Dos and Don'ts

When entering the international marketplace, there are several things to consider and prepare for. Here's our quick reference of Dos and Don'ts.

Things to Do

• Define Your Objectives. What exactly is it you expect to achieve? Publicity? Trade contacts?  Inclusion in Tour Operator catalogs? Special interest travel? Business and convention visitors?

• Analyze Your Tourism Product.  How accessible is your destination? What airline services are available? Do you offer a shuttle service from the airport? What is the capacity of your accommodations industry? Rental cars? Commercial or public attractions? Scenic places? Historical landmarks? Sports and Entertainment? Climate? Culture and Folklore? Special Events? And most important: Would someone really travel 5,000 miles to see it or experience it?

• Identify Your Main Selling Points. Why should an international visitor come to your destination or deal with your company? What makes you unique? Quality of services? Language resources?  Prices? Destination expertise? Uncrowded? Lively? Great shopping?

• Establish Your Rates. This is becoming the weakest link in the region, evident by the fact that Tour Operators are hungry for our kind of products and want to include them in their brochures. But if your product is priced either "rack rate" or with a simple 10% travel agent rate, the Tour Operator will have absolutely no financial incentive to use up valuable brochure space to promote your product for free.

• Target Your Markets. Use State and RMI research data. Analyze prevailing patterns of tourism, both domestic and international. Decide on the method of segmentation. By country? By market segment? Or in combination?  Many don't realize that the single biggest market in the world is not Japan, or Taiwan, or Korea.  It's the European Community.

• Ask and Listen. Ask the Tour Operator and overseas rep whether they think there is a demand for your product. Listen to what they say about the market and how you might promote your product.  Don’t do all the talking during your appointment. Ask what the Tour Operator needs. 

Things to Avoid

• Don't Enter Foreign Markets Without A Long-Term Commitment. Tour wholesalers and operators need time to develop new products and introduce them to their clients. And they need to know that you are someone who will be there next year.

• Don't Be Adamant About What You Consider Your Best Feature To Be. The view from Frankfurt and London is different from the view from the sagebrush. What may be popular domestically may be a complete bust in foreign markets. Sometimes what you don't have, like a large population base and resort amenities, can work in your favor. Sometimes western history doesn't excite someone who lives in a 250 year old house and is used to seeing historical buildings that are over 800 years old.

• Don't Push A Product That Won't Sell. Trust the Tour Operator and wholesaler to know his clients. You are both in it together, and nobody makes any money on something that doesn't get sold. Be prepared to accept alternative suggestions, but don't compromise your product or your integrity. 

• Don't Panic If Nothing Happens In The First Two Years. Any new product has its introductory phase. That is when it needs support and patience. Plan for the long haul. Remember that it might take a year to interest a Tour Operator in your product. When he/she agrees to sell it, it will still take a year to market it in a brochure properly. And if the product is purchased by a consumer, it is likely to be six to eight months before they take the trip! Be patient. 

Networking & Packaging

Networking

Many business people contend business networking is a more cost-effective method of generating new business than advertising or public relations efforts. This is because business networking is a low-cost activity that involves more personal commitment than company money.

Unfortunately, most people start with a networking group by looking for immediate gains - that is, for favorable results for themselves. If this is what you are trying to achieve, you are networking for the wrong reasons and will be sticking out like a sore thumb. It would be more beneficial to belong to a networking group of two people who can help each other often than a large group of people who are interested in only helping themselves. One must be willing to recognize that this is a long-term project. Each player must prove his or her worth. It should be as rewarding to help out a contact as it is to be helped by one.

The 10 Commandments of Networking:

1. Thou shalt drop the "what‘s in it for me?" attitude.

2. Thou shalt listen.
   

3. Thou shalt build a relationship.
   

4. Thou shalt give the first referral.
   

5. Thou shalt not tell others of the referral you require; thou shalt "show them" with a story.
   

6. Thou shalt be specific of the type of referral.
   

7. Thou shalt reciprocate when appropriate.
   

8. Thou shalt participate in the network executive, functions, and network time.
   

9. Thou shalt thank the person who gave a referral.
   

10. Thou shalt follow up on the referral within 24 hours.

Business networking is productive and fun, and that is why it will always be part of the Bigger Picture.

http://sbinfocanada.about.com/cs/marketing/a/networkingmm.htm

Packaging

Benefits of Packaging

In the hospitality and tourism industry, packaging is the process of combining two or more related and complementary offerings into a single-price offering.  Packaging is a popular technique used for attracting customers because packages make travel easier, more convenient and implies a value.  It can create a variety of benefits of participating businesses: 

• Increased convenience. Trips can be time consuming and difficult to arrange. Several telephone calls and letters may be required to arrange for tickets, accommodations, reservations, and other components of a trip. A package allows a customer to arrange many components of a trip with one call or letter and one payment, saving the customer time and aggravation.

