Contiki, a travel company focused on young adults, is eyeing expansion in Asia, Latin America, and Africa as it adapts to the post-pandemic travel landscape.
CEO Adam Armstrong said in a Skift interview that Contiki has a strong presence in Australia, New Zealand, and Europe and sees the potential to double or triple its business in these new markets. Increased demand from Australians and Americans for cost-effective and less congested destinations in Asia is driving the shift in focus.
Africa has emerged as a significant success story for Contiki, particularly among travelers in their late 20s and 30s, while Latin America remains a work in progress, Armstrong noted.
The CEO also highlighted changes in traveler preferences, with a temporary shift back to longer trips post-pandemic now leveling off. Group sizes are expected to return to pre-pandemic levels in 2024, and younger travelers are requiring more support to integrate into group environments.
Contiki plans to invest in AI-powered tools and decarbonize, too, Armstrong said.
Areas of growth
Skift: Your strongest markets are Australia, New Zealand, and Europe. Are you looking to expand your presence in other parts of the world?
Adam Armstrong: Outside of Europe, we’ve been making a concerted effort to build our business in three other regions: Asia, Latin America, and Africa. We’ve been operating in all those places for a while. But we see huge potential for us to be much bigger — we could double or triple our business there. So there’s a lot of marketing activity going for us into those three destinations to try and persuade people to try them out as well.
We probably would have done it before Covid. It’s just delayed. We’re seeing generally more demand for Asia from Australians and Americans. Asia’s up by about 40%. So we just want to jump on top of that. It’s also more cost effective than Europe for the traveler, it’s less congested. So there are a lot of pulls towards that.
I don’t think we’ve nailed Latin America yet. We’ve got some work to do on our product range to appeal to younger passengers. We launched in Africa about 18 months before COVID, and coming into 2020, we were going to have an amazing year. We are now getting huge demand, especially from our older clientele – so late 20s to 30s. It’s a big success story.
Post-Covid changes
Skift: In 2021, you pivoted from large-scale trips to smaller ones. How has Contiki adapted its travel offerings to cater to the evolving preferences of young travelers in the post-pandemic era?
Adam Armstrong: Yes, our offerings have changed a bit but also consumers have changed a bit as well. It’s kind of a mixture of the two. I don’t know if it’s chicken or the egg, which one came first. What we saw coming out of the pandemic is people shifting back temporarily to longer trips. Those longer trips were just starting to decline slightly every year. Coming out of the pandemic, people skewed back towards it, especially Australians and New Zealanders, having been isolated and making up for lost time. I think they peaked last year – they certainly are not as strong this year. I still think we’ve seen this revenge travel trend or whatever you want to call it. People going for long trips, going for longer and going further. But now it’s 2024 and it’s starting to calm back down again.
I think the group sizes will go back to how they were before last year. We were running very full coaches. This year there’s going to be a few spare seats.
Skift: Can you tell us more about how your travelers have changed since the pandemic?
Adam Armstrong: Those in their late teens and early 20s who were probably impacted most by isolation are coming in a little less psychologically ready to be in a group environment. There’s a little more reluctance and it takes a little bit longer to get into the rhythm of things. We didn’t see that before.
What’s interesting is the role of a trip manager over the years, we call them trip managers rather than tour guides and tour directors because you want to acknowledge that their skill set is evolving over the years away from just going from point A to B. They are helping bring people together, fueling friendships, and dealing with anyone who’s shy and maybe struggling to fit in.
Technological transformation
Skift: Hostelworld, an online travel agency, created a tool that lets guests chat with other hostel goers optionally if they want to connect before a trip as a way to help foster friendships and encourage bookings. What is Contiki doing to help foster a “sense of community,” which is especially important to this customer base? Can tech help in any way?
Adam Armstrong: We’re not as technologically advanced as that. But about two weeks before departure, the trip manager will reach out to everyone in the group and we’ll start a WhatsApp group. Generally, what’s happened is that this is used for pre-trip community building where instead of answering questions, it’s really an opportunity to start chatting and getting to know each other so when we turn up, you’ve probably got the measure of a few people. But we don’t have a dedicated technology for it. It’s done by the trip manager.
It’s on the technology roadmap for next year. But we have some other bigger projects that we have to get through first, which are boring, internal infrastructure projects. But this is important, especially for our demographic, that’s where they exist, that’s where they live and communicate, so we have to do a better job there.
Skift: Do you plan to upgrade or change your technology this year? Is artificial intelligence (AI) on your radar?
Adam Armstrong: We are trialing a couple of AI tools, one internal and one external. It’s really like a helpdesk function for our contact center or call center which will enable them to answer questions quickly. This is still in the planning stages. That’s a boring internal one that will help us. The more sexy interesting one for external is that people will be able to search our site by just giving us some prompts. We’ll be able to give them tours based on what they ask for. So rather than ticking boxes and filtering, you will just be able to write a sentence or speak a sentence. I don’t have a specific time for when this will be out, but not this year. It will be sometime next year.
Climate efforts
Skift: Your website says that in 2022, you made all of your trips carbon-neutral, but your activities largely rely on coaches. How are you decarbonizing your fleet?
Adam Armstrong: All of the companies under the parent company, The Travel Corporation, contribute a small dollar amount for every passenger that travels. So we all contribute to this carbon fund and we then compete in a bid for uses of the carbon fund for initiatives that are going to reduce our impacts and reduce our footprint. So there’s a multimillion-dollar carbon fund available each year.
We won our bid last year to use the money to fund HVO fuel (hydrotreated vegetable oil) for our coaches, which is a higher cost than conventional fuel. So far we’re running at 40% reduced carbon footprint in Europe this year.
Skift: Your site also says that you’re encouraging travelers to travel by coach and public transit and that you’re developing more “closer to home” trips. What are your thoughts on the future of local travel as a serious source of revenue?
Adam Armstrong: We tried selling domestic trips during Covid to domestic people, selling Australia to Australians, America to Americans. We didn’t get huge takeoff. However, we do see more Australians going to Asia and Americans going to Central and Latin America rather than to Europe, to kind of stay within the continent.
We have also been on a journey with how we market our climate credentials. We were really proud and shouting about it for a while but then the feedback from our guests was that it was a bit too in your face and that we were expected to do these things anyways. They wanted to know about the destinations and where they are staying. So we dialed that down a bit.
Rather than trying to be the hero we just make it part of the trip. We also heard that our customers didn’t want us to be so serious about it. Our brand is fun and a little bit irreverent and a bit cheeky sometimes. So without denigrating what we’re doing, we can have a bit of fun with it rather than being very serious and boring.
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