Specialise, diversify or both? Strategies to thrive and grow in travel
- Chris Thompson
- Jul 9
- 7 min read
What’s your business’s strategy for the next few years? Which new pathways will you take? Or is your plan to keep going as you are? Firebird director Chris Thompson outlines the strategic options for future-facing tour operators, discussing the pros, cons and possibilities – and the risks of doing nothing.
With the sector evolving at such a fast pace, standing still is a risky choice for any travel business. Think competitors innovating past you; market trends shifting while you’re caught flat-footed; gradually losing relevance, etc. What crises like Brexit, COVID and various economic bumps have shown us is that proactive moves build resilience – and unquestionably have an impact on a business’s value, along with its chance to thrive (and, crucially, survive).
In this article, which is a digest of a recent masterclass I ran for AITO members, I’m going to explore the critical strategic choice for SMEs in travel: whether to specialise further in what you do best, diversify into new markets/products, or pursue a balance of both.
“All good strategy starts with clarity”
First, some quick definitions:
Specialising means focusing your business on a particular niche – whether that’s a destination, a type of travel experience, or a customer segment – and aiming to be the best at that.
Diversifying means expanding into new areas – adding new destinations, products, customer types, or even new business models – to spread risk and capture new opportunities.
Hybrid means taking elements from both strategies.
Talking through the pros and cons of these with a room that was (almost exclusively) full of specialists, I noticed that participants were initially great at finding pros for diversifying and cons for specialising!
By the end of the session, however, we’d achieved more balance – and the main point we agreed on was: all good strategy starts with clarity. That’s clarity about your strengths, the market, your purpose and what will provide a sustained financial return. After that, teams can consciously choose the path that aligns best with their business. Fundamentally, you need to figure out what you can truly excel at and actively commit to that path.
“Specialising enhances identity and efficiency, but it also requires vigilance”
There are several pros to specialising, including opportunities to build operational efficiency and customer loyalty. Specialising typically leads to strong margins too, while the cons involve limiting market size, being pigeon-holed, or becoming vulnerable to market shifts.
My own experience of specialising comes through 16 years running Ski Famille, an operator that exclusively offers family-focused catered ski chalet holidays with in-chalet childcare. Focusing solely on our specialism meant we could create strong brand clarity, precisely tailor products to one customer segment, and drive sustainable growth that resulted in a strong valuation.
On the flip side, we were vulnerable to restrictions around term-time holidays, snow conditions and the many challenges that emerged from Brexit. We were also constrained in terms of market size and other areas of operation. Doubling down on our niche was a success, but it definitely constrained growth: when every property you operate from has to be purpose built to your requirements and you have SOPs around the provision of free nappies it is possible you may have painted yourself into a corner!
What did all that teach me? That while specialising enhances identity, customer loyalty and efficiency, it also requires vigilance around external risks – and an acceptance that there may be limits to growth.
“Diversifying can strengthen resilience, but needs to be done carefully”
Diversifying, by contrast, offers the ability to spread risk, generate new revenue streams, create cross-sell opportunities and shore up some resilience to market changes. The cons, however, are not to be ignored, and can include a lack of focus, low clarity of brand identity and added operational complexity.
Recently, Firebird client McCabe has demonstrated what diversification can do when it’s done well. As a long-established operator providing tours to the Holy Land, McCabe’s primary destination was effectively halted overnight in 2023, because of the conflict in Israel. It forced them to rapidly speed up initial moves they had taken towards geographical diversification – and was arguably the key to their survival. With Firebird’s support, that strategy was more successful than anyone could have predicted (as MD Martin Adams explains in this revealing blog post.)
When executed decisively and strategically, diversification can strengthen resilience and open up valuable new market opportunities. But like specialisation and hybrid approaches, it needs to be done carefully, with a close eye on a company’s context, strengths and environment.
Personal experience has also shown when diversifying can go wrong. In my early days at Ski Famille we operated a summer brand called Alp Active. The plan was to make better use of internal resources, remove cashflow lumps and bumps, and have another enticing offer for our loyal clients. The reality was it had few clients in common with our core brand, struggled to generate a decent margin and added operational complexities that, at the time, we were ill-equipped to fully deal with.