• Greater economy. Businesses that package can frequently purchase tickets, meals, and other package components at wholesale prices. The business can add in the cost of packaging and still provide a competitive price to the customer. Thus, the cost to the customer is usually more economical than purchasing the package components individually.

• Popular programs and activities. Visitors and travelers are often unfamiliar with many of the activities and attractions in an area; a package can help customers find them easily.

• Specialized interests. Packaging provides a unique opportunity to design components of a package for specialized interests. These so-called "benefit bundles" can include a package component not readily available to individual customers. For example, a package weekend may feature a cooking demonstration by a well-known chef or a lecture by a well-known author.

• Improved profitability. During peak or high-demand periods, use packaging to add value to an existing product. Purchasers may be required to stay a prescribed period or purchase a combination of goods and services. Packaging may also allow a business to price its product at a premium by adding special goods and services.

• Joint marketing opportunities. Packaging can allow the business to reduce marketing costs or start a new program one could not normally afford by joining with one or more businesses to conduct a marketing or advertising program.  This strategy can be especially effective if the businesses involved have similar customers.

• Improved target marketing. Packaging can be an effective tool to tailor tourism and travel products for specific target markets. Examples can be ski, sports, or theater weekends. Good market research is needed so an appropriate mix of tourism and travel services will meet the needs and desires of a target group of customers.

Before developing a tourism packaging program, the businesses should ask themselves the following questions:

1. Are you willing to do market research to determine who your customers are and what they want?

2. What are the potential attractions, businesses, or marketing service firms that could provide a part of the package? Meet with the managers of these businesses and public attractions to discuss their interests and ideas.

3. What are potential marketing and promotional networks that will help spread the word about your product? Convention and visitors bureaus, chambers of commerce, retail travel agents, clubs and organizations, state offices of tourism, and other attractions or travel businesses all have the potential to play an important role in merchandising your package.

4. Does your business have the ability to manage and service the customers you generate through your packaging program?

5. Are you prepared for a risk? Because you will be including customer service activities that are not under your direct control, you will be required to develop formal, written agreements between the cooperating businesses.

Putting together a successful package is not easy. However, by following the suggestions listed below, the chances of success will be greater.

• Include attractions or demand generators. Every package needs one or more core attractions. These could be tickets to a special event, specialized programming, or reduced prices.

• Provide value to the customer. Many travelers buy packages because they perceive they will receive greater value for the travel dollars they spend. For some, this translates into a package that costs less than the sum of the regular prices of individual elements. Almost everybody is interested in getting something for nothing or next to nothing.

• Be well planned and coordinated. A successful package must be well planned and coordinated. Each element should flow naturally from one to the next. Use a theme to hold the package together and create a positive experience for the tourist.

• Offer consistent quality and compatibility among elements. Many customers buy packages because they expect consistency in quality. Combine only package components that are compatible and enhance the overall quality of the traveler's experience. Customer dissatisfaction with one part of the package will often spoil the entire experience.

• Cover all the details. The temptation might be to throw a package together, but the close attention to detail makes some packages more successful than others. Remember, it is often the little things a business does for guests that matter the most. Some things to consider include a policy on refunds and cancellations and complete information on all package elements included in the price, as well as items not included.

Determine if the package is feasible by applying a breakeven analysis to help determine how many packages a business must sell before earning a profit.

http://web1.msue.msu.edu/imp/modtd/33700412.html

Commissions

1.  Know the definitions of rack and net rates.

2.  Expect to provide the following commissions, or a net rate reflecting the following discounts from your rack rate, when dealing with the international market:

Business Type	Percentage
U.S. Receptive Operator	25-30%
Overseas Wholesaler or Specialty Tour Operator	20-25%
Overseas Retailer (travel agency)	10-15%

The U.S. Receptive Tour Operator (RTO) works directly with other tour companies, not the consumer. Examples of this type of company are Rocky Mountain Holiday Tours, America 4 You, AlliedTPro, ATI, etc. They assist Tour Operators by planning itineraries and programs which are wholesaled to the overseas Tour Operators to sell to their customers through retail travel agencies. The receptive operator develops a document called a tariff, which lists all the accommodation net rates and is not for public distribution.

