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Advise on tour operator business. (market strongly hit by covid)

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Armen9

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Hello everyone!

I am (was) running tour operator business (walking, bicycle, sometimes van tours) in nyc
pre-covid numbers were 350k rev, ~70k income.

Market is strongly hit by covid and since it's started we got only 2 bookings. And nobody shows any interest. (before we received bookings 1-3 months in advance)

Right now i am hesitating what to do.
On the one hand there are lots of things i can improve in business.

1. Operations.

2. Marketing
Now all sales are coming via PPC (google and bing) and i need to:
-add more quality content (i build high converting product pages with lots of photos, reviews, etc, but no content that people, influencers, bloggers would like to link to)
-make SEO work
-make OTAs work
-make FB work

3. New products
We several ideas for new tours / experiences that should help us stand out from competition.

To achieve those we will need to move to new platform, and it will cost plus minus $100k. (most of it will go to pay to developers, plus about ~20% for content, tours, photography).
Plus big time commitment from me, cause i will need to communicate to dev team, guides working on tours, writers, provide feedback, communicate design, etc.

If it won't be for covid i won't hesitate much, but now i am not sure. $100k is big investment for me, and with travel situation i am not sure how long it will take to get $ back,
and maybe it's better to invest this money and TIME somewhere else / try new venture. My strong skills are sales, design, marketing, ppc, SEO.

I like travel, like serving guests, they are nice people to work with. And i know our industry good. I have several ideas how possibly we can expand our offering (now we are serving only small portion) that's why i am trying to invest in automation, but i am not sure i what's decision to make.
 

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MrTrash757

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Are you planning on going virtual with your tours? Or hosting different in-person ones right now? What sort of automation are you looking at?

I know the travel industry is in a ROUGH shape right now. I see it myself as my PE firm's focus is shifting to infrastructure, transportation and travel.

But I know it will bounce back. Humans are inheritantly nomadic, so there will be a large surge over the next 5-10 years of travel and people going places.

Domestic travel will most likely boom the most (for the US), because of the poor response to COVID and the bans on Americans in most other countries. On top of that, only 20% of Americans have a passport.
 

Armen9

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"Are you planning on going virtual with your tours?" - we tried virtual once, but got very few interest. I saw that airbnb have them. But for some reason they don't work for us.

"What sort of automation are you looking at?" - lots of things need to be automated, but most important is scheduling. It takes lots of my time.

"I see it myself as my PE firm's focus is shifting to infrastructure, transportation and travel. "
- do you mean your PE firm is shifting into travel cause you see "distressed" businesses? (businesses that need $ now and you can buy on favorable terms)

"But I know it will bounce back. Humans are inheritantly nomadic, so there will be a large surge over the next 5-10 years of travel and people going places."
- i know this myself. And i told myself "just focus and work for long term." It's just that all my sources of income were dependent on travel and now in case if "bouncing back" will take longer than expected it will be hard.

"Domestic travel will most likely boom the most (for the US), because of the poor response to COVID and the bans on Americans in most other countries. On top of that, only 20% of Americans have a passport."
- that's what my friend in aspen told me. He leaves in touristic area, right after covid it was "dead", but now US tourists come back. It's not the case for NYC. I guess cause all broadway shows, etc are cancelled. (reasons why people visited nyc)
 
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MrTrash757

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"Are you planning on going virtual with your tours?" - we tried virtual once, but got very few interest. I saw that airbnb have them. But for some reason they don't work for us.

"What sort of automation are you looking at?" - lots of things need to be automated, but most important is guide scheduling. It takes lots of my time.

"I see it myself as my PE firm's focus is shifting to infrastructure, transportation and travel. "
- do you mean your PE firm is shifting into travel cause you see "distressed" businesses? (businesses that need $ now and you can buy on favorable terms)

"But I know it will bounce back. Humans are inheritantly nomadic, so there will be a large surge over the next 5-10 years of travel and people going places."
- i know this myself. And i told myself "just focus and work for long term." It's just that all my sources of income were dependent on travel and now in case if "bouncing back" will take longer than expected it will be hard.

"Domestic travel will most likely boom the most (for the US), because of the poor response to COVID and the bans on Americans in most other countries. On top of that, only 20% of Americans have a passport."
- that's what my friend in aspen told me. He leaves in touristic area, right after covid it was "dead", but now US tourists come back. It's not the case for NYC. I guess cause all broadway shows, etc are cancelled. (reasons why people visited nyc)
Interesting to hear about virtual tours.

