If someone books an organized tour or adventure excursion, what determines how much they’ll pay? Where does all that money go?
I believe most of the people reading this blog are independent travelers. people who are good at figuring out how to get the best experience for the best price. My general goal here is to show travel lovers how to get away more no matter what their budget, starting with choosing some of the cheapest places to travel.
In my alternate role as editor of a publication that focuses on higher-end travel in Latin America though, I see how the other half travels as well. And some of them are having a really great time.
I just attended two travel industry trade shows in that region where business-to-business buyers and sellers conduct days of tightly scheduled appointments to find good fits and work out deals. No consumers were at either show. This is where the people collecting the money figure out where and how to divvy up that money.
How the Travel Tour Business Works
Most people who book organized tours, even the ones that travel that way all the time, have no idea where all that money goes. They give their credit card to Tauck, Backroads, or Abercrombie and Kent and figure that’s who is taking care of them the whole time.
Sometimes that company does take care of them the whole time, by owning assets (vans, kayaks, small ships), having direct local employees, and a local business license. That was the case when I went on a bike tour with Lifecycle Adventures in Oregon . More often though, especially for international trips, the tour operator is more like a marketing shell. They bring in the customers, get them ready, and choose great partners on the ground. Once you the customer get off the plane in the destination, the original company you booked with is only available by phone (with the occasional exception of one tour leader) to help out when things go wrong. Still, it’s why many travelers—especially nervous ones—book with a company like this. They want to be able to call the Abercrombie & Kent office back home and get a real person who will make things right.
So who is actually doing the tour? That would be the “inbound operator” in the country. It’s probably someone you’ve never heard of and they might not even display their own company logo anywhere. Often they will have guides change their polo shirt according to whoever the tour was booked with and they’ll switch out the magnetic signs on their van. They’re doing work for Backroads, but they don’t work for Backroads. It just looks that way on the sign.
There’s nothing inherently wrong or deceitful about this and in fact it’s probably going to make your tour go better. Would you rather have a guide who is stepping into the country for the second time or one who has lived in that jungle his whole life and knows all the local fixers? You want local experts, which is what the inbound operators are. The better the company you booked with in your own country, the better (and better paid) local personnel you’ll have on the ground. Your one fat fee paid for good guides, safe drivers, good equipment, and a backpack full of first aid supplies around at all times.
How This Impacts the Price
As you’ve probably figured out now, when booking with a tour operator in your home country, you are essentially paying a middleman, a broker. They set up an itinerary, market it, and get you prepared before you go. Then the middleman hands you off to the local tour company, which is the one really doing all the work.
So the obvious step to take if you want to save some money is to book your tour in the destination country instead. In some cases you can do it with that exact same company Backroads uses because the local company takes direct bookings as well. In other cases you can’t though because they’re “wholesale only.” You’d have to go to a competitor to set it up. But when you do, you’ll likely pay between 60-90% of what it would cost to book it in your own country. If you wait until arrival and wing it, you can easily cut the price in half. I’ve lost count of how many budget travelers I’ve talked to who have done that in the Galapagos or Peru, for instance.
What About Hotels?
This is where it gets tricky. It is not uncommon that you will pay far more booking a hotel room than the boisterous people down the hall from that tour group paid. Anything bought in bulk tends to result in a discount and that applies to hotel rooms as well. This is true for Cox & Kings at the top and true for G Adventures at the bottom. Since the big tour companies book so many rooms at once, you can actually upgrade your hotel experience by being on one of these tours. You don’t really know how much each place costs though: that’s all rolled into the total price. Usually for the tour operators there are tiers available, with the highest tier only staying at the best of the best properties along the way.
There’s also some comfort in not having to make a bunch of decisions every day that are going to tax your mental energy while you’re on vacation. You don’t have to choose a hotel for each spot or worry that it’s going to be an unhappy surprise. (Usually).
Why Pay a Tour Company?
“I just want to pay my money and have someone else take care of all the details” is a typical response from travelers who do a lot of these tours. For those with more money than time, just making a phone call and putting all the decision making in someone else’s hands is a big relief. That’s worth far more to them than the 10 or 20% they could have saved by figuring it all out on their own.
There’s also an element though that most shoestring travelers don’t see or know about: special access. Tour groups that have ponied up a little dough have relationships in place, get into sites before others, hear talks from experts, get to see things the average wanderer never gets to see. I once did a tour with the top company in the Yucatan Peninsula and got to enter Chichen Itza just before sunset, after the park was officially closed and all the vendors had packed up. There were a total of ten of us plus two credentialed archaeologists—one of whom had made famous discoveries in Palenque. “Probably 90% of what the regular guides tell you here is either outdated or just bullshit,” he told us.
A very rare shot in this place…
There’s also the camaraderie, which is especially nice if you want some different people to talk to and share the experiences with. A lot of first-time tour buyers with G Adventures or Intrepid Travel are hesitant because they don’t consider themselves “organized tour people,” but then they end up booking with the company again because they loved the experience. It’s especially good for solo travelers who want a break from having to try so hard on the road to get from A to B without hassles and to find new friends along the way.
Also, some think of it as a reward after having some success in life. “I’m not on a backpacker budget anymore and I want to get the absolute most out of this trip,” I heard one 30-something vacationer say, relishing the thought of not having to research hotels and arrange transportation at every stop.
If you’re wondering who is still using travel agencies, it’s rich people. They want someone else to sweat the details. At 1:00 a.m. last Thursday night, an inbound tour operator from Iceland told me after a few beers, “Our average price for a one-week custom trip is more than $10,000 per person.” That’s after airfare, by the way.
There’s no wrong or right answer on this spectrum, but just be aware that every person inserted into the process is going to cost you. If the service is worth it, pay with a smile. If it’s not, you can probably do better on your own by buying direct.
