When terrorists attacked the Pentagon and World Trade Center, Randy Julian's business started disappearing almost immediately.
Julian Tours runs tours all over the world. When the air travel system shut down so did the pipeline that gets folks to a tour's origination city. Even when the planes were flying again, people were still reluctant to travel.
Just a couple of months ago Randy got a call from a group that had an upcoming tour scheduled. They wanted to cancel. Members of the group were afraid to fly. The $90,000 booking disappeared forever in in the brief phone call.
Sometimes bad things happen to your business and all you can do is react. Julian Tours is part of the tour industry and they've been rocked by changes in outside forces over the last year. That's why they're a good case study on how change can hit your business and what you can do about it.
Start by preparing for the changes you can see coming. Not all change is sudden, like the events of September 11. Some of it builds for years. That's because a major driver of change in most industries is demographics.
Generations age and pass through different stages of life. And, as Strauss and Howe pointed out first, generations have different characters. Many tour operators have done very well for several years providing tours for senior citizens.
That business was great for a couple of reasons. The senior citizens, from the Bob Hope and Silent Generations, born between 1921 and 1945, were the first to benefit from retirement plans that could actually leave you with some discretionary income after retirement. And their retirements happened earlier and earlier.
In 1950 the average retirement age for men in the US was 70. By 1970 it had fallen to 65. It kept dropping until, in 1985, the average retirement age was 62. Those earlier retirements put folks in the tour market earlier, with money to spend. Here's how they liked to tour.
In a common scenario a group of retirees get together and fly to a location where they climb on a bus, go to a hotel, and rest up for the night. The accommodations should be clean but they don't have to be posh, this is a frugal group and they're willing to give up some comfort to save money. The next morning, they set off together to see the sights. Being part of a group sharing the same experience is part of the fun.
That was great for the Bob Hope and Silent Generation, but there are fewer members of those generations every day as their members die or become too infirm to travel. It would seem logical for tour operators to just sell tours to the next generation in line, the Baby Boomers. But the Boomers are something else.
The Baby Boomers (folks born between 1946 and 1964) are the largest cohorts ever to make their way through the population. At each step along the way, Boomers changed things. They touched off building booms in elementary schools, then junior highs, then high schools, and then colleges. They made up a huge chunk of the folks who both protested and fought in the Vietnam War.
Unlike their parents, this generation doesn’t necessarily like doing things in big groups. They want to do their own thing, just like when they were younger.
They don’t necessarily want to eat together with everybody all the time. They’d like to explore some restaurants in the area where they’re headed. They probably want some options for seeing different sights, and want to be able to do some exploring on their own. And they’re after some of those luxury accommodations.
Because demographic changes take a while to hit you can usually spot them coming. But only if you're watching. Read about generational change. Pay attention to how different generations differ. Concentrate on what kind of value matters most to each one.
The Bob Hope generation folks are looking for a great group experience at a reasonable price. The Baby Boomers want something unique. And they're willing to pay a little extra to get it. That might mean that customizable luxury tour packages might be much more profitable.
It also helps if you understand that the changes driven by powerful social forces like demographics may shift opportunity to industry segments that used to be in decline. Baby Boomers are good news for some manufacturers because they're buying more and more of their products.
What kind of rider do you think of when you think of Harley Davidson? If you imagine someone in their twenties think again. Today the average age of a Harley customer is 52. They're not buying cheap bikes either. Boomer customers head for the comfort of the top of the line.
Then there's Winnebago. This year the company announced that they were increasing their plant capacity by almost a third to produce the recreational vehicles (RVs) that more and more Boomers seem to want.
Boomers don’t want just some old VW bus with a pop-up camper top. That might have been fine when they were in their teens and going from city to city, following protest marches. Today they want comfort and lots of it. They’re driving a boom in the larger luxury RVs, some of which cost more than $100,000.
Now it's tempting to look at that data and think, "Oh, my, that's bad news for tour operators." It surely will be for some of them. Others will see opportunity lurking in the data.
Charlie McIlvain and the folks at Idle Time Tours in Fort Worth have done that. They've recognized that Boomers want something different. They've analyzed data and information from all kinds of industries. And they've come up with some ideas they think are worth trying.
One idea is to package a whole different kind of tour. Folks arriving in Texas will be able to rent an RV and take off on a tour that includes accommodations at the state parks. Another is to offer Texas by Harley Davidson.
Usually good ideas like these come from asking the right questions. Most folks get so busy analyzing the impact of change that they miss the opportunities. It's better to ask the question, "Can we seize an opportunity here?" But that's not the best question.
My mother taught me that no matter what happened I should ask, "What good can we make of this?" Translate that into business terms and the question becomes, "How can we profit from these changes?" The difference between "Can we … " and "How can we …" is critical.
The former assumes that the question is figuring out if there's an opportunity in the situation. The latter assumes there is an opportunity and that all we need to do is find it. That's a powerful question to ask when you're dealing with another force for change—technology.
While some tour companies were asking themselves whether they could use net and Web technology at all, Tauk World Tours was asking the "How" question. This year they'll save hundreds of thousands of dollars by using the net to communicate information that used to have to go out by FedEx packages to and from tour guides working around the world.
If that sounds too grandiose, try this. Western Leisure is a tour operator based in Salt Lake City. They work with associations that are having meetings in town, offering tours before, during and after the meeting. Their answer to the "How" question is simple and effective.
Western Leisure uses a simple Web form to let folks register in advance for tours they want to take when they're in Salt Lake City for a meeting. Half or more of the pre-meeting registration for their tours happens on the Web. It happens at low cost. It often happens when the office isn't open.
Tour operators like Randy Julian are asking that question in the aftermath of September 11, 2001. Things are different now. While many folks are uncomfortable flying, they're willing to drive. They may want to stay closer to home. They seem to want to travel more with their family. Patriotic themes are more popular. The answer to the "How" question is in that data, waiting for Randy and others to discover it, and then use it.
When bad things happen to your good business, the key to success is asking, "How can we profit from these changes?" Or, as my mother would say, "What good can we make of this?" Thanks, Mom.
This feature appeared on 11 November 2002
