Tour and Attraction companies have a lot of moving parts.
From hosting large groups of daily customers to managing different product lines to staff scheduling - it is common to experience information overwhelm for operators and managers. It helps to measure a few “North Star” Tour and Attraction KPIs that are easy to reference for a snapshot of your business health.
KPIs, otherwise known as Key Performance Indicators, are simply numbers that give you information about a particular facet of your business. These can help you set baseline performance standards, have a comparison for goal setting and let you know if something needs to be changed when you go off track.
Below is a list of KPI’s based on years of experience in the Tours and Attractions space, as well as some basic tips on how to get the most out of them.
Yield Management KPI’s
Yield Management comes down to blending volume and price strategies to arrive at peak profitability. Following laws of supply and demand, Tour and Attraction companies generally feel the cyclical nature of their offering and are wise to price more profitably during periods of high demand.
Customers may be willing to pay more at a certain time of year, or a certain day of the week (Saturday nights in the summer are important, for instance). While it is possible to do this personally based on your feel for the customer flows, careful tracking will produce data that gives you confidence that you are maximizing profit.
The following are some key Yield Management KPI’s to ensure you are on track - starting from the highest level down to more detailed numbers.
The broadest KPI to track is your tour or attractions’ Market Share, deducing what percentage penetration your business has of all competitors in your Market based on publicly available tourism information.
The concept is best illustrated by an example.
Imagine a fictional boat tour operator in NYC called Big Apple Boats. Big Apple has 3 competitors and carried 1 million passengers in 2019.
- TAM (Total Addressable Market): The City Convention and Visitors Bureau (CVB), reported that NYC welcomed 66.6 million visitors in 2019. 66 million is your TAM.
- SAM (Serviceable Available Market): Which customers are actually serviceable? For example, business travelers are included in the TAM, but the likelihood of a business traveler jumping on a sightseeing boat on the east river is low. Also, of the international visitors, which languages can you service? Big Apple Boats offers tours in English and Spanish only, so we should remove the visitors that are not likely to book a tour outside of their native language.
To be conservative, if they exclude all international travel (13.5 million) and assume half of domestic travel includes business (26.5 million) they have a new basis of 26.5 million for their Serviceable Addressable Market.
Local Tourism boards post data at the city, state and even national level and are a great source of information on what the total addressable market is for your tour and how much you are capturing. Should you find you are lagging other local attractions, you can look to advertise or partner with the Tourism Board to increase visibility.
The top line number that all tour and attraction companies must monitor is the total number of passengers. In a cyclical business, there is a moving target in assessing what is a good or bad day, week, month, or year.
In this case it can help to have a tracking system to show trends of customer numbers and help identify any causes of an outlier day - be it positive or negative.
ATP (Average Ticket Price)
Companies in this space typically sell a host of different experiences that they must track revenue from. For example, a company may have an option for a tour, sightseeing, a restaurant or drink and a ride - all under one offer and all at a separate price.
The Average Ticket Price is very helpful as a top line metric. It blends all the different prices of your tickets to arrive at an average price, that does include discounts that were provided to reflect the true revenue you took in.
AHP (Average Headline Price)
The Average Headline Price follows the same blended philosophy but does not account for discounting. Although this does not reflect true realized revenue, this metric assesses your gross revenue sales capability and allows you to separate out the variable of discounting to understand, in a more nuanced way, your supply and demand.
The key takeaway from knowing these two numbers is to have the following simple equation at the ready:
AHP - ATP = NTM (Net Ticket Margin)
Your Net Ticket Margin should be as small as possible to increase your yield.
Revenue from Upselling and Cross Selling
Another tool that can really add to a business’ bottom line is to upsell or cross sell your captive audience some additional products or services, be they your own products or another business.
In Tours and Sightseeing businesses, for instance, it is quite common to see a restaurant, retail or drinks offer attached that may pay a referral fee, or simply two businesses cooperating unofficially to refer business back and forth.