There are three links in this chain (the receptive, the overseas Tour Operator and the travel agent), so each one gets paid 10% for their efforts. 

The Overseas Tour Operator (Wholesaler) or Specialty Tour Operator sells his product through retail agencies, so they have to pay the retail travel agent 10% for their selling efforts, and need 10% for themselves. The overseas Tour Operator generally produces a four-color brochure including all tours and product for sale which is distributed directly to the consumer and/or to travel agents. Many operators are transitioning to posting their offering only on their website and have discontinued the production of a brochure.

The Retail Travel Agent is selling the product of the overseas wholesaler or specialty Tour Operator directly to the consumer, and receives 10-15% for his efforts.

How do you know who you are selling your product to, and therefore which commission to offer? Sometimes you have to just ask who is buying your product.

Why offer a net rate? The wholesalers and specialty Tour Operators are promoting your product for you by featuring it in a four-color brochure, and promoting it directly to the consumer. You are not paying for that advertising, other than providing a net rate. 

Do not increase your rack (brochure) rates by 20-30% and offer that as your commissionable rate!! If you do this, you can count on never working with that operator again. They can easily discover your rack rates by reading one of the rate cards in your brochure, going to your website or by just calling and asking your front desk or reservations department.

Net rate requirements may differ among the various tour companies, so keep an open mind and listen to what the Tour Operator's needs are. They will tell you what their commission requirements are, and indicate if negotiations are possible.

You can also establish black out dates when the full commission or lowest net rate is not available, but be honest and up-front about it with the operator. Think about offering better net rates during shoulder seasons or slow periods when you really need the business.

The final rate you quote the operator should include taxes, gratuities, etc. (See our Pricing your Product above).

You must be prepared to honor the rates you have quoted, even those quoted over one year out. European operators are obligated to provide the rates printed in their brochures, as outlined by the European Consumer Protection Laws. 

Pricing Your Product for the International Market

It's very expensive for a U.S. Receptive Operator, Overseas Tour Operator or Travel Agency to put your product in their tariff or four-color brochure and to print and distribute sometimes hundreds of thousands of copies of that brochure. Therefore, the operator or agency must be able to make some money for marketing, distributing, and selling your product.

Expect to provide the following commissions, or a net rate reflecting the following discounts from your rack rate, when dealing with the international market:

Business Type	Percentage
U.S. Receptive Operator	25-30%
Overseas Wholesaler or Specialty Tour Operator	20-25%
Overseas Retailer (travel agency)	10-15%

As the above table indicates, the standard commissionable product in the market worldwide includes at least 25-30% for a U.S. Receptive, 20-25% for a Tour Operator and 10-15% for a Travel Agency. Does this all go to the Receptive Operator or Wholesaler?  Absolutely NOT. If, and only if, your product is sold, the commissions are shared down the "Booking Channel" so that the client will (hopefully) be charged an amount that is not exceeding the actual rack rate they would have received had they contacted the supplier direct.

This channel is:

Supplier >>>>Receptive Operator>>>>Tour Operator>>>>Travel Agent>>>>Client.

The following is a formula for determining your net rate and pricing it for a U.S. Receptive Operator or Overseas Wholesale Tour Operator. It is essential that the rack rate be the same rate being quoted domestically to consumers.

*The $100.00 per night net rate is only an example figure*
*This example assumes you're working with a U.S. Receptive Operator at 25% commission*

Determine your Net Rate - this should include overhead, print, promotion and profit, and should be the lowest rate you can live with. Let's say $100.00 per night.

Now you need to add in the appropriate commissions that can be negotiated with the U.S. Receptive you're working with. To add in a 25% commission, divide your net rate ($100.00) by .75. The result is $133.33 and is your Rack Rate.

Now, when your product is sold, the U.S. Receptive will collect his commission and in turn, the Overseas Operator his share, and the Travel Agent who actually worked with the end client receives the remainder amount.

IMPORTANT: Recognize that Tour Operators and U.S. Receptives are your sales force, not people who want to take 25-30% of your revenue. Recognize that the commission is paid only when the sale has been made at no cost to, or effort from, you.

Finally, add local and state taxes for the total rate. Commissions should not be paid on tax.

