Travel and tourism
Procurement and Supply Chain Consulting
The travel and tourism industry faces evolving challenges, from shifting demographics and digital transformation to growing sustainability demands. To thrive in this dynamic landscape, businesses must optimize procurement and supply chain strategies that not only adapt to changing traveler needs but also drive sustainable operational excellence.
Unlocking value: key strategies for travel & tourism
Transform Procurement to Drive Efficiency
Streamline procurement processes to unlock savings and enhance service offerings, ensuring cost-effective operations without compromising quality or customer satisfaction.
Strengthen Supplier Relationships for Innovation
Collaborate with suppliers to foster innovation and ensure supply continuity, adapting quickly to shifting traveler needs while managing risks effectively.
Embrace Digitalization for Future Growth
Adopt advanced digital tools to boost procurement efficiency, reduce costs, and position your business for long-term success in the digital age.
Master Uncertainty with KGM Strategy Volatility Manager
In today’s unpredictable market, ensuring product availability and pricing is crucial for a seamless customer experience. KGM Strategy Volatility Manager provides real-time insights and strategies to help you navigate market challenges, protect margins, and meet consumer demand with confidence.
Key challenges in the travel and tourism sector
In the travel and tourism industry, businesses experience significant fluctuations in demand, with occupancy rates ranging from 90-100% during peak seasons to as low as 30-40% in off-peak periods.
This extreme seasonality presents challenges in procurement and supply chain management, as companies must efficiently manage inventory, staffing, and supplier relationships to ensure cost-effectiveness and service quality throughout the year. The ability to scale operations up and down quickly while maintaining high standards and controlling costs is crucial for sustained profitability.
Emotions play a key role in travel decisions, often surpassing rational factors like cost. Travelers choose destinations and experiences based on expected feelings—excitement, relaxation, or adventure. The challenge for travel companies is to create positive emotional connections at every stage of the journey— before the trip (inspiration and booking), during the trip (service and experience), and after (memories and feedback) —building loyalty, driving repeat business and increasing word-of-mouth referrals.
Travel and tourism are highly sensitive to rapidly shifting trends driven by economic, political, social, and environmental factors. Global events, like political instability or climate change, can quickly impact traveler preferences.
Additionally, trends such as sustainable travel and personalized experiences demand that companies adapt swiftly. Unlike other sectors, these changes can have immediate effects on both demand and operations, requiring constant agility.
With high fixed costs like infrastructure and staffing, and relatively low variable costs, travel and tourism businesses are under constant pressure to drive demand. However, the real opportunity lies in optimizing procurement and operations to boost margins.
By improving cost efficiency, companies can unlock significant profitability and resilience, reducing their reliance on fluctuating demand and achieving sustainable growth.
How we support travel & tourism brands?
-
Transform Procurement to Drive Efficiency
Optimize procurement processes by implementing spend analytics, predictive forecasting, and automated workflows. Focusing on indirect spend and commodity-specific strategies can generate substantial savings while enhancing the quality and reliability of services.
For instance, integrating Total Cost of Ownership (TCO) assessments can guide smarter decision-making. This approach ensures operational resilience and aligns procurement with business performance goals.
-
Strengthen Supplier Relationships for Innovation
Establish strategic supplier partnerships with tailored Key Performance Indicators (KPIs) to foster innovation and resilience. Through Supplier Relationship Management (SRM) programs, travel companies can co-develop solutions that improve customer experiences and address evolving traveler demands.
Leveraging a structured collaboration approach allows for shared risk management and faster adaptation to global supply chain shifts, enhancing continuity and value co-creation.
-
Embrace Digitalization for Future Growth
Adopt a phased digital transformation strategy, beginning with a digital maturity assessment to identify priority areas. By implementing intelligent tools, like AI-driven demand forecasting or blockchain for transparency, companies can enhance procurement efficiency and traceability.
Focusing on digital procurement ecosystems positions travel companies not only to optimize current operations but also to scale innovations that support sustainable growth and differentiation in a competitive digital market.
Solving challenges with procurement solutions
- Tailored Procurement Strategies: Develop procurement approaches that cater to varying demand levels, ensuring that both peak and off-peak periods are managed efficiently. This includes capturing the purchasing power of different demographics like millennials, Gen Z, and the aging population during various travel seasons.
- Supplier Relationship: Collaborate with suppliers to ensure flexibility in meeting seasonal demands by adjusting offerings and capacity to match fluctuating traveler needs. For instance, developing temporary labor suppliers allows companies to scale their workforce up or down as required without compromising service quality. This approach ensures operational efficiency, even during periods of demand fluctuations.
- Risk Management: Implement risk management strategies to ensure supply continuity during both high and low demand periods, minimizing the impact on customer experience when supply chains are under pressure.
- Culturally Sensitive Procurement Practices: Accommodate the increasing diversity in travel by offering procurement strategies that resonate with the emotional and cultural drivers of diverse customer groups, enhancing the emotional connection to travel experiences.
- Foster Innovation: Work with suppliers to develop customized products or services that cater to the emotional and experiential aspects of travel, creating more personalized and meaningful customer experiences.
- Sustainability Initiatives: Participate in collaborations focused on sustainable travel, aligning with travelers’ growing preference for environmentally conscious choices, thus enhancing emotional loyalty to brands committed to sustainability.
- Procurement Digital Piloting: Assess the digital infrastructure and introduce tools that improve adaptability and responsiveness to industry changes, ensuring procurement processes can swiftly adjust to new trends or disruptions.
- Degree of Digital Maturity: Evaluate the company’s readiness for digital transformation and leverage intelligent digital tools to guide decision-making, enabling rapid adjustments to shifting traveler preferences and market demands.
- Foster Innovation: Encourage supplier innovation to develop new products and services that keep pace with industry shifts, ensuring that offerings remain competitive and aligned with evolving customer expectations. Procurement can also serve as an innovation hub, gathering valuable market insights from suppliers and sharing them across various functions. This cross-functional collaboration helps align the company’s strategies with fast-paced trend changes, driving innovation and market responsiveness.
- Cost-Effective Solutions: Develop procurement strategies that make travel experiences more accessible, particularly for low-income individuals, thereby unlocking additional revenue streams while managing fixed costs effectively.
- Supplier Evaluation: Conduct thorough assessments of suppliers’ environmental practices, ensuring efficient energy use, waste reduction, and sustainable sourcing. This reduces long-term operational costs while maintaining profitability.
- Collaboration Initiatives: Join forces with peers in industry-wide collaborations to enhance sustainable practices and drive collective performance, which can contribute to profitability by reducing waste and optimizing resources.
Discover our client references
Reference: Realignment of procurement for a leading airline
Our client is an airline that is suffering from strong price competition in the industry. In order to return to profitability, the company initiated an extensive cost-cutting programme.Read more
Backed by BCG’s global network and advanced tools, we fuse global insights with local expertise – to drive tangible, P&L-impacting results that align with your vision and culture – empowering your brand for sustained success in a competitive market.
Get in touch with our travel and tourism consulting experts
