The multiday tour market is growing, which is good news for operators, but that development is slow and uneven, according to new research from Arival.
The organization released a 47-page report on the state of the tours industry, finding that even though the sector saw modest progress last year at 4%, less than half of suppliers reported growth. But even with the slow development, nearly 75% of operators reported profitability.
Large brands are more likely to report profits, while smaller companies that are laser-focused on product strategies -- think offering highly tailored tour types or just a handful of products -- are more likely to achieve higher margins, Arival found.
Sightseeing and adventure tours are the most popular among offerings. But gone are the days when customers want to join a group filled with dozens of travelers. Now, group sizes are getting smaller, a trend that's only grown in popularity.
Arival found that 68% of operators offer tours with groups of up to 10 people, while 63% of companies feature trips with groups of 11 to 20 guests. Only about one-third lead itineraries of more than 30 travelers.
Couples, private groups and families are driving demand, with couples representing the largest share of customers at 64%.
Areas where the tour industry can improve
The report flagged a vulnerability for U.S.-based tour providers: they underserve younger travelers. These operators rely heavily on travelers who are age 45 and older, while failing to attract younger millennial and Gen Z travelers.
Suppliers in APAC, Latin America and the Middle East and Africa attract younger travelers, fueled by stronger growth in adventure travel.
The research firm also tapped into another vulnerability in this industry: technology. Online booking is underdeveloped in this sector, with opportunities for more technology adoption. Sixty-one percent of tour bookings are made "offline," which Arival describes as through phone calls, email inquiries and third-party resellers, rather than directly through a company's website.