Tour Operator

From a macroeconomic point of view, tour operators are divided according to the geographical origin and destination of their customers.

• Outbound operators: Such operators are based in the traveler’s home country and organize trips to foreign destinations (e.g., a UK company selling trips to Thailand). The focus of their business is marketing to their local source market.
• Domestic operators: These are companies that organize travel experiences for residents of their own country (i.e., a US operator selling Grand Canyon tours to Americans).
• Inbound operators vs. DMCs: An inbound operator is located in the destination country and packages local products to sell to international buyers (often outbound operators). While often confused with a Destination Management Company (DMC), the focus is different. A DMC is normally logistics heavy, carrying out complex ground operations for corporate events, MICE (Meetings, Incentives, Conferences, Exhibitions), and large groups. An inbound operator is product-heavy, designing leisure packages for export.

Beyond geography, tour operators are defined by the particular style of travel experience they construct.

• Multiday and group operators: These companies operate fixed-schedule/fixed-itinerary tours (e.g., “10 Days in Italy”) for groups. Their logistics are complex, including bus charters, guide management, and block inventory management at hotels in multiple cities.
• FIT (Free Independent Traveler) operators: These are the operators that use dynamic packaging technology to create custom, non-group itineraries for individuals or couples. They enable travelers to plan their own bespoke trip and not be bound to a bus or even a planned schedule.
• Specialist and niche operators: Companies that target a particular activity or demography as opposed to simply a destination. Examples would be ski specialists, safari operators, or culinary tour providers.
• Luxury operators: These companies are aimed at the high-net-worth people. Their value proposition is not price, but exclusive access — offering private transfers, after-hours entry to museums, and high-touch 24/7 concierge support.

As they deal with complex bundles instead of individual transactions, tour operators need specific software capabilities in comparison to traditional OTAs.

• Inventory management: Multiday operators need systems to manage seat caps on coaches and room blocks.
• Itinerary builders: FIT and luxury operators use visual tools to enable agents to drag-and-drop components to build complex and day-by-day proposals.
• Quoting systems: An important backend tool that computes the total margin of a multi-component trip, taking into account seasonal rates of suppliers, taxes, and buffers for currency exchange.