Tips of the Travel Trade

• Know the difference between a wholesaler, Tour Operator and travel agent. See our glossary.
• Print up separate rate cards if necessary.
• If you're in a bind, offer local rate to locals.
• Have prices available a year to a year and a half, in advance.
• Work with your local U.S. Receptive Tour Operators.
• Recognize that Tour Operators and receptives are your sales force, not people who want to take 25-30% of your revenue.
• Recognize that the commission is paid only when the sale has been made at no cost to, or effort from, you.
• Realize that his is the way that the world does business.

Working with U.S. Receptive Operators

What is a U.S. Receptive Operator?

Answer:  A wholesaler who contracts with both the International Tour Operators and the local (regional) suppliers (lodges, ranches, attractions, services) and will then act as a go-between.

For the Tour Operator it is much easier to work with the local/regional receptive operators for the FIT (Fly-drive) or Group bookings than to have to try to book with each individual property. Many bookings may involve multiple lodges/activities and working from overseas this can be very time consuming and costly for the Tour Operator. They would rather send the information off to the receptive operator and have them do the work, especially since they may be on the same time zone as the supplier and not 8 to 9 hours off. Also, with money exchanges, it is much easier for Tour Operators to send one payment (often on a monthly basis for all of their bookings) to the receptive operator and have them distribute this to all of the lodges/activities booked than to have to send off dozens or hundreds of checks. Some Tour Operators may work directly with a supplier if they feel that they are sending enough business to warrant this action, but for many lodges/attractions they would prefer to work with a trusted and reputable receptive operator.

For the Suppliers, it is easier for them to work with a receptive operator with one contract than to try to keep up with the dozens of Tour Operators that this receptive might be working with – again both for the booking process (sending out contracts to Tour Operators that may only book 20 – 30 rooms a season when they can work with a receptive operator who, through the volume of working with many Tour Operators, may book 150 –200 rooms a season) and for their own billing and payment programs. Most payments are now done through bank transfers and this is a costly procedure both for the sender and the receiver!

As mentioned above, Receptive Operators work with as many Tour Operators (booking partners) as they can sign up; often this is dozens or hundreds of Tour Operators. So if a Supplier is working with the right receptive operators they are really reaching out to many more potential buyers than they would be able to do on their own. Receptive Operators who carry their lodges/activities in their tariff also act as a marketing arm for their services as they will attend multiple trade shows in the USA and in the foreign countries, basically giving each supplier in their tariff a representation at each show! And this service is not paid for until they actually book into your property – and then the payment comes in the form of a reduced cost that they can pass along to the Tour Operators to pass along to the booking client. So, rather than spending several thousand dollars to be at a show in Berlin or USTA’s Pow Wow and not get any bookings – work with a receptive operator who will be there for you – and if you get a booking the few $$ you mark down your service is much less than the $$$$$ you would have spent on your own to get the same booking.

What rate is a Receptive Operator looking for?

Receptive Operators are looking for a net rate (much easier to work with than a commission rate) that reflects a discount off of your “rack rate” of 20–25%.  Does this all go to the Receptive Operator?  Absolutely NOT.  The cost is shared down the “Booking Channel” so that the client will (hopefully) be charged an amount that is not exceeding the actual rack rate they would have received had they contacted the supplier directly.

This channel is:

Supplier >>>>Receptive Operator>>>>Tour Operator>>>>Travel Agent>>>>Client.

In working directly with the Tour Operator, a net rate reflecting 15-20% is all that is required for this channel.

You must remember that each party is working on helping you to sell more rooms.

• The Receptive Operator is marketing your product to reach as many Tour Operators as possible.
• The Tour Operator is actually putting together a marketing tool that will sell your product within their country (high gloss brochure publication, interactive website, etc.)
• The Travel Agent is doing their best to get the business of the client by selling them on an exiting holiday that will include coming into your area – and they are the original contact to get the client interested in the first place (and not going to Florida, Australia, South Africa, etc, etc.)

Remember that the supplier does not pay anything UNTIL a booking is actually made.

