For anyone who is interested in any sort of entertainment which involves what is essentially a group activity, what you’ll probably be fully aware of by now is that it is indeed cheaper when you book or buy in groups. At the core of the reasons for this is the age-old economic phenomenon of supply-and-demand, particularly that element to it which involves trade volume. Put simply, anything on this earth which can be produced becomes easier and cheaper to produce if produced in bulk.
One of the most popular forms of group-activity entertainment is indeed that of travel, and while there are some backpackers and Digital Nomads who are happy to travel solo on account of that equating to major savings, generally speaking it’s much cheaper to travel in groups. In any case, even if a group of what are effectively solo travelers came together to share the costs of their travels between them, it would still ultimately work out much cheaper for each of them.
Thanks to formalized platforms for bulk special deals, it has indeed become common knowledge that pretty much anything to do with travel becomes cheaper if there are more of you booking or buying at once. However, if you’re to live out the rest of your life as a traveler who benefits out of getting the best deal possible, it’s perhaps pertinent to drill a little deeper into the reasons why it is indeed cheaper.
One sale usually equals profits
It might be quite challenging to wrap one’s head around this, but with most (not all) profitable businesses which operate within the travel and tourism industry, one sale over a certain period or during the course of one “event” amounts to enough business to account for a profit. Passenger airlines are only really making extra money with each commercial passenger ticket they sell, for instance, with their profits having already been secured for that particular flight through the freight transportation service they provide.
Greater than the sum of its parts
One of the reasons why one sale is usually enough to account for profits is because in most travel sector businesses, the whole is greater than the sum of its parts. Three or four seemingly empty passenger cabins would in isolation render a specific airline as running at a loss, but then it just takes one full flight later on to account for all the profits, while the frequency of the flights isn’t reduced, for instance.
The mathematics of basic economics
Group travel deals take advantage of the mathematics behind basic economics, which as mentioned is that more people sharing the costs of something means they can each pay less.
Travel and tourism businesses as a marketing channel
Some businesses in the travel and tourism sector would be reported to be running at a loss had they existed in isolation, but most of these are part of a greater marketing and brand awareness building campaign. This is where group deals appear to be pushed hard, whereas it really doesn’t matter either way.