Tracking your revenue from additional sources can really help supercharge your planning sessions and get your team working to come up with creative, and profitable, arrangements.
Number of Customers: How does this trend over time? What causes a very good or bad day/week?
AHP - ATP = NTM: How does discounting affect your sales? When reducing discount offers, at what point do sales diminish?
Upselling and Cross Selling: Are there other products, either yours or another businesses’, that would make sense to bundle in your offer?
With a business that has many people and moving parts to consider, a lean and organized operation is a major boost to the bottom line. As is always the case, what gets measured gets managed - make sure you are publicly reviewing a few key metrics to keep staff on the same page.
In Tours and Attractions, a strong safety score is a must. You do not want to end up as a strong operation that is derailed by a preventable measure.
Beyond this, insurance companies will require a base level safety score to maintain your license to operate. Know your safety score and train your staff well on the importance of ensuring that it is well maintained.
A difficult planning mechanism for any business operator, particularly in the service industry, is staff availability. It is imperative to make sure employees are scheduled well in advance, but all operators are subject to the occasional no-show or complexity of arranging a large group of people.
A high-level view of costs of goods and labor makes all the difference in profitability tracking. We recommend running this on a weekly schedule as a lagging indicator, reviewing the previous week on Monday morning meetings with staff. Equipped with these quick numbers, you can extrapolate how to improve based on your business:
Weekly Revenue - Weekly Cost = Weekly Profitability
This equation, like the previous, is effective not only for the final profitability number, but as a placeholder of tracking weekly revenue and costs and assessing their trend.
We recommend keeping a simple spreadsheet to analyze the data historically and look for the outliers - whether a week was particularly good or particularly bad. What happened? How do you avoid, or repeat, these same results?
Consider your costs to operate and pay staff - how many tickets do you need to sell just to break even on the day? This is the simplest, one number metric you can track to help your sales staff have an easily understandable goal each day.
Safety Score: Ensure there is a written document that is shared with relevant staff about the protocols required to meet this.
Staffing: For more complicated staffing needs, look to a Tour and Attractions management software that includes staff scheduling as part of operations management.
Cost Control: Revenue - Cost = Profitability. This simple metric measured over weeks, months and years helps identify trends.
Breakeven Tracking: All else equal, you want one single number to be top of mind. For example, you need to sell 100 tickets to break even.
Customer Experience KPIs
Finally, and perhaps most importantly, it is imperative that efforts to increase your profit margin are met on the opposing side with metrics ensuring you are not decreasing customer experience.
Net Promoter Score
When you receive a survey from a business asking you how likely you would be to recommend it to a friend, that business is tallying responses to arrive at a Net Promoter Score - which is the most common metric of customer satisfaction.
As a summary, customers are batched into Promoters, Passives or Detractors based on the score they provide. There are many simple forms that can be sent out through email lists or regular customer contacts to collect the survey information.
The Tours and Attractions space drives lots of referral business through OTAs, Google and Facebook - each of which has built in review mechanisms that display directly to potential new customers a snapshot review on a measure of five stars.
Monitoring these reviews is important not only for information, but also to take the opportunity to publicly address any negative reviews and rectify them in the eyes of the customer (which is shown to drive trust and brand loyalty).
While there are a whole host of KPI’s specifically to measure Digital marketing efforts, we recommend monitoring the conversion rate of people that visit your site versus those that complete a direct booking with you.
An additional metric that can be added to this formula is the referring site, whether they searched you on Google or were referred to you from another site (particularly an OTA). This information is available in Google Analytics.
- NPS: Seek out an NPS tracking software that suits your needs and commit to reviewing results regularly. If available as a feature within your Tour and Attraction software system, this is easy to integrate and manage.
- Reviews: Is there someone on your team who owns the role of monitoring, reporting, and responding to reviews across your Google and Social channels?
- Digital Marketing: The starting point is understanding your conversion rate from site visitors to direct bookings. Many Tour and Attraction software systems integrate with Google Analytics to clean your data and give the most relevant insights - make sure to review regularly for a digital marketing health check.
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