I'm not looking at distressed assets yet, but just changing my niche.

NYC is a tough market right now. The cities are not places where people want to be in quite honestly.
 

Kid

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will cost plus minus $100k
If customers aren't buying, new "$100k platform" won't do anything good.
(Sorry for one liner but it boils down to it)

Few things you might consider:
- Wait it out
-Split $100k into 10 or 20 budgets (that is $10k or $5k) and come up with things that could profit on such low budgets
-Partly pivot - use something you have and use it in new way (things like "instead of them going away to trip, you go to their house do presentation about some place and serve food from there")
 

Armen9

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If customers aren't buying, new "$100k platform" won't do anything good.
(Sorry for one liner but it boils down to it)

Few things you might consider:
- Wait it out
-Split $100k into 10 or 20 budgets (that is $10k or $5k) and come up with things that could profit on such low budgets
-Partly pivot - use something you have and use it in new way (things like "instead of them going away to trip, you go to their house do presentation about some place and serve food from there")
Kid, hi, thank you for reply!

"If customers aren't buying, new "$100k platform" won't do anything good."
- completely agree. And i know this. It's that then i ask myself if i am serious about the niche? If i want to be able to expand / add new tours, etc i need to upgrade the platform. Paid solution (like fareharbor, etc) are not custom enough. Basically i ask myself am i staying and moving ahead though now times are tough, or am i moving to another venture.

"-Partly pivot - use something you have and use it in new way (things like "instead of them going away to trip, you go to their house do presentation about some place and serve food from there")"
- i thought about it, and tried to brain storm ideas of businesses i can try to start in my area. I somewhat liked cleaning.

Pros:
-Recurring rev (we don't have in tour business)
-In nyc there is high density of buildings / population next to each (more effective logistics)
-Business depends on system a lot, business with most efficient systems / operations have advantage

Cons:
-Often price is what matters to customer most
-"Dirty" / not very pleasant business
-There are thousands of "start cleaning" threads / everyone can do it.
 

Ernman

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Purely MHO: Tourism will rebound. The question is how many existing tourism players can wait it out. A very few will take advantage of this situation to prepare for the rebound such as you've suggested - improvement to operations, repair/replace hard assets, etc. Others will need to find additional revenue sources to hold them over - diversification is a good thing. Most will fold up, find another niche or take a regular job to keep a roof over head and food on the table.

If you can - strengthen your position in your chosen industry and search for ways to make it Fastlane. Do a CENTS analysis and act on what you discover.
 

Jon L

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Kid, hi, thank you for reply!

"If customers aren't buying, new "$100k platform" won't do anything good."
- completely agree. And i know this. It's that then i ask myself if i am serious about the niche? If i want to be able to expand / add new tours, etc i need to upgrade the platform. Paid solution (like fareharbor, etc) are not custom enough. Basically i ask myself am i staying and moving ahead though now times are tough, or am i moving to another venture.

"-Partly pivot - use something you have and use it in new way (things like "instead of them going away to trip, you go to their house do presentation about some place and serve food from there")"
- i thought about it, and tried to brain storm ideas of businesses i can try to start in my area. I somewhat liked cleaning.

Pros:
-Recurring rev (we don't have in tour business)
-In nyc there is high density of buildings / population next to each (more effective logistics)
-Business depends on system a lot, business with most efficient systems / operations have advantage

Cons:
-Often price is what matters to customer most
-"Dirty" / not very pleasant business
-There are thousands of "start cleaning" threads / everyone can do it.
Couple questions:

1) How quickly do you think the travel industry will come back after a vaccine is produced? Will it be a trickle, or will people be desperate to get out and explore once again? How can you market based on what you think will happen?

2) When will this recovery happen?


And a thought:

I do custom software of the type you're talking about. I've never had as much interest in my company's services as now. People are jumping at the chance to get ahead of the recovery. Its pretty incredible actually. Here's my take on why that is: Companies and people that have been successful and saved their money see this downturn as an opportunity to take over market share once the economy recovers. Especially in industries that have been hard hit. Few companies in the travel, restaurant, event (etc) industries will survive. Those that do will be able to pick up customers like crazy once things come back to normal.

