How To Expand Your Tour Operator Business Into New Markets With Horizontal And Vertical Scaling
Many tour operator companies are founded by people with a desire to share a special corner of their world with others.
They want to help more people access and enjoy the unique culture and experiences they love – so they build a business to bring pleasure and unforgettable moments to the lives of others, wherever they might live.
The internet has made this increasingly easier of course, as travellers can now book tours and experiences from the comfort of their own home or office, anywhere in the world.
In fact, digital marketing has given tour operator companies the opportunity to reach more potential future customers than ever before…
And today they can showcase their products and tours in various exciting ways, bringing an experience to life right before the eyes of a curious website visitor – even if they’re thousands of miles away.
This has opened up a new world of possibilities for ambitious tour operators to grow their businesses into 6, 7 and even 8-figure operations.
And there are a couple of growth strategies in particular which some of the smartest companies are using to achieve that...
Strategies that unlock access to more potential customers in new markets, helping tour operator businesses grow scalably and securely – rather than just ramping up their ad spend and hoping for the best.
Let’s take a look at how both Horizontal and Vertical Scaling can help you grow YOUR tour operator company.
Horizontal Scaling – why you don’t need to reinvent the wheel to revolutionize your business
Horizontal Scaling is about expanding your business into adjacent markets, in a way that lets you generate more bookings without having to heavily invest time and effort.
Put simply, you take your existing business model and apply it in a new market – one where you can use it without changing the core idea of what you do.
Let’s say you sell tours of famous movie locations in London to UK-based customers. That means you could quite easily start selling online to English-speaking visitors planning a visit from the US or Canada – moving into new and bigger (adjacent) markets to maximize your reach, but without creating completely new products or radically changing your business model.
This strategy has been used successfully by businesses like Uber to achieve consistent growth...
They began by connecting taxi drivers with local customers in San Francisco, where Uber started out. But there was no reason they had to limit their service to only one city once they’d made it work…
The same problems needed solving in thousands of other locations: people everywhere could use a mobile app for instantly bookable taxis, and drivers wanted access to more customers around the clock.
So it made sense for Uber to expand into more US cities, and then other countries – but also to do it without fundamentally changing their service.
That’s Horizontal Scaling at its most essential.
How could you apply this to the tours and experiences market?
These days tour companies are increasingly finding they can use Horizontal Scaling because the ‘old rules’ no longer apply:
You’re not limited to selling tours only to visitors from one particular area. You can easily widen your scope to include more potential future customers from further afield, and you can do it much more effectively than 5 or 10 years ago.
In theory, you can now sell a tour or experience to anyone, anywhere – because today’s travellers no longer expect you to also arrange flights and/or accommodation for them.
Someone in Australia who wants a multi-day tour of New York can use virtually the same booking process as someone who lives in the US, arranging their own travel separately.
That’s a key behavioral change that’s developed over the past few years which has led to more streamlined services from tour & experience companies.
Want to know more about how YOUR tour operator business could uncover new markets and generate 7 or even 8 figures in annual bookings?
Schedule your free Get More Bookings™ Strategy Session with our co-founders, Jay Connelly and Max Hardy.
In this session we’ll outline how some of the ideas in this article can work for YOUR specific tour operator business, and walk you through how our unique process can help you generate 7 and 8-figures in bookings.
Independent tour operators are no longer limited to selling tours in their own physical location either...
They’re expanding into other areas by applying their distinct knowledge and expertise, recreating the magic of their tours & experiences in other districts, and even other countries.
For instance, we worked with Live The Journey to expand their current traditional B2B model focussed on inbound travel to Southern Africa destinations, to develop a B2C product that now targets a North American client base.
Of course, before digital marketing levelled the playing field, tour operators relied heavily on print ads in specific locations, telephone bookings from people who’d already planned their trip, and even on foot traffic from visitors who’d arrived at their destination…
But now that travellers are in the habit of researching and planning their trips in advance and can connect with tour businesses on different continents in the blink of an eye, the days of waiting for someone to walk past your office window to sell them a tour are (thankfully!) over.
And if you want to take that opportunity to the next level, there are other ways you can apply Horizontal and Vertical Scaling to expand your business too.
At 10x Travel we talk with tour operator company owners every day, and often hear how they’re concerned about ‘running out of’ leads in the niche markets or locations they serve. But that’s less of a problem once you start scaling.
Any market is subject to all sorts of ups and downs, and if you’re only set up to sell to people in one specific area you risk ‘putting all your eggs in one basket’.
For example, the effects of the 2016 Brexit vote in the UK have had an ongoing impact on UK tour businesses who rely on EU visitors, and vice versa.
For many tour operator companies, expansion into other markets can be a way of securing their long-term futures.
