Wow! This is really well written, simple and was easy to understand, thank you. On the tour-operator example - Would the % of recurring business change based on how premium the tour is? I'm currently exploring purchasing a tour operator (this piece was a timely read) and a part of my thesis is that the higher-value the tours are, the larger the margin of safety and quality of revenue. Also curious if you have any other general thoughts on tour-operators you'd be open to sharing.
Thank you! I'm not sure I follow the question -- why would the premium level of the tour relate to whether or not it is recurring revenue?
Unless they are signing up for some kind of recurring plan (like they get one tour per year if they pay $X/month, just a thought), it's still just one-time revenue. If clients often come back and do tours again, then it may be re-occurring revenue - still not recurring, as the clients have to make a new purchase decision each time.
Apologies, I meant to say re-occurring, would a more premium tour operator have higher re-occurring revenue? Presumably because they command higher customer loyalty than your typical national tour operator.
That just depends on the nature of the tour I think, not the premium-level. Like if the tours are catered more to locals and they change every few months/years, then it makes sense that folks may do it again. But if it caters to out-of-town tourists, then it's unlikely re-occur as the tourists probably don't come back at any predictable rate.
The national tour operators have much higher re-occurring revenue because they have multiple locations. If you had a great experience with XYZ brand's ski tour in Jackson Hole, Wyoming, you're more likely to use them if they have a ski tour in Park City, Utah, too. But you probably won't do the same tour again in Jackson Hole.
Very useful info, thanks for sharing it.
Great information. Thank you.
Wow! This is really well written, simple and was easy to understand, thank you. On the tour-operator example - Would the % of recurring business change based on how premium the tour is? I'm currently exploring purchasing a tour operator (this piece was a timely read) and a part of my thesis is that the higher-value the tours are, the larger the margin of safety and quality of revenue. Also curious if you have any other general thoughts on tour-operators you'd be open to sharing.
Thank you! I'm not sure I follow the question -- why would the premium level of the tour relate to whether or not it is recurring revenue?
Unless they are signing up for some kind of recurring plan (like they get one tour per year if they pay $X/month, just a thought), it's still just one-time revenue. If clients often come back and do tours again, then it may be re-occurring revenue - still not recurring, as the clients have to make a new purchase decision each time.
Apologies, I meant to say re-occurring, would a more premium tour operator have higher re-occurring revenue? Presumably because they command higher customer loyalty than your typical national tour operator.
That just depends on the nature of the tour I think, not the premium-level. Like if the tours are catered more to locals and they change every few months/years, then it makes sense that folks may do it again. But if it caters to out-of-town tourists, then it's unlikely re-occur as the tourists probably don't come back at any predictable rate.
The national tour operators have much higher re-occurring revenue because they have multiple locations. If you had a great experience with XYZ brand's ski tour in Jackson Hole, Wyoming, you're more likely to use them if they have a ski tour in Park City, Utah, too. But you probably won't do the same tour again in Jackson Hole.