The only question is, 'when will that happen?'

I watched an interview from 2006 with a guy that was alive during the 1918 Spanish Flu. He said that it was four years before people really felt comfortable going out, shaking hands, going to church, etc. They didn't have a vaccine for it back then, though. We should have a few of them in the next 6 months. Crossing our fingers that they work...
 

Armen9

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Jul 24, 2016
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Purely MHO: Tourism will rebound. The question is how many existing tourism players can wait it out. A very few will take advantage of this situation to prepare for the rebound such as you've suggested - improvement to operations, repair/replace hard assets, etc. Others will need to find additional revenue sources to hold them over - diversification is a good thing. Most will fold up, find another niche or take a regular job to keep a roof over head and food on the table.

If you can - strengthen your position in your chosen industry and search for ways to make it Fastlane. Do a CENTS analysis and act on what you discover.
Erman hi, thanks for reply!

"Most will fold up, find another niche or take a regular job to keep a roof over head and food on the table."
-that's already happening. Lots of smaller operators in my niche moved to another thing.

"If you can - strengthen your position in your chosen industry and search for ways to make it Fastlane. Do a CENTS analysis and act on what you discover."
-i did took time to analyze my industry / operation. And realized following weaknesses:

1) it's 1 time product (after talking one of our tours 99% guests won't return, not cause they didn't like it, but simply the already did the experience, and even if they return to nyc they would like to do something else; comparing to recurring service businesses like say cleaners it's big weakness cause every time you have to hassle for new customer)

2) it's hard to scale to new geographies (product/tour is place specific, and if we would want to do tours let say in chicago we will need to create tours about chicago and need knowledgeable/expert person to do so; comparing to more common service businesses like cleaning, if you figured out operations, cleaning chemicals, etc at one location you don't need to reinvent it again)

right now brainstorming possible ways to solve it / improve business model.
 

Armen9

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Jul 24, 2016
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Couple questions:

1) How quickly do you think the travel industry will come back after a vaccine is produced? Will it be a trickle, or will people be desperate to get out and explore once again? How can you market based on what you think will happen?

2) When will this recovery happen?


And a thought:

I do custom software of the type you're talking about. I've never had as much interest in my company's services as now. People are jumping at the chance to get ahead of the recovery. Its pretty incredible actually. Here's my take on why that is: Companies and people that have been successful and saved their money see this downturn as an opportunity to take over market share once the economy recovers. Especially in industries that have been hard hit. Few companies in the travel, restaurant, event (etc) industries will survive. Those that do will be able to pick up customers like crazy once things come back to normal.

The only question is, 'when will that happen?'

I watched an interview from 2006 with a guy that was alive during the 1918 Spanish Flu. He said that it was four years before people really felt comfortable going out, shaking hands, going to church, etc. They didn't have a vaccine for it back then, though. We should have a few of them in the next 6 months. Crossing our fingers that they work...
Jon hi, thanks for reply!

"1) How quickly do you think the travel industry will come back after a vaccine is produced? Will it be a trickle, or will people be desperate to get out and explore once again? How can you market based on what you think will happen?
2) When will this recovery happen?"
- honestly, i have no idea. It's all speculation and guesses.

"Those that do will be able to pick up customers like crazy once things come back to normal.
The only question is, 'when will that happen?'"
- exactly :)

"We should have a few of them in the next 6 months. Crossing our fingers that they work..."
- hope so!

Interestingly not all tourist areas are effected and some are even BOOMING!
I read post on reddit about guy who lives in florida and plans to open surf board rental. He said that this summer there were more tourists than usual and local rental shops couldn't keep up with demand.
 

Jon L

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Jon hi, thanks for reply!

"1) How quickly do you think the travel industry will come back after a vaccine is produced? Will it be a trickle, or will people be desperate to get out and explore once again? How can you market based on what you think will happen?
2) When will this recovery happen?"
- honestly, i have no idea. It's all speculation and guesses.

"Those that do will be able to pick up customers like crazy once things come back to normal.
The only question is, 'when will that happen?'"
- exactly :)

"We should have a few of them in the next 6 months. Crossing our fingers that they work..."
- hope so!

Interestingly not all tourist areas are effected and some are even BOOMING!
I read post on reddit about guy who lives in florida and plans to open surf board rental. He said that this summer there were more tourists than usual and local rental shops couldn't keep up with demand.
that is kind of amazing about portions of tourism. That seems to be the case all over the place.

