A Discussion with H2A Travels – Day Tour Operator – Zichron Yaakov, Israel
Welcome to the Industry Insider blog series. The Industry Insider aims to highlight common challenges across the tourism industry. From sales to reservations to accounting to operations, we all strive to operate efficiently and profitably. At the core of TourConnect is a passion for uniting the industry around the solutions to these challenges.
At the core of TourConnect is a passion for uniting the industry around the solutions to these challenges. Simply put, we believe that working together benefits the entire industry.
Today, we look at a closer look at H2A Travels, a day tour operator that specializes in providing historically significant and modern sight-seeing experiences all over Israel. We spoke with Mrs. Ronit Litman, H2A Travels’ owner, to learn about the challenges they face in the tourism industry today.
What ma
kes H2A Travels different from your competitors?
H2A’s specialty is to design and plan unique and spectacular day tours that meet lifestyle, budget, and arrival time requirements. We serve groups, independent travelers, singles, families, seniors and handicapped, who wish to discover Israel in a new way. All of our tours are custom-made, which ensures no two tours are ever the same.
I am a professional archaeologist, and that has translated into the deep knowledge of the Bible, history, and archaeology that makes our trips one-of-a-kind. We plan diverse theme trips that are very special. As part of my job and hobby, I travel across Israel and always stay up to date with the new attractions and sites.
How do you manage all of your business relationships and keep them engaged in your company?
We get 30% of our business from direct bookings, 40% from social media (primarily Facebook/LinkedIn), and 30% from travel agents.
I use social media, brochures, and our website to market to our direct business. We keep our current B2B business partners engaged by weekly correspondence. I communicate with them by Skype, phone, and emails. In addition, I attend trade shows and exchange business cards to develop new relationships.
What advice would you give to a new company as they try to find and build relationships with new business partners?
My focus is on delivering a great product on the ground. I have great relationships with reliable accommodation suppliers. I also make sure to communicate well with our clients to ensure their satisfaction every step of the way.
What is the most challenging or tedious part of your job on a day-to-day basis?
Tedious: Administration issues around filing and scanning rates, contracts, and other documents.
Challenging: Negotiating our rates, especially with many competitors.
Setting our rates can be extremely challenging. We have to factor in competition, commissions, and seasons all while trying to make a profit. I think this is likely a challenge everyone has in a competitive market, like Isreal.
What do the next five years have in store for H2A Travels?
We intend to expand our inbound, B2B business through establishing new relationships in the industry. In addition, we will be looking to entering the outbound sector for travelers departing from Isreal.
Why did you decide to sign up for TourConnect? What do you hope to gain?
I signed up with a recommendation of a colleague (Alon Galin: WalkinIsrael). TourConnect ties into my goals of expanding our business by connecting to a larger community of industry partners. I intend to use the PartnerFinder to develop new business relationships which could come in handy with our move into the outbound space. I also hope to simply stay connected with the tourism industry as a whole.
The TourConnect Take
Below, we break down the interview to share relevant experiences, analysis, ideas, and thought provoking questions with the industry.
H2A Travels is experience the challenge that every company in history has encountered…pricing. H2A Travels, as a tourism supplier, has a unique challenge in that they provide custom tours for each and every client. So what pricing strategies should they use to be competitive yet profitable?
Pricing is an enormous topic, but I want to touch on just a few key topics that relate to the inbound tourism industry.
On Request/Ad Hoc Pricing vs. Static Rates
At first glance, most suppliers think they are giving themselves an advantage by providing a custom quote for every single traveler that comes through the door. They are giving the best value to the customer and it directly relates to the experience they are delivering. However, the problem is custom quotes for every client may not be the best option for certain distribution channels, specifically certain travel agents.
Many tour operators and travel agents like to sell a package or combine set products to create an immediate quote for their clients. By including products that require a custom quote every time, the traveler must wait until all those quotes are complete until they know what their ‘trip of a lifetime’ will cost. This means that the additional time that an agent must take to get a quote finalized, the traveler can be shopping around or simply getting frustrated with the process.
One way to help with this is to create static, or set, rates for custom tours. How can this be done? It’s challenging, but by grouping similar style itineraries (or possible itineraries), you can often start to see patterns in the costs of delivering those experiences. Create products around these similar experiences that still highlight the fully customized itinerary.
For example, you may end up with:
3-hour Custom Tours – $300/guest
4-hour Custom Tours with Lunch – $500/guest
8-hour Custom Tours with Lunch and River Tour – $800/guest
All of these can be customized for a great experience, while at the same time giving tour operators and agents a product to load in their booking system. This allows agents to quote for your product immediately, while still figuring out the exact experience for the client. The key is to price these products in a way to ensure that the maximum cost of delivering the experience will still ensure a comfortable profit.
Different Products for Direct Bookings and Agent Bookings
There is no rule that says you have to offer the same experiences to your direct customers and those that come from travel agents. Yep, believe it or not, it’s true! It is ok to create product offerings for specific tour operator partners or all travel agents which you do not offer direct to the public.
For example, if you end up creating static rates (as mentioned above), you do not have to offer those to the general public. So you would have some set products for your agents, but still fully customized quotes for direct bookings.
This allows you greater flexibility in meeting the needs of your business based on distribution channels.
Higher Prices Driving More Business?!
If you are offering the same products to direct consumers and travel agents, you are stuck trying to keep prices down to always match your competitors. If your competitor does not have the same relationships with tour operators and agents, that means you are driving your prices down on tour sold through agents. Not only does this hurt your profit, but it may be reducing the number of bookings agents are sending you.
Remember, the tour operators and agents that work on commissions like higher commissions. So, a slightly higher price may actually help your sales through some agents. Be careful though, it’s a fine line and you need to get good feedback from your partners. If you give a nett rate to a tour operator that they mark up when they sell the product, be careful, as well. If you raise your nett rate, you may be eating into their margins. Again, this is why you build great relationships, to ensure you are meeting the needs of your partners.
Pricing is difficult, but hopefully a few of these concepts open ideas up that help your business. TourConnect is excited to help encourage productive discussions between partners. This will ensure that great experiences, like H2A Travels’ tours, get into the market at a profitable price that delivers great value for the traveler.
TourConnect would like to thank Ronit at H2A Travels for taking the time to share their experiences and honestly addressing their challenges so that others have the ability to relate.
Have you or your company experienced these challenges? How have you addressed them? Comment below so we can all learn and relate.
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We look forward to sharing more of these insightful interviews with our ongoing series, Industry Insider. Be sure to follow us on Facebook or Twitter to stay up to date on all of our blog posts and system releases!
