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 -- such as highly tailored tours or offering 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 millennial and Gen Z travelers.
Suppliers in the Asia Pacific, Latin America and the Middle East-Africa regions attract younger travelers, fueled by 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.