Why kind of pivot could you do in the meantime that would be travel related that would be your version of surfing? Should you pivot?
 

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Kid

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Very good posts above by Jon, Ernman and MrTrash757.

Now this wouldn't be easy but consider:
since many small tour operators shut their doors,
there will be unmet demand for travel/trips after this whole covid thing will end.
Some of them will never return to this business.

People are going nuts for having to stay home for longer time.
Your thing would be to survive or stay lean till then.
If you will stay, you might have a chance for something.
 

Jon L

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Very good posts above by Jon, Ernman and MrTrash757.

Now this wouldn't be easy but consider:
since many small tour operators shut their doors,
there will be unmet demand for travel/trips after this whole covid thing will end.
Some of them will never return to this business.

People are going nuts for having to stay home for longer time.
Your thing would be to survive or stay lean till then.
If you will stay, you might have a chance for something.
Could you do safe tours of some sort? Here in Seattle, we are all going stir crazy. There are only so many times you can go to a park or what not before that gets incredibly tedious. If there were a guided, socially distanced event of some sort, I'd pay for that.
 

Ernman

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Erman hi, thanks for reply!

"Most will fold up, find another niche or take a regular job to keep a roof over head and food on the table."
-that's already happening. Lots of smaller operators in my niche moved to another thing.

"If you can - strengthen your position in your chosen industry and search for ways to make it Fastlane. Do a CENTS analysis and act on what you discover."
-i did took time to analyze my industry / operation. And realized following weaknesses:

1) it's 1 time product (after talking one of our tours 99% guests won't return, not cause they didn't like it, but simply the already did the experience, and even if they return to nyc they would like to do something else; comparing to recurring service businesses like say cleaners it's big weakness cause every time you have to hassle for new customer)

2) it's hard to scale to new geographies (product/tour is place specific, and if we would want to do tours let say in chicago we will need to create tours about chicago and need knowledgeable/expert person to do so; comparing to more common service businesses like cleaning, if you figured out operations, cleaning chemicals, etc at one location you don't need to reinvent it again)

right now brainstorming possible ways to solve it / improve business model.
Forgive me if you're already doing or have thought of this...
What about different themed tours: haunted, famous murders, financial, 9/11, "Gangs of NY", movie locations? Each tour is a little different either attracting a different client or repeat biz from folks happy with the last tour.

You can use the down time now to do the research to put together the tours. Even have themed merch to go along.

Total brain storm on my part, I'm not in your biz but have taken multiple tours of New Orleans each with a different theme.
 

biophase

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The difference between your tours and surfboard rentals is that surfboards are outdoors and done alone versus your tours that probably have a group of people in a confined space for some of the time. I don’t think people will be doing types of group tours to indoor spots anytime soon. I think those will be the last types of tourist events to come back.
 

Armen9

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that is kind of amazing about portions of tourism. That seems to be the case all over the place.

Why kind of pivot could you do in the meantime that would be travel related that would be your version of surfing? Should you pivot?
Good question, Jon

Right now i am thinking about the options, problem also is that now tourists simply don't come to nyc.
(tiny amount compared to what it was before).

So problem is not only that our customers are not buying our product, but also that customers simply can't buy our product cause they are not at our location.
 

Armen9

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Forgive me if you're already doing or have thought of this...
What about different themed tours: haunted, famous murders, financial, 9/11, "Gangs of NY", movie locations? Each tour is a little different either attracting a different client or repeat biz from folks happy with the last tour.

You can use the down time now to do the research to put together the tours. Even have themed merch to go along.

Total brain storm on my part, I'm not in your biz but have taken multiple tours of New Orleans each with a different theme.
Erman, that's very good suggestion. And that's exactly one of the things we are working on now.
 

