Did you know that many gift cards are never redeemed? That means the revenue from gift cards sold and not redeemed can end up as untapped profit for tour operators.
And imagine turning $100 into $353 without adding a single new tour or hiring extra staff. Welcome to the world of strategic gift card sales in the tour industry.
This isn’t just about selling digital gift cards or plastic cards with your logo on them. It’s about unlocking a revenue stream that can generate income even when you’re not running tours, reach new customers without expensive marketing campaigns, and boost your profits with minimal extra effort.
Let’s dive deep into how this simple addition to your business model, when done right, can make an impact on your bottom line. Even better, what we’re sharing here is backed by real-world data and proven strategies from successful tour operators.
Introducing gift card sales can be a real boost for your tour and activity business. Here’s why:
To back up these claims with hard data, we reached out to TOMIS, a leading marketing agency for tour operators, to share some stats with our coaching team. Several years ago, they shared invaluable insights from their large dataset on gift card redemption rates, order rates, and lag times between purchase and redemption.
Here’s what we learned:
This data shows an interesting trend: the higher the gift card value, the more likely it is to be redeemed. However, even at higher values, a significant portion remains unredeemed.
Let’s focus on a $100 gift card with a 28.3% redemption rate. This means $71.70 remains unredeemed, directly adding to your profit. But it gets even better. The redeemed portion often generates more revenue than its face value through extra spending by gift card users and their guests.
TOMIS refers to this as the “adjusted value.” For a $100 gift purchase with a 28.3% redemption rate, you could generate over $353 for your tour business. Even with a more conservative 40% redemption rate, you’re still looking at over $250 in adjusted value.
This multiplier effect is similar to what fast food chains leverage when they offer super cheap drinks or coupons. They know that once they get you in the door, you’re likely to spend more.
This applies even more to tours and activities because these are rarely experiences people want to do alone. Gift card recipients often bring additional friends or family to join them, further increasing your revenue.
Another crucial factor for profitability is the lag time between the gift card sale, its redemption, and the actual tour. According to the operator data from TOMIS:
This lag time is significant for several reasons:
You might wonder if discounting gift cards during promotions is worth it. The answer, surprisingly, is a resounding yes. Even with a 30% discount (offering a $100 gift card for $70), you’re likely to see a 3x multiplier on the value to your business. This comes from both unredeemed gift cards and additional sales volume during redemption.
This strategy works because:
To maximize the benefits of gift cards for your tour business, consider these strategies:
Implementing a gift card system is typically straightforward with most modern booking software. These systems usually allow you to create gift cards as a purchasable product on your website, generate unique codes for each gift card sold, and track redemptions and provide back-end reporting on key metrics.
By understanding the true power of gift cards, you’re not just adding a new product to your lineup—you’re implementing a strategic tool that can help stabilize your cash flow, reach new customers, and significantly boost your profits.
Remember, gift card sales are often more valuable and profitable for your tour business than direct sales. While they may make up a minority of your overall sales, they represent a highly profitable sales channel that shouldn’t be overlooked.
Whether you’re running city walks, food tours, or outdoor adventures, gift cards represent an often-untapped opportunity to enhance your tour business’s financial stability and growth potential. By implementing a strategic approach to selling and promoting gift cards, you can significantly impact your bottom line year after year, season after season.
Don’t leave money on the table. Start harnessing the power of gift cards today and watch as this simple tool helps transform your tour business’s financial future. Remember, in the world of tour operations, sometimes the smallest changes can lead to the biggest impacts. Gift cards might just be the profit-boosting strategy your business has been waiting for.