How Tourico is pushing ahead with its hotel-fuelled growth strategy
Hotels may hate the wholesalers but that is not stopping Tourico whose CEO believes a global bed bank could put OTAs in their place. Sally White reports
Rage they may against the power of the wholesalers, yet hotels and other travel players don’t seem to have dented growth at Tourico Holidays, for one. It is positively booming. This Florida-based wholesaler claims to broker inventory to nearly 4,000 clients in 100 countries, cover 6,200 destinations, receive 155 million searches a day and have an annual turnover of $1.4 billion.Last year it featured in Inc. 5000's 2015 list of fastest-growing private US companies.
Driving its expansion, it is clear, are the emerging travel countries. Asia is key now, the Middle East is coming up and South America did excellent business last year, sales rising by 70%. However, as a private company - founded 22 years ago by former Israeli travel agent (and Israeli intelligence employee) Uri Argov and his wife Miriam - Tourico does not have to disclose its dollar numbers.
It does, however, reveal its strategies. In a recent quarterly up-date, it reported that it had increased its Asian hotel inventory by 20% so far this year. And although it has in recent years “more than doubled its hotel partnerships in the market, amassing a total of over 5000 hotels” it intends to keep on going there.
“Asia is a region demonstrating incredible travel growth, punctuated recently by a very strong first half to 2016, so our primary goal now is to double our hotel inventory again in the next five years,” said Steve Skidgel, Executive Vice President of Global Product Development in his online news release.
“In addition to bolstering our hotel partnerships, we’ve also shifted focus to building out our pre-purchased hotel inventory in the market, growing our ancillary inventory, and continuing to add offices and personnel on the ground.”Bookings of pre-purchased hotel rooms, or ‘ExclusiveDeals’, have increased by more than 100% in Asia in 2016. While ExclusiveDeals makes up just a couple of percent of the inventory, it accounts for over 40% of the revenue!
Tourico has offices all over Asia-Pacific - in Beijing and Shanghai, China, Hong Kong, Tokyo, Japan, Bangkok, Thailand, New Delhi, India and Brisbane. It now plans new ones, in Shenzeng, Seoul and Sydney.
“Over 20 years ago, Tourico pioneered the practice of purchasing room blocks on a massive scale, and today this unique inventory is a driving force behind the company’s growth in Asia. Tourico aims to pre-purchase another $15 million dollars in hotel inventory in Asia before the year’s end – targeting primary cities in China, Japan, Korea, Singapore, Thailand and Australia,” explained Skidgel in the company’s statement.
Part of the overall growth from the China source market was fuelled by inter-country bookings, he says. Bookings from China to cities within China increased in Q1 2016 compared to Q1 2015, with Beijing bookings up over 300%, Guangzhou by over 250%, and Shanghai Hangzhou and Chongqing all increasing by over 200%.
Growth numbers for the Middle East may be less stratospheric (inbound travellers up 20%, outbound up 25% in Q1 2016), but they are still impressive. So this is another target area for Tourico.
Director of Middle Eastern and African product, Tourico Holidays, Jonathan Ming announced to the press that: “With additional flight routes, iconic attractions, and new hotels popping up throughout the Middle East, we see a market that has tremendous room for growth – unmatched by few regions throughout the world. In an effort to help fulfil the region’s potential, we’re making a strong push to sign new hotel contracts and add local resources intended to help our current distribution partners succeed.”
Lumping in the Middle East with Europe (EME), Tourico says it now has over 10,000 hotel partners in this region and bookings are increasing at a rate of 25% a year. The US accounts for 11% of the incoming tourists, and is growing at 20% on last year. While the UK also has 11 percent, it is growing at just eight per cent.
...after Brexit was announced we forecasted a 30% growth in UK room nights. Today, we’re predicting an even greater increase of 41%
Mark Redmond, Vice President, European Region
On the UK, Tourico is definitely pro-Brexit. “...after Brexit was announced we forecasted a 30% growth in UK room nights. Today, we’re predicting an even greater increase of 41%, “said Mark Redmond, vice president of the European Region.
Tourico is widening its global range, including cruises and adding ancillary activities of all sorts. The car rental inventory is also seeing rapid growth. “Tourico clients have already booked more than 50,000 rental days in Europe in 2016 and US car rental bookings to Europe have increased by 120% year-over-year,” it says.
However, hotels are at the core of if the business, “driving its 300% revenue growth in EME over the last five years”. And Uri Argov has some interesting ideas on this market, believing that ultimately there could be just one global bed-bank. He would welcome this as he owns up to hating the major OTA’s and the dominance of Priceline and Expedia, as he told the website InboundReport.
His view is, he said to InboundReport, that their dynamic pricing puts at a disadvantage all tour operators who rely on static rates in the products and packages they develop with travel suppliers. He sees the “parity philosophy” as his biggest challenge.