Kasimir

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What an interesting thread to read!
Everybody tried to speculate on how fast we will get back when we get a vaccine. And people tend to compare it with all the data which we have. And that's more or less the Spanish flu or maybe Ebola or Malaria. But that's it.
To understand the situation totally we have to look into what is needed to get back to normal:
Herd immunity in reach when around 60% of people are infected. (Or had a successful vaccine shot)
  • At the moment the US has around 8.7 million confirmed cases but it's estimated that there are around double that but just not tracked. So you have at least 15 million cases in the US alone. This number will potentially double until we get a vaccine. That means that you have around 30 million cases which means that already 10% of people are immune against Covid.
  • The first 20% of the population will receive their shots quite quickly. And predicted in June/July 2021. Another 20-40% will receive their shots between August and October 2021. This last move will hopefully end Covid.
These were all speculations from experts, and could potentially be wrong.
But I think we can't compare it to the Spanish flu for a couple of reasons:
1. We don't fear Covid as much as the Spanish flu was feared.
2. We should get a vaccine.
3. The Spanish flu could be really bad for young people too. While Corona rather dangerous for old people.
4. Everyone is tired of Covid. People want to go out. That was the main reason for the 2nd wave in whole europe.

So I think travel will be back. Different but it will be back. And it will be back fast in my mind.

I think you have to ask yourself what this investment of 100k will bring you. If you think it is worth the risk I would take it. Now is a great time to test things out.

Another topic which could be interesting to see is that flights will really expensive post-Covid. Just my opinion but I think after we saw way too cheap flights in the last 5 to 10 years we will see some pretty normal to even expensive flight costs. This will maybe help you get more customers if I get your business right. People will rather make trips in there own country than travel far away for a high price-tag.
 

Armen9

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The difference between your tours and surfboard rentals is that surfboards are outdoors and done alone versus your tours that probably have a group of people in a confined space for some of the time. I don’t think people will be doing types of group tours to indoor spots anytime soon. I think those will be the last types of tourist events to come back.
Biophase hi! Thanks so much for your reply! I read your ecommerce AMA and learnt lots of things (even though i am not selling products, but more services).
I completely agree on group tours, and to be honest i don't think that we will fully recover in next 1.5 - 2 years the earliest in this category.

I know that you also have tour operator business, and i don't see this type of businesses often mentioned on the forum. Do you have suggestion how to make this model more fastlane?

As mentioned above we do tours in nyc, and now we are working on adding tours to have option to cross sale / sell as package, but it's all one geo location (nyc). One of the requirements of CENTS is to choose big market. So sometimes i wonder if i violate it.
 

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Where did you get the 100k figure to develop what is it a website? Do you have an example or comparison website or app about what exactly it is you want to achieve?
 

BizyDad

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Good question, Jon

Right now i am thinking about the options, problem also is that now tourists simply don't come to nyc.
(tiny amount compared to what it was before).

So problem is not only that our customers are not buying our product, but also that customers simply can't buy our product cause they are not at our location.
Sounds like an opportunity to get locals to enjoy more of that beautiful city of yours. I'm always shocked at how many natives never go to see the sights.

People everywhere are all couped up looking for something to do. Start marketing Staycation events. Find some events, make some events (taking any necessary precautions, of course).

On the subject of spending 100k, probably not the best time. I don't know what all you are looking to do, but is there any way to chunk the upgrades into smaller sizes? I only ask because we built a custom website/tour booking system/business management tool for a client years ago for about a third of what you are looking to do. Not sure what it would cost today, and customers are way more savvy, but if you shop your project around perhaps you can get a lower quote.

As for expanding, have you considering moving into markets as an affiliate first? That's what my client did. We started him locally, built up his site's authority, got SEO business and traffic going.

Then when he moved into a new market, he just offered to sell a company's tours (several companies) for a small cut of their profit. We'd put up some tour pages and run Facebook ads to test them. If that worked well, we'd work on the SEO rankings. This is how he'd enter the market, but if it proved lucrative he'd do one of two things:

1 - Stop selling for others and ran tours himself (exactly how you said, hire guides, etc). But more often than that he would
2 - Start tours that didn't compete with his partnerships.

I worked with him for 7 years and we grew revenue all 7 years.

One more thing. I know that 99% of these folks are one time deals, but see if you can find little upsells. Would you like us to provide a picnic lunch? Would you be interested in a champagne toast at the end of your tour? Do you need to rent shoes (or gear, etc)?

If you treat yourself like a concierge of fun, you may be able to drive up the average ticket.

And if you do move into the staycation market but providing unique experiences, I'll bet you find an increase in repeat business.

Two more sources of repeat business for when things are getting back to normal...