Australian business owners may want to branch out into the US market for instance, rather than limiting their lead supply by over-relying on visitors from their own country.
After all, people are now prepared to buy a long-haul flight and spend additional money on tours and experiences in their chosen destination, rather than book everything through the same source like with the traditional package holiday model.
This approach has clear advantages...
If you can attract English-speaking visitors with your marketing, you’re not limited to doing business only with visitors from the UK. The English-speaking world is your oyster – you just need to focus on reaching those further afield.
And with more and more travellers now booking their own flights and accommodation, the easier it’s become to attract people from outside your traditional catchment area to your tours.
So the ‘British’ market is really a ‘UK / USA / Canada / Australia / New Zealand and beyond’ market – with far greater potential for bookings.
We recently helped Vienna-based tour operators Rad + Reisen to expand their English-speaking market significantly. Over the first 6 months of our work with them, traffic to their site from English-speaking countries grew by an extra 50% compared with the same period in 2018.
Of course, in order to reach visitors from overseas, your offers have to get their attention first. But with more and more digital marketing tools making this easier, now could be the time for your business to start advertising to wider markets more effectively.
The old limitations of timezones and even cultural differences are being removed...
Lead segmentation and automated email responses allow you to create personalized messages for your prospects and new inquiries, which are essential when managing contacts from different countries and timezones.
There’s now no need for a website visitor from the other side of the world to wait for your team to wake up and clock on before making an inquiry (or even getting a response)…
Which means there’s more chance of them converting to a qualified lead or a paid booking – with less time and effort from your side.
When it costs roughly the same amount to attract, nurture and convert a prospect regardless of where they’re based, you can open up a much wider market for your business – provided you have a reliable digital sales strategy in place.
For example, 10x Travel partner USA Guided Tours were able to take advantage of Horizontal Scaling by opening a new office in Boston after we helped them grow beyond their New York & Washington DC outlets with our Get More Bookings™ online sales system.
Their city bus tour business model was scalable and repeatable across the US east coast, so we were able to help them create customized sales funnels for their new locations, including targeted social media and online advertising.
So expanding into new markets by offering more options to a bigger audience can prevent risky over-reliance on one location, while increasing your revenue opportunities.
And despite the cultural differences which sometimes divide us, it is possible to market effectively to people outside your traditional area by following some cultural guidelines…
How using ‘Cultural Clusters’ can help you decide who else to market to, and how to do it
The GLOBE Project is a social science research foundation focusing on leadership and organizational behavior.
Their Cultural Clusters project divides the world’s nations into ‘clusters’ based on cultural similarities – such as values, shared history, economic development, regional proximity and social factors.
The idea of Cultural Clusters is important because it illustrates how it’s not always straightforward to assume that a marketing message or a business idea will translate from one nation to another, if you simply switch your message to another language.
For instance, New Zealand and the USA may be thousands of miles apart, but they’re still relatively similar in their ‘western’ culture…
Whereas it’s a shorter journey from New Zealand to China, Russia or Thailand, but the greater cultural differences mean you can’t assume the same offer translated into the right language would have the same impact.
Similarly with the UK compared to Italy or Spain, for instance – people from those relatively neighboring countries may have very different expectations when booking and undertaking a tour or travel experience.
Digital marketing has broken down many barriers, which is an advantage for businesses like ours, but cultural and behavioral differences remain – which is what makes travel so attractive to people, after all!
So it’s worth bearing the Cultural Cluster list in mind when choosing which locations to move into, and considering how to adjust your sales and marketing process accordingly.
If you’ve ever thought of expanding your tour operator business into different locations, click the button below to schedule your FREE Strategy Session, and I’ll walk you through exactly how 10x Travel can help you conquer your next market.
Vertical Scaling – leveraging your existing assets to create more tours and experiences
Changes in the ways people want to travel have also presented tour operators with exciting new opportunities to move into growing niche markets…
Solo travel is on the rise, with significant increases in related web searches and solo bookings (particularly amongst millennials, baby boomers and women-only tours), while guided tours for solo travellers are increasing in popularity all the time.
Recently, luxury tour operators Abercrombie & Kent successfully moved into the wellness-inclusive tour niche to meet a relatively new but rapidly growing demand, and appeal to more health-conscious travellers.
A&K’s Stefanie Schmudde told Skift: “It is a way to stay true to what we do at our core, which is culturally immersive luxury travel, but also be able to introduce something new with the wellness focus.”
Since the company already had relationships in Southeast Asia, India, Kenya and Peru as part of their existing luxury tour range, they were able to easily link up with smaller, more boutique hotels and create wellness-inspired itineraries for a different market sector.
Abercrombie & Kent didn’t need to tear up their business model or even explore new locations to expand in this way...
