As a tour and activity provider, you need to know that you don’t need to set a fixed rate for every tour and activity that you provide.

For example, if you offer one-hour horseback riding tours throughout the countryside, you should not create a fixed price of $100 per person, per tour. You need to develop a pricing strategy that allows you to take advantage of the influx of customers during the high season, and still keep travelers booking your tours during the traditionally low season. One of the best ways to do this is through yield management.

Yield management is the practice of implementing a variable pricing strategy that anticipates and understands consumer behavior during different time periods in order to maximize the revenue of a perishable resource.

In the case of tour and activity providers, the perishable resource is the limited number of tours that are available on a given day.

Why is Yield Management Important for Tour Operators?

With yield management, you can increase bookings and have a steady business during the low season for travel.

For example, you can implement a seasonal pricing strategy. During the slow and chilly winter months, you can offer discounted pricing to interested tourists, as this could entice them to book a tour when they otherwise would not. You also can adjust your pricing based on the day of the week, or even the time of the day. You can adjust your yield management techniques in order to fit the unique needs of your specific business.

With a variable pricing strategy, you can maximize the profits that you earn during the busy high season. During the summer months when your tourism business is booming, you can set a higher price for your products because they consumers will be likely to book anyway. You can increase your profits during this busy time of the year, and stockpile your savings for the slow season.

How Can Tour Operators Implement Yield Management?

Tour operators, especially small, local business owners, can implement yield management by employing a mark down pricing strategy as well as a mark up pricing strategy. In a mark down pricing strategy, you would offer your products at a discounted rate in order to increase the number of bookings you receive. By offering a discount, you get more customers than you would have if you had not created the promotion, and therefore increase your profits. With a mark up pricing strategy, you increase the cost of your tours before offering a significant discount. The customer feels like they are getting a deal, but you are able to earn more profits on each individual tour that you book.

Ultimately, yield management will help you increase revenue by allowing you to book your tours and activities at all times throughout the year, and maximize the profits that you earn. This helps you grow your business, create new tours and activities and continue to generate interest in your local area.


Want to know more about yield management?

This article is merely an introduction to yield management, there is a lot more to learn about how to juggle demand, inventory/capacity and price. For instance, how you can apply it to your own tour and activity company? Comment below with any questions that you might have!

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