Break into corporate groups. And see if you can find travel agents from other countries who routinely send people to the Big Apple. Get on their radar. You know who is still uses travel agents? Rich people. Big companies. Travel agents can be an excellent source of customers.

Hope that helps.
 

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Armen9

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Sounds like an opportunity to get locals to enjoy more of that beautiful city of yours. I'm always shocked at how many natives never go to see the sights.

People everywhere are all couped up looking for something to do. Start marketing Staycation events. Find some events, make some events (taking any necessary precautions, of course).

On the subject of spending 100k, probably not the best time. I don't know what all you are looking to do, but is there any way to chunk the upgrades into smaller sizes? I only ask because we built a custom website/tour booking system/business management tool for a client years ago for about a third of what you are looking to do. Not sure what it would cost today, and customers are way more savvy, but if you shop your project around perhaps you can get a lower quote.

As for expanding, have you considering moving into markets as an affiliate first? That's what my client did. We started him locally, built up his site's authority, got SEO business and traffic going.

Then when he moved into a new market, he just offered to sell a company's tours (several companies) for a small cut of their profit. We'd put up some tour pages and run Facebook ads to test them. If that worked well, we'd work on the SEO rankings. This is how he'd enter the market, but if it proved lucrative he'd do one of two things:

1 - Stop selling for others and ran tours himself (exactly how you said, hire guides, etc). But more often than that he would
2 - Start tours that didn't compete with his partnerships.

I worked with him for 7 years and we grew revenue all 7 years.

One more thing. I know that 99% of these folks are one time deals, but see if you can find little upsells. Would you like us to provide a picnic lunch? Would you be interested in a champagne toast at the end of your tour? Do you need to rent shoes (or gear, etc)?

If you treat yourself like a concierge of fun, you may be able to drive up the average ticket.

And if you do move into the staycation market but providing unique experiences, I'll bet you find an increase in repeat business.

Two more sources of repeat business for when things are getting back to normal...

Break into corporate groups. And see if you can find travel agents from other countries who routinely send people to the Big Apple. Get on their radar. You know who is still uses travel agents? Rich people. Big companies. Travel agents can be an excellent source of customers.

Hope that helps.
BizDad, hi! Thank you for your reply! It helps a lot! I can see you are very familiar with the travel niche :)

"People everywhere are all couped up looking for something to do. Start marketing Staycation events. Find some events, make some events (taking any necessary precautions, of course)."
- i will look into staycation, to be honest it's the first time i hear this term.

"Then when he moved into a new market, he just offered to sell a company's tours (several companies) for a small cut of their profit. We'd put up some tour pages and run Facebook ads to test them. If that worked well, we'd work on the SEO rankings. This is how he'd enter the market, but if it proved lucrative he'd do one of two things:
1 - Stop selling for others and ran tours himself (exactly how you said, hire guides, etc). But more often than that he would
2 - Start tours that didn't compete with his partnerships.
I worked with him for 7 years and we grew revenue all 7 years."
- could you please expand about it? i'd like to learn more!
--- what kind of targeting / ads / funel did you use for Facebook ads? We tried facebook ads but got 0 results.
Lots of visits, but 0 sales.
--- what market was he serving? USA? Did he try to specialize within each niche? (example "best experiences in sf", or did he try to cover wider market - example "best experiences in US" or even "best experiences in the world")
--- did he have other means to provide value / monetize tourists other than tours?
Cause tours have quite a few cons:
-it’s very people dependent. You have to hire guides, etc. And people don’t scale well. And you can’t be cheap on guides cause what ever effort i put in tour (idea route, script, visual materials) 60-70% of guests satisfaction comes from guides personality, energy, people skills, etc.
-it has high administrative overhead. Now all major tour marketplaces (viator, klook, get your guide) force 24h refund / reschedule policy. So scheduling / rescheduling / refunds are quite often.

"As for expanding, have you considering moving into markets as an affiliate first? That's what my client did. We started him locally, built up his site's authority, got SEO business and traffic going."
- that's exactly my plan for some of the offerings. Cause some tours we simply can't do now. They are too capital intensive and risky to enter before we secure our position with constant traffic sources / interest.

"One more thing. I know that 99% of these folks are one time deals, but see if you can find little upsells. Would you like us to provide a picnic lunch? Would you be interested in a champagne toast at the end of your tour? Do you need to rent shoes (or gear, etc)?"
- great suggestion!
 

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