All Aboard: Rocky Mountaineer Railtours

Blitz Magazine

British Columbians are spoiled. Most of us live with mountains, spend our days unavoidably looking at mountains. Mountains and lakes, mountains and rivers, mountains and mountains. We’re used to seeing wildlife, and a trip to Calgary is no big deal.

But for people from Kansas City or Manhattan, Liverpool or Cairo, a trip through the Canadian Rockies is an awe-inspiring, once-in-a-lifetime experience. And this is why Rocky Mountaineer Railtours is one of the world’s most coveted of train trips.

The Rocky Mountaineer story goes back to 1988, when VIA Rail, Canada’s national passenger train, started running a service called ‘Canadian Rockies by Daylight’. The service was heavily subsidized and, after two years without profit, the federal government put it up for auction. Twenty bids were received; the rights were awarded to Vancouver’s Great Canadian Railtour Company (GCRC), a team of former railroad executives led by one-time Gray Line Tours president Peter Armstrong. Rail is no longer a cheap, efficient way of transporting people over long distances, but the GCRC people knew that if the trip became an experience, it could be successfully marketed.

They were right. This was long before terrorism hit the travel industry but, even then, North Americans were looking for different types of vacations, especially those that didn’t involve leaving the continent. And tourists from all points of the globe want experiences—not just a couple of weeks sitting on a beach. They want an understanding of the places they visit; to experience the culture, history and geography of unique places.

GCRC purchased the VIA routes and equipment, bought and refurbished the old VIA coaches and, in April 1990, began operating a 500-passenger train service between Vancouver and Jasper, and Vancouver and Banff/Calgary. By the following May, capacity had increased to 600 passengers and departures were up by 50%. GCRC employed 50 people and received 11,000 guests.

Today, Rocky Mountaineer Railtours (RMR) is the largest private passenger rail operator in North America. It employs 350 people, owns 65 pieces of rolling stock and, in 2001, welcomed 73,000 guests. And the whole success story boils down to terrific service, excellent guest relations and targeted marketing.

The Rocky Mountaineer experience is a two-day, all-daylight journey that follows the historic train route constructed over 100 years ago through BC and the Canadian Rockies. (The high season is April to October, but there are also winter tours.) It’s not just a trip from Vancouver to Calgary; from Calgary, guests can do the return trip, drive out of Calgary, fly out of Calgary, or keep heading east on VIA. If they return to Vancouver, they can hook up with a cruise to Alaska, head to Whistler, Seattle, home, whatever. There’s a Calgary Stampede Tour, a Christmas in Victoria tour, various wildlife tours, skiing tours—RMR markets 40 different packages.

For the rail portion, guests choose from two levels of service: Gold Leaf, which is first class, and Red Leaf, which is first class-ish. Red Leaf is classic rail travel on 50 year-old reconditioned Pullman coaches. There are reclining seats, large picture windows, open-air vestibules and in-seat dining. Gold Leaf coaches are $3.5 million, state-of-the-art, two-tier cars with glass ceilings, observation platforms and dining rooms.

Either way, guests are wined and dined with BC Salmon, Alberta beef and BC wines accompanied by white linen and fresh flowers. On-board attendants speak English, French, German, Japanese and Mandarin, and give passengers plenty of notice when the train is about to slow for key photo ops. Guests carry detailed maps and follow the line’s history with the Rocky Mountaineer newspaper.

The two-day journey travels 918 miles through the UNESCO Rocky Mountain World Heritage Site, which is Mount Revelstoke National Park, Glacier National Park, Yoho National Park, then Banff and Jasper. The average pace is 75 k/hr and passengers do not disembark, but they can gape away at bears, bighorn sheep, moose, deer and elk. Along the way, they take in seven mountain ranges, plus tons of bridges, tunnels, waterfalls, canyons, lakes and rivers. And in the middle, they spend the night in Kamloops, where they have the option of attending the RMR-owned Two River Junction Dinner & Musical Review.

The cost of the trip depends on passenger choices. The minimum is $499 for Red Leaf, $999 for Gold Leaf (the split of choice is 50/50). When people order and book directly from the RMR brochure, they can spend up to $6000 per person; the average is $1300. But if they want to rent a car and drive back from Calgary, or head back to Vancouver via limousine, then stay at the Four Seasons before spending a week at Whistler, it can all be booked as an RMR custom tour and the sky’s the limit.

