Here is How to Educate Your Revenue Manager with an Answer: Using NAJ’s RTO Summit West in Marina del Rey as a both a forum and opportunity, NAJ’s founder and CEO, Jake Steinman, launched a day-long series of presentations, seminars and panel discussions with a presentation of his own: “Educating the Clueless Revenue Manager.” Predictably, the target of the lesson was not in attendance, but the message might get through, nonetheless, because of the presence of hotel and DMO sales professionals whose goal is to bring visitors to destinations and its hotel properties year-round.
Steinman’s “RTO 101” offering covered the following points: What RTOs are; The RTO Landscape; RTO Statistics; Pros and Cons of Working with RTOs; and How it Works.
What is a Receptive Tour Operator (RTO)? The straight definition. An RTO is:
- A B2B gateway to international visitors/travelers through the trade
- A wholesaler to wholesalers and travel agents
- A financial intermediary between U.S. suppliers and international wholesalers
- A hotel room aggregator for resale via overseas travel agents
- FIT online booking systems
- Escorted group tours
- Fly-Drive programs
- M.I.C.E. tour programs
- Meet and greet and ground services
Steinman broke down the types of RTOs into four subsectors—there are: bedbanks; traditional “Legacy” receptive; subsidiaries; and niche or regional businesses. Broken down, the numbers in these subsectors are as follows:
Group business is still what RTOs are about. And a breakdown of that business for 2013—the year for which complete data are available—is as follows
Their Share of the International Market: Steinman advised RTO Summit delegates that the two numbers that sales and marketing professionals can point to are those showing the share of total room nights sold. Based on NAJ’s proprietary data—the figures that have been provided to NAJ since 2007 from the top receptive tour operators in the USA—receptive tour operators are responsible for about half, plus or minus a few percentage points, of total group nights and total overseas leisure nights sold internationally. (The data are compiled into NAJ’s Trax™ Report, which is developed from reports by 11 receptive tour operators that, collectively, book more than half of the international room nights sold for U.S. hotels.)
Strong and Steady Growth: During the period for which NAJ has gathered data on the room sales registered by RTOs, the destination-by-destination breakdown shows solid improvement. In a sample of 19 destinations comprising small, medium and large-size destination markets, the mean Compounded Annual Growth rate in the sample markets from 2007 to 2013 was 40 percent.
Advantages and Disadvantages of Working With Receptive Tour Operators—Advantages:
- The RTO assumes currency and financial risk of collections
- The RTO delivers business during off-peak times
- The RTO has access to international groups and M.I.C.E.
- The RTO requires issuing relatively few contracts
- The RTO moves distressed inventory at higher yields than OTAs
Advantages and Disadvantages of Working With Receptive Tour Operators—Disadvantages:
- The RTO is just another middleman
- The RTO deeds rates 18 months in advance (in the case of traditional operators/national operators)
- There is the perception of the RTO’s business as low-yield tourism class business (rarely true)
- The RTO ‘s tiered rate discount can seem unnecessary in strong economy
- Sales from traditional brochure wholesalers can take 2-3 years to materialize
Finally—How it All Works as Part of the Distribution System:
In sum, explained Steinman, DMOs and travel suppliers have to think of the receptive tour operator as their international distribution team and consider themselves as the RTO’s travel product resource. “It’s a win-win relationship,” he said, urging sales and marketing executives to make the case for the relationship to their revenue managers, who never seem to spend face-to-face time with their RTO partners.