How to Work with a U.S. Receptive Operator

There are receptive operators who work with FIT (Fly-Drive programs), those that work only with group programs, some that work with on-line booking services or Host-2-Host program (direct web bookings from the guest into the system of the receptive operator). Some work with lodges/services nationally, regionally or just on a local basis. What each supplier needs to do is find the Receptive Operator that they feel will work best for their lodge/ranch/activity/service. Ask around as to which receptive operators others in your industry are working with, who has best payment programs to fit into when you need to be paid, etc. Then approach these receptive operators and find out what they need to fit your product into their tariff and work out an agreement that will work for both sides. You do not need to work with all receptive operators and not all receptive operators will feel that your product will work for the markets they best work with internationally. Do not give up after one year as it sometimes takes a few years to get a new location or product successfully into programs that are being featured and sold by the Tour Operators through the receptive operators. Be willing to work with the rate structure that is being proposed.

And, very important, be willing to work within your check in/out programs so that the rates given to the receptive operators (or directly to any Tour Operator) are confidential between the two parties. You do not know what rate the client has paid for your product and the client should not be shown what the receptive operator has paid as there will be markup along the chain of bookings (as shown above). If the client should suddenly see a rate that he knows is 25% lower than what he paid, he will have no idea as to why he was not charged this rate (and the Tour Operator and the receptive operator did not take their “commission” out of the cost he has just been shown). The client does not understand that this is a net rate and commissions are added to this rate, along with taxes, service charges, etc.

Meet with the Receptive Operators at shows like the RMI Roundup as they are also meeting with the Tour Operators present at this show and many of the Tour Operators are already working directly with these Receptive Operators. Many will tell you they like your product, please make certain that it is being offered by “ABC Receptive Services” as they will purchase this through their services.

International Lead Follow Up

International lead follow up is key to your success. Here are a few tips to aide in your venture into international marketing.

• People Buy from People they Know and Trust! Establish your credibility with Travel Agents and Tour Operators. Relationship building is essential, so be reliable and demonstrate knowledge of your business or destination, and industry. Certainly don't promise more than you can deliver. Fully disclose rates/costs with taxes and gratuity included or expected. Know that the laws in Europe are strict and enforceable.

• Get Things Right the First Time. Don’t forget your business cards. Include your complete and correct fax number, email, and website address on your business cards and in any follow up communications. Avoid using toll-free numbers unless you know they will work from other countries. Avoid vanity numbers since there are no letters on telephones oversees.

Use the Tour Operator’s business card as your tool. Note their gender for future reference. Is the country listed on the card? City and/or Country access codes for fax and phone? If not, learn to use the telephone book phone service pages or internet sites like www.countrycallingcodes.com

Qualify your leads by selecting the ones that are right for your business. Respond as quickly as possible. Use a shipping or mailing method you know and trust.

DVDs are a great way to show your destination or business to buyers. Utilize the internet for formatting specifics.  State tourism offices use a universal or multi-region format, when creating master DVDs, to ensure that the DVDs can be played worldwide. 

• Shipping and Mailing. Send all the materials or information requested. Use a shipping container that is the right size for the shipment – not too big or too small.  Improperly sized boxes can split, get crushed, or even pop open.  Re-enforce corners and seams with tape.  Protect breakable items, like videos, with bubble wrap, etc.

Unless requested, do not send every single piece of promotional material you publish.  Don’t send the kitchen sink. It's expensive and storage space is usually limited, so they will throw it away if not needed.

On shipping and/or mailing labels, postal code (zip code) placement is important.  Follow the Tour Operators business card example.

• Europe – before city
  
• UK – before country  (example London, N19 5PR)

When shipping documents use appropriate customs forms and fill them out completely and correctly to avoid costly duty charges or returns. Label shipments “For Free Distribution, No Commercial Value," "For Promotional Use Only" and check the" “gift" box on the form. Assign a per unit cost that international customs officers can accept as realistic.

• Cut Costs. Make use of Email. Acknowledge receipt of emails. If possible, use auto-response if you're out of the office for an extended time. Update your email signature to ensure the contact information is current. Use a courteous greeting and closing, as well as a more formal/professional tone.  Curt messages come across as rudeness in many cultures.

For international faxes, dial 011 for international access. Use the correct city/country codes. If you receive a fax from an international Tour Operator, acknowledge it, even if it may take you some time to respond completely and appropriately.  Don’t leave them wondering if you received their fax.

Research shipping options. Combine materials into one shipping container, if appropriate. Communicate effectively with the shipper to discover discount opportunities. Try FedEx’s Great Rates Hotline:  877-463-7408

• Remember:
  • Follow up is following through
  • If you say you’ll send it, send it. 
  • If you make a promise, keep it. 
  • It’s your word, don’t break it. 
  • And, be patient.  Results take time.