Operations

How To Create Your Own Destination Tours

Jim Luff
Posted on February 6, 2018

What Is A Tour?

The dictionary defines a tour as traveling from place to place, a long journey including visiting places or taking a brief trip led by a guide. With that definition, you are limited only to your imagination as to where you go and how long the trip will last. As buses and large vehicles distinguish our industry from TNCs, tours have become a way of securing new business and new channels of revenue. Everyone loves a group trip and buses make the adventure more fun.

Permitting & Licensing

One factor to consider is some states, such as California, require separate operating authority known as a sightseeing permit to sell by the seat. The permit may cost an additional fee. Also, do not engage in tours that cross state lines unless you have federal operating authority from the USDOT.

Organizing A Concert Or Sporting Event Tour

One of the easiest tours to assemble is a trip to a concert or sporting event. You will sell the ride and admission for one price to each passenger. After selecting a concert act and venue, contact the venue to ask for group pricing. For example, Hollywood Bowl offers a 20% discount on group sales when more than 10 tickets are purchased. If your bus holds 50 people, you would buy 50 tickets. If tickets are $80 each and you pay $64, your profit is $800 on ticket sales alone. The same type of purchase can be set up for a sports event by working with the venue. Don’t forget to ask about parking fees and factor that into the per seat price.

Social Media Marketing

The best place to market tours is on social media. There are a few keys to success. The first is setting a date far enough away that people can plan for the day off and the money. Collect a non-refundable deposit of one quarter of the total price. If your total price is $150 per person, you would collect $37.50. This is affordable for most people and locks in their seats. Non-refundable deposits will become another source of revenue. Post frequent updates such as “only 10 seats left” to drive bookings. You just might need a second bus. Never display any price other than the per seat price. You will see in the example how to calculate your pricing using two different methods.

Doing The Math

Mark Ups & Pricing

Creating tour pricing is similar to preparing a standard charter quote. You can use either an hourly rate or per mile rate as long as you are calculating based on using a standard group charter rate. Packages will not be successful trying to use a luxury coach hourly rate like $200+ as the per seat price will be too high to look attractive.

Sample Trip: Assumes a boarding time of 4 p.m. and end time of 1 a.m. for a total of nine hours with 206 live miles.

Total Mark-Up Method

In this method we will add up all the costs associated with the trip as raw costs and add specific mark-up percentages to determine the per seat selling price and gross profit potential:

Wages: $280  (Assumes 11 hrs w/overtime and employer costs)

Fuel: $88 (Assumes 27 gallons of fuel @ $3.21 per gallon)

Concert tickets (50): $3,200 (Assumes 50 tickets @ $64)

Parking fee: $45        

Total Cash Cost: $3613 (cost per seat = $72.76)

Add 25% mark-up: $4,516.25 (cost per seat = $75.27; gross profit = $903.25

Add 30% mark-up: $4,696.90 (cost per seat = $ 93.94; gross profit = $1,083.90

Add 40% mark-up: $5,058.20 (cost per seat = $101.16; gross profit = $1,445.20

Line Item Calculation Method

In this method we use full retail rates to determine the per-seat selling price and gross profit potential. The full $80 concert ticket price is used in this calculation.

Vehicle Charter Fee: $1440 (cost per seat = $28.80)

Concert Tickets (50): $4000 (cost per seat = $80)

Parking Fee: $45 (cost per seat = $.90)

Total Retail Cost: $5,485 (cost per seat = $109.70)

You can see there is a difference of $8.54 between the two methods when comparing a 40% mark-up on cost.

Bottom line: Always do your math and know your profit goals before offering a tour, trip, or contracted set of runs

Great Ideas provides a broad range of information about new ideas and approaches in management, human resources, customer service, marketing, networking and technology. Have something to share or would like covered? You can reach LCT contributing editor and California operator Jim Luff at [email protected]

Related Topics: charter and tour, Jim Luff, limo licenses, service pricing, social media, social media marketing, sporting events, tour buses, tourism

Jim Luff Contributing Editor
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