If you’ve ever planned a vacation, you know that the information and choices you have can be overwhelming. Some people know precisely what they want and can confidently buy those things themselves. Others use travel agents to curate custom packages. Many others piece things together and rely on online reviews to find the best excursions, hotels, and other services.
Another way to travel is to be part of a group. A lot of people avoid this just because the idea of being part of a group is abhorrent. Others feel that existing packages don’t include the items they want. There is a common misconception that packages are more expensive because you are also paying for the tour operator to plan and host it.
There are a couple of kinds of group travel. Over-the-road group travel means that the group stays at multiple hotels in multiple cities and takes multiple excursions–all as a group. In these instances, you can’t really avoid being part of the group, and you will be around and probably have to talk to your fellow travelers throughout the trip. These trips tend to be smaller, however, and often have like-minded travelers because they are very specialized and designed for a specific audience. The other kind of group travel involves a single resort and just a few if any, excursions.
This single-location type of group travel allows you to be as much a part of the group as you’d like, even if that’s not at all. A primary reason to travel in a group such as this is cost savings, which I’ll get to later on, but it is one way to save on a vacation without actually having to talk to anyone other than a host (even if that can be less than a 5-minute conversation). Once your trip is booked, you can usually supply your information, such as flights, dietary preferences, etc., online without ever speaking to another human being. Your transportation will be taken care of, and a hotel room will be booked in your name. When you arrive at the hotel, you can just check in and be on your way. It’s often valuable to talk to your host to make sure you have all the most recent information, get your departure time, confirm your departure flight, and ask any questions you may have. But that’s ALL the interaction that’s required.
If you really don’t want to be involved in the transportation and excursions, depending on the tour operator, it’s also possible to get yourself booked into a group room block without any other inclusions. You can book your own transportation, your own excursions, and your own airfare; you’ll just save a bunch of money on your hotel. Most tour operators build and sell their bundled packages, but many are willing to sell individual components (especially the hotel) on request.
I’m going to sidetrack a little bit to discuss why a tour operator would be motivated to break up a package in order to book just a hotel room. When a tour operator requests hotel rooms, the hotel assumes the tour operator will fill all those rooms with guests and takes that inventory offline, holding it for the tour operator. In order to protect themselves, the hotel requires the tour operator to guarantee these rooms. Usually, the tour operator is permitted to give back 10%-20% of those rooms, referred to as attrition, but in general, if a tour operator agrees to sell those rooms, they are responsible for doing so and have accepted financial risk for those rooms.
Excursions, transportation, tickets, etc., are often booked a couple of months before the trip travels, in comparison to at least six months (often well over a year) in advance that the hotel is booked.
This means that if you ask a tour operator six months in advance of a trip if they’ll sell you just the hotel room, they’re going to be fine with that. You can also ask a travel agent for the same thing. The travel agent will usually go ask the tour operator for that package if it’s possible, but in many cases, the answer is yes. You’ve now booked a hotel at a group rate without having anything to do with the group at all!
Do keep in mind, however, that tour operators are often experts in a certain location. It’s safe to assume that if they’ve included an excursion or transportation in a package, they have done their research, they have a relationship with those vendors, and they know that their guests will be well taken care of. There is certainly a benefit to taking their advice.
And now, let’s talk about why group pricing on hotels, excursions, and transportation is so much less than the retail equivalent.
It is in the best interest of the hotel to sell as many of their rooms every night as possible. Hotels rarely expect 100% occupancy, so they price their rooms with the understanding that they won’t sell out. That means guests are paying more than it actually costs to provide all the necessary services, such as housekeeping, electricity, water, etc., in their single room.
Therefore, when a tour operator or other entity comes to a hotel asking for a bunch of rooms, the hotel has a guaranteed occupancy level and is willing to give that tour operator or other entity a better price on each of those rooms. It’s the same concept as buying in bulk at Costco. If you buy 24 rolls of toilet paper, you pay less for each roll than you would if you were buying 6. If you buy 100 hotel rooms, you pay less for each room than you would if you were buying 1.
This price difference is often substantial. Most of our hotels give tour operators 25-30% off published online rates. I have one hotel that offers a group rate that’s usually 45-55% off their online rates. Those are HUGE savings that an individual traveler can’t get.
Packages offered by tour operators usually include all the taxes and fees at the hotel, so there are no surprise expenses; and they often include other benefits like transportation and excursions. The buying-in-bulk rule applies for these services as well, although often not to the same degree as for hotels.
On top of the discounted price, the tour operator receives a commission on these rooms, which is the most common way that tour operators and travel agents earn a living. A per-person profit is often added to the package as well. Nevertheless, with the substantial discount on the hotel, you’re usually still saving money over retail.
It’s important to keep in mind that hotels don’t ALWAYS give these considerable discounts to tour operators. Certain events don’t lend themselves to discounts. For example, during the Super Bowl, in addition to not discounting their rates, hotels often won’t offer commissions either. Sporting events often have this issue, and that’s exacerbated by a similar problem with ticket prices: tickets are rarely sold in large blocks and, therefore, don’t qualify for group pricing.
Regardless of the few exceptions, group travel CAN allow you to save a ton, customize your experience, and yet travel as an individual.
