NTA tour operators don’t speak with a single voice. They specialize in particular markets and activities, taking clients to differing destinations. Yet when asked about the outlook for 2024, they’re all on the same page, expecting higher sales, higher costs, higher pricing, and yes, higher profits.
All those highers just might add up to a new norm.
“Sales are through the roof: Just about everything we offer sells quickly,” says Mark Hoffmann, CTP, owner of Sports Leisure Vacations. “Profits took a huge hit last year—in part because of the huge increase in food and bus pricing—but margins since March have been back in line or slightly better than pre-COVID.”
Hoffmann’s company works primarily with mature travelers, offering an upscale product and smaller groups. He says that even though they have raised prices considerably, there’s isn’t much pushback “because seniors are still playing COVID catch-up when it comes to travel.”
Chase Poffenberger also has a positive eye on the road ahead. “We expect 2024 to be a strong year,” she says. “The speed of our recovery was delayed as we replaced several key accounts that were lost during COVID, but enrollments for 2024 are starting out ahead of 2019.”
Poffenberger is vice president of Academic Travel Abroad, a B2B international company whose group travelers affiliate with other organizations: a museum, brand, media company, etc. She said international suppliers’ rate increases remain higher than usual—from 10% to 30% year-over-year—and the company’s labor costs for their D.C.-area employees has increased some 25% since 2019. Still, ATA tours have been profitable.
“In the last two years, gross margins on our tours that operated exceeded our expectations,” Poffenberger says. “We just wish more had operated!”
Domestic costs are also running high, according to Michelle Pino, co-owner of Massachusetts-based Northeast Unlimited Tours, a receptive tour company. “Although consumer inflation appears to be leveling off, prices over the last three years have increased exponentially across the board. In many cases, we’ve witnessed hotel rates and meal prices nearly double since 2019, alongside significant rises in motorcoach and fuel costs,” she says.
Even with elevated costs, 2023 has produced solid growth and profits, Pino says, and bookings for 2024 are pacing ahead of previous years. People simply want to travel.
“Our cost increases have been widely accepted, as people experience inflation everywhere and understand the higher tour package prices,” Pino says. “Travel has been far more important to them, so they’re willing to pay the price.”
Several things can factor into the decision to travel despite high prices, says Paul Larsen, president of Ed-Ventures, a Minnesota-based company that specializes in faith travel. He points out that the cost of his company’s trips is running about 20% higher than before COVID, yet clients are willing to pay.
“The faith-based market is huge, and price is not the first criteria in the decision-making process,” he says. “These are once-in-a-lifetime trips for some travelers, and for others, it’s still the effect of having been locked down for those two years.”
Airfare is the key component of increased costs for his company, Larsen says. “The flight that was $1,200 not that long ago is now $1,700 and, for some dates, it’s over $2,000. Hotels and other parts of a tour are up, too, although not to the same level as airfare.”
Pricing for 2024 is still not stable, according to Michael Holzer, and it’s a different type of transportation that he finds largely responsible.
“Pricing for motorcoaches has increased by nearly 100% post-COVID and is causing 10% to 20% increases in our trip costs for 2024 over 2023,” says Holzer, owner of Educational Travel Adventures in Freehold, New Jersey. “We have seen modest increases in restaurant and hotel pricing post-COVID, and those increases are somewhat predictable, but transportation costs are a wild card and are inflating the overall prices for travel significantly.”
Travelers might hope that costs moderate or even drop as inflation eases, but veteran tour operators like Ted Nelson aren’t holding their breath.
“I think higher prices are here to stay,” says Nelson, the president of Massachusetts-based Hospitality Tours. “I also believe we will have another year or two of increases as the suppliers who did not make the huge leap this year try to catch up in 2024, and then we’ll see a relatively consistent annual increase of 10% to 15%.”
In Nelson’s experience, major events can spark legacy changes—ones that become permanent—and we’re living such a change now, following the pandemic.
“The permanent legacy of COVID will be higher prices,” he predicts. “Hotels may never return to full-service housekeeping, and add-on fees and special taxes will become normal—and more and more difficult to negotiate away.”
Nelson says we have entered a new generation of travel, and the travel professionals who thrive will be those who embrace change and become better marketers at selling higher-priced travel. “If my projection becomes reality, one who anticipates lower pricing and bases their strategies on that will be hurt.”
Larsen agrees. “I think we are looking at the new norm,” he says, adding that the bottom line remains questionable, especially with the rising cost of marketing.
“NTA is the best value for that, though,” Larsen says. “This is a relationship business, where good service and relationships are far better than a dollar spent on marketing. And NTA relationships are priceless.”
Photos by Normand Huberdeau