Which is part of Vertical Scaling’s practical appeal for smaller operators too – with a dash of creativity and a bold approach, these tactics aren’t limited only to more established or big-spending companies.
In fact for many of these businesses, the easiest way to expand is to offer their tours and experiences to new groups who they’ve previously overlooked.
The Adventure Travel Trade Association (ATTA) recently reported on their annual survey, which reflects the ever-changing behavior of the travel industry…
It shows how in 2019 custom itineraries, green & sustainable travel, wellness and mindfulness tours are increasingly popular, representing opportunities for ambitious tour operators to create new products and services without having to ditch their business models and start from scratch.
An increasingly popular growth strategy for companies who traditionally offered day tours has been to combine some of their best-selling tours to create exciting multi-day packages – adding accommodation and even transport to create a higher-value, more desirable product.
Done right, this type of Vertical Scaling can lead to more bookings, bigger margins and a new revenue stream – and even repeat bookings from higher-income clients who travel more often and want to enjoy unique experiences without spending hours pasting their own itinerary together.
As we mentioned earlier, Barcelona Guide Bureau were able to do this, as they sought a way to attract customers with higher income and increase their Average Order Value (AOV).
Since working with 10x Travel to create and market their new multi-day products, Barcelona Guide Bureau can now sell multiple products to the same client in one go and generate a greater return without investing in extra resources.
The result: their clients are happy with the new offers and BGB are selling more of them to a previously untapped market – simply by combining existing products and marketing them more effectively.
There’s another reason why ambitious tour operator companies have been going all-out on expansion recently...
In 2016, online accommodation giant Airbnb launched their ‘Experiences’ site, offering “one of a kind activities hosted by locals”, creating direct competition with operators in the day tours sector.
A glance at their listings reveals everything from food and walking tours to photography classes and wellness breaks. The company is moving into the tours and experiences market in a big way, and it’s already having an impact on the way travellers search for and make bookings.
By May 2019, Fast Company estimated there were more than 30,000 Airbnb Experiences listed across over 1,000 cities worldwide, with the business generating around 1 million guest bookings in 2018.
And more recently, Airbnb introduced ‘Adventures’ – expanding into the multi-day tour arena. Many tour operators around the world are understandably worried about what impact this may have on the industry.
As a $31 billion company, Airbnb clearly has the financial power to become a major player in our industry and potentially take a lot of business away from smaller companies.
But rather than just lie down and wait for the tech giant (and inevitably the others who follow its lead) to take a big bite out of their client base, some tour operator businesses are fighting back by using digital technology to their own advantage.
Online sales & marketing strategies have helped independent operators defend themselves against the wave of corporate-backed gatecrashers, particularly in popular destinations where competition for bookings is fierce.
Booking automation is on the rise in the tours and experiences market. How your business responds to that challenge is up to you...
Online booking automation has already disrupted the hotel and airline areas of the travel industry – in many cases for the better, certainly as far as customer choice is concerned.
At 10x Travel we’ve long believed the activity sector would be next, and that tour operators need to be ready for the knock-on effects.
There are still some parts of a tour operator’s booking process that can’t be completely automated, and that’s where smart business owners can stand out and excel. There’s still the opportunity to stand out vs the Airbnb model with a more ‘personal touch’: top-notch customer service and more customized booking experiences for your clients.
But as far as automation goes, the rise of Airbnb and other tech-driven booking trends is really just the beginning – and that’s actually an invitation to companies who don’t want to get left behind by the digital revolution to up their game.
Using Horizontal and Vertical Scaling strategies like we’ve outlined here can help your business grow, even while bigger players jump into the market. You can move horizontally into different geographical areas, or vertically with exciting new products and services, or both.
Yet the framework which all these expansion possibilities are essentially built on is having a reliable system to generate more leads and sales for your business, wherever it’s focused.
Whenever you enter any new market, you need a clearly defined process for consistently attracting and converting new customers. Without that process in place, all growth strategies are at risk of dying on the vine.
That’s why 10x Travel specializes in implementing that process for our partners:
We help tour operator businesses with the ambition to reach the next level succeed in new and existing markets by building customized digital sales funnels based on a proven, reliable method.
Because once you have a solid digital sales strategy in place, you can start to unlock the potential of both Horizontal and Vertical Scaling to expand into exciting new markets, and secure your company’s long-term future.
Want to know more about how YOUR tour operator business could uncover new markets and generate 7 or even 8 figures in annual bookings?
Click the button below to schedule your FREE Strategy Call with me, 10x Travel CEO Max Hardy.
I’ll personally walk you through how your business can apply some of the strategies mentioned on this page, and how our unique Get More Bookings sales funnel can help you consistently generate more leads and sales to support your growth.