Business Models

Useful Info


A custom travel planner can work in a variety of business models. There are pros and cons to each situation and it helps you to know the differences in order to get the most from your custom travel planner.

We’ve highlighted the most frequent below and explained how they are paid, how their product might vary from the alternatives and how their business model differs from the others. At the end, I’ve listed some pros and cons to consider for each situation.

 

Travel Agent – a travel agent who is also a custom travel planner will usually be known as a “Destination Specialist”. This term is an overall term with no requirements, and qualifications vary widely. On the fully qualified end, there are specialists who have traveled to their destination regularly for years; know all the major hotels and general managers, attend trade shows and continually work at increasing their knowledge. On the opposite end are agents who have taken a test or two offered by a tourist board and hung up their shingle. Often they have never even traveled to the country or, if they have, it has been as part of a tour arranged by the tourist board to meet with and promote specific hotels and attractions at the site. Ask your agent, before engaging them, when the last time they were in the country and what they did on their most recent trip. Then ask them about the trip before. A travel agent will usually work with either a tour Company or a DMC (see below) and generally make their money on commission paid by the company providing your tour services.

 

Destination Management Company (DMC) – these companies are located in the country or place you are going and are intimately familiar with the situation “on the ground”. They will usually have a wide range of local contacts and can provide outstanding experiences due to their connections. They will usually provide hotels, guides, transportation, airport transfers, special experiences and more. A DMC can provide these services directly to a client but will usually sell services to a travel agent, tour company or other travel intermediary (e.g. one of the internet travel companies). If you find yourself working with a DMC, remember that sometimes they are so familiar with their own destination, that they do not see it like a traveler does. They may not be as prepared to explain to you the differences between your life at home and what you will encounter on your vacation. They may not be able to compare themselves to other countries.  And, as with all companies, their actual offerings may not be a good fit for your needs, so ask questions wisely. Ask them about one or two trips they have planned recently for someone with your client profile. Ask them how they might change that for you based on what you’ve already described about your interests. A Destination management company makes money by packing components of a tour and offering either an unbundled package (where you pick and choose what you want) or a bundled package. Bundled packages are generally a better value as the most favorable hotel contracts usually preclude the company from offering unbundled pricing.

 

Tour Operators – a tour operator can be located anywhere in the world and provide tour services to clients located anywhere in the world. Many famous companies are technically tour operators and actually outsource their ground operations to trusted DMCs. This does not detract from the final product for most situations, but it is an important point to understand when consulting with a Tour Operator for custom services. Most Tour Operators run many group tours, but their outsourced custom planning may not be as excellent as their group tours. Others specialize in custom planning for a range of destinations and choose only highly trusted tour operators on the ground to assist. Ask them how they will deliver their services in the country you will be visiting and how their custom travel services differ from their standard tours. Tour Operators make their money, most usually, by offering a DMC’s package with a mark-up for their services, coordination and knowledge.

 

Ground Tour Operators – finally, there is hybrid of Tour Operator and DMC which could be called a Ground Tour Operator. These are companies that are not located in their specialty area, but do most of their ground operations themselves, using staff “on the ground”. The planners, sales, marketing and business operations are usually in a major first-world country and the operations staff and guides are usually in the destination country(ies). They may sell only to the public, or they may sell through other Tour Operators or Travel agents. This varies widely. Ask them how they put their programs together and how do they ensure the services are delivered. Ask them about special services that they can provide that other Tour operators may not be able to secure (to determine their “inside connections”). As with DMCs, Ground Tour Operators will have hotel contracts to provide some cost efficiencies and make their money by putting together an entire package for the client. In general, you can expect this type of service to cost the most, as it is usually the most specialized, with all the attendant customization costs.

 

 

Here are the pros and cons for each of these four major types of Custom Travel Planner. Understanding who you are dealing with may save you a lot of time and money in the long run:

 

Travel agent:

Pros: Should be familiar with, and can access, a wide range of DMCs or Tour Operators to match your needs more closely. Usually will not cost you any more than if you had gone directly to the source company.

Cons: difficult to find one who really knows the destination well (but it is possible!). They will usually only specialize in a limited number of places, so you will need to find a new one when you travel elsewhere.

 

DMC:

Pros: Should have lots of good contacts and can provide unusual services and/or experiences.

Cons: Usually located in different time zones and may be difficult to consult with when planning details. They are more difficult to vet, so you need to look for local licensing requirements, recommendations, etc., on your own. They can work with a wide range of price points so you need to be certain they have experience with your preferred level (anyone can book a 5* hotel, but do they know the concierge by name and can they get that special pass to the annual event that happens to be taking place during your visit?)

 

Tour Operators:

Pros: Will usually have contracts that can provide a better price for fully bundled services. Because they often cover multiple destinations, if you find one you like you can use them for future trips (although bear in mind they may not do their own ground everywhere and so the service might vary widely).

Cons: Sales staff usually have experience with a wide range of destinations but may not know one in-depth. They may not have a single destination focus, but instead, offer a wide number of places they cover (e.g. all of South America vs. only Peru).

 

Ground Tour Operators:

Pros: Will usually focus on a very narrow niche and know it well; their staff outside of the host country will often be better versed in comparing the destination to others so can communicate better with clients in the proposal phase.

Cons: May have good pricing, but usually will cost more due to their narrow specialty. You have to find a new one every time you go to a new place and need custom travel services. If they are a small, well-regarded company, they may not be able to assist you due to being “sold out”, even for custom planning.

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