How travel packages lead to profits
Travel and tourism business strategist, Gouldsboro
Packaging in the travel and tourism business is all about leverage. To understand the true power of packaging and how it can make your business more profitable, I use leverage — borrowing to improve your capacity to increase the rate of return — as an analogy. In its purest sense, it allows you to borrow other businesses travel products to increase your economic gain.
I define packages as two or more travel products combined to create a third unique product. Most travel packages include a lodging component and an activity component. Let’s look at the numbers to see how leverage works in the tourism business. In the mid-1990s when I was in my early 20s, my wife and I bought a house in Pennsylvania and created a bed and breakfast named the Yellow Breeches House next to a famous fly-fishing river. We sold two travel products: lodging and fly-fishing guided packages. Our rooms ranged from $99-$175 per night in season. Our fly-fishing getaway packages cost $395 per person and included two nights lodging, one and a half days of guided fly-fishing, two dinners and two breakfasts. Either a couple or two guys purchased the fly-fishing packages. At the height of the business, we had three fly-fishing guides, whom we paid $200 for a day and a half of work. We paid two restaurants $20 for each dinner and we served our own breakfasts.
Let’s analyze the numbers and compare selling a room versus selling a package, with two people per room on a two-night weekend stay. A room only with two people would gross $350 in our most expensive room. A fly-fishing package with two people grossed $790. Expenses were $200 for one guide, four dinners for $80, yielding a net profit of $510. We made $160 more on the weekend or $80 more per night by selling a package. That same $175 room was worth $255 per night. Multiply this by more than one room and you can see how your business could become more profitable very quickly.
The power of packaging is that you borrow other businesses’ travel products and, unlike financial leverage, you have no or limited expenses to borrow as you are just forming partnerships with other travel and tourism businesses in your community or area.
An increased profit is the core strength of packaging. Other benefits include the following: The client buying a package is less likely to cancel a trip. Your business fosters new business relationships within your community and you create win-win deals for others. Creating packages enables you to quickly move with trends and fads in the travel and tourism industry; if something is “hot” this season you can create a package for it.
Packaging can be implemented and sold by not only lodging properties but by tour guides and individual businesses engaged in the travel and tourism industry.
Geoffrey Warner, a master furniture designer and creator of the famous “Owl Stool” in Stonington, offers local bed and breakfasts his handmade Owl Stool workshop. Innkeepers are packaging the workshops with their lodging and guests of the inns take a half-day workshop at his studio and go home from their vacation with an Owl Stool, made with their own hands. This is another example of packaging. Next year, Geoffrey plans on selling his own packages directly to his clients in addition to the B&Bs selling and leveraging his areas’ rooms.
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