“Essentialism means being crystal clear on strengths and value-drivers”
Whatever goals they want to set, any travel business needs the right means to achieve them. OKRs (‘objectives’ and ‘key results’) are a tool I’ve written about on the Firebird blog before – click here for a refresher – and can be as powerful for SMEs as they are for enormous companies like Google.
Another approach that helps teams navigate strategic pathways is essentialism. This approach is highly complementary to the use of OKRs. In a strategic context, essentialism is about identifying what is truly fundamental to your business’s success and concentrating on that, while eliminating/avoiding other distractions. Whether specialising, diversifying or both, teams should do so in an essentialist way.
That means being crystal clear on what the company’s greatest strengths and value-drivers are. If specialising, essentialism helps decide which niche or activity is most worth focusing on – and which opportunities to politely say ‘no’ to. (Often, success comes from saying ‘no’ to good ideas so there’s room to say ‘yes’ to the best, most important alternatives.) If diversifying, essentialism will guide expansion into areas that align with a core purpose or competencies, rather than chasing every shiny new idea.
As an example: at Football Escapes – a Firebird client I’ve advised since 2024 – we get many expansion ideas thrown at us (rugby, golf and padel courses, for example), but staying true to providing the ultimate football family holiday remains the North Star. That’s why the team has chosen to diversify geographically (i.e. new resorts) without diluting into non-football products. They know what is essential to the brand for the time-being. Which is not to say that won’t change in the future.
“One option that feels relevant to many is ‘adjacent diversification’”
That point takes us on to another important note about strategy: there is no shame in pivoting. A strategic decision isn’t a life sentence – teams can re-evaluate in a year or two. Maybe you try a diversification pilot project; if it doesn’t work, you re-focus. Or you specialise for two years and then see a ripe opportunity and diversify at that point.
Some businesses successfully manage to specialise and diversify. In other words, they build from a strong core into carefully chosen extensions. Inntravel is one example that comes to mind. Over time, Inntravel carefully expanded their geographic coverage from primarily European destinations into carefully selected areas beyond Europe, applying the same core slow-travel formula. They diversified their product range by adding winter snow holidays (cross-country skiing, snowshoeing) and tailored short breaks, leveraging their existing customer base’s trust and preferences.
At the masterclass that inspired this blog, the path that felt most relevant for many delegates was adjacent diversification: first doubling down on what a business is really good at (and something that has a return) and then, when that core offering is well-established/profitable, looking for the logical extensions. To succeed, businesses still need the right passion, expertise and financial return. Leaders need to make an intentional strategic decision that fits their company’s context rather than drifting into new areas or activities.
“Doing nothing is a choice – and it should be made with eyes open”
Ideally, whatever the route you choose, it will be a proactive one. While holding steady can be appropriate in the short term (for example, if you need to consolidate recent changes, or a niche is currently booming and you want to ride the wave), in travel, standing still often means falling behind. And doing nothing isn’t just operationally risky – internal morale and motivation often dip in businesses that drift or stall. It can also erode a business’s value in the eyes of future investors or acquirers.
The key message is that even deciding not to choose a new direction is a choice – and it should be made with eyes open. If you deliberately decide to do this, make sure you have a very good reason and a plan for how that will sustain your success… or accept you have a lifestyle business which provides an income but may have a finite life.
“Deep specialisation or smart diversification will come from a grounded strategy”
During the masterclass, drawing from the enormous amount of experience in the room, we jointly explored the real-world dilemmas that many travel businesses face. Whether to double down on a niche, branch into new areas, or pursue a balanced path.
Where we ultimately landed was this: that the right answer depends on the business’s essential strength – the thing they do best, that they’re passionate about, and which delivers solid returns. If you operate at the intersection of these three, your strategy will be grounded. That might lead to deep specialisation, or to smart diversification. Either way, it’s intentional.
My thanks to all the participants for their openness and insights. For anyone who wants to think further on these ideas I can heartily recommend the three books below, all of which I dipped into when preparing for the masterclass:
Good to Great by Jim Collins
Essentialism: The Disciplined Pursuit of Less by Greg McKeown
Measure What Matters by John Doerr
Chris Thompson is a Director of the Firebird Partnership, with over 20 years’ experience of leading and growing businesses in the travel and tech sectors. His focus is on creating strategy, building teams, and devising processes that are both efficient and value-building.
Learn all about Firebird at www.firebirdpartnership.com
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