RMR houses a group travel department that arranges customized itineraries for groups—in the incentive and leisure travel sectors, plus the pre- and post-conference sector (many companies have their conferences right on the train).

Outside North America, RMR has sales reps in 18 countries, plus five sales managers who work out of the Vancouver office but travel the world making sure that tour operators, travel wholesalers and travel agencies are aware of the company’s offerings. The company supports the European market through a London office, PR firms are active in Los Angeles and London, and the company works very hard at maintaining a positive relationship with the international media.

As RMR’s VP Marketing, Graham Gilley, explains: “Our PR people pitch the international media with many different editorial angles. In 2001, we hosted 75 groups of media—we want those photographers and cameramen on board. We’ve been on Chef at Large, on the BCC, on CNN’s Hot Spots. And we work very closely with Tourism BC, Tourism Vancouver and Travel Alberta to get the most out of the media and make sure that Rocky Mountaineer is part of the story.”

This coverage not only helps sales, but it has helped the company build an excellent reputation. Its trade-marked slogan ‘The Most Spectacular Train Trip in the World’ was actually a comment made by former Canadian Prime Minister Joe Clark. Rocky Mountaineer is only one of seven rail journeys to twice make the 20 Best Rail Experiences list issued by the prestigious International Railway Traveler magazine. In 1998, it was voted Best Attraction by the North American Association of Travel Writers. Fodor’s listed RMR’s winter tours on its list of Top-Ten Most Overlooked & Under-Rated Winter Tours.

This sort of thing goes over very well with the RMR market, which is people 55+, mostly couples and empty-nesters who can afford to be discriminating. About 40% come from the US; 25% from Britain, 20% from other parts of Canada, the rest from Europe, Asia and Australia.

“People come to Canada because they want to see its natural beauty,” says Gilley. “We’re the centrepiece of that Canadian vacation and a big draw to Western Canada. For train buffs, the fact that passengers have their own train [no cargo attached] is a big deal, but only about 15% of our guests have a real interest in trains.”

There are two groups of customers: tour operators and FITs, or Fully Independent Travelers, who either call to book directly, or ask their travel agents to book.

The Internet is a big part of the marketing effort. RMR has three sites: rockymountaineer.com, which has been up for four years; winterrailtours.com and spectacularmeetings.com have been up for two years. Gilley notes that rockymountaineer.com receives 2,500 unique visits every day, making it one of the most visited of Canadian travel sites. The sites are extremely thorough, offering detailed information packages, streamed video and 360-degree Ipix tours, plus scheduling and pricing information. But you can’t book on-line. You have to call.

When someone has chosen his trip from the website, he calls the 800 number; in Vancouver, there there’s a 24/7, 24-operator call centre that fields 1000 calls a day. The call is answered by a well-trained RMR salesperson, who starts with the caller’s immediate choice, then helps with the ‘vacation design’, then books it all. RMR has strategic alliances with Hertz, Laidlaw Motor Coaches and Fairmont Hotels, so the up-sell angle is very important. But it’s a win-win situation. With one phone call, RMR makes a profit, the consumer gets a fabulous, custom-designed vacation. And the one-stop-shop approach makes life easier, and costs lower, for travel agents.

There’s another, equally important kind of caller. Those are people who want the all-important, 56-page RMR brochure, 800,000 of which are distributed every year. The brochure is an even more important planning tool than the Internet information and is most likely to lead to the booking.

While the sales managers and overseas agents take care of their areas, in North America, advertising encourages people to make that call. A print campaign targets the FITs from January to June, with ads in Readers Digest, Canadian Living, Conde Nast Traveler, Smithsonian and regional lifestyle magazines. Gilley says that newspaper and radio ads do not work for RMR. “We’ve tested radio; we went heavily into newspaper three years ago, but we weren’t pleased about getting stuck in the clutter of seat-sale ads. We don’t sell on price point—we’re an experience and that’s difficult to communicate with newspaper and radio. We’re a very visual product and need to be seen in full-colour.”

Gilley’s print advertising budget is around $850,000. Aside from bringing in those phone calls, the advertising provides very strong brand awareness. The ads tell people to call their travel agents, or the 800 number. This helps to drive business to the travel agents, who are also very important to RMR’s success.

“We support travel agents very strongly,” says Gilley. “It’s important that people deal with travel specialists. We’re happy to take bookings over the phone, but we don’t want to cut off the travel companies—about 60% of our business comes from travel agents. And unlike other travel-industry companies, we have not cut or capped commission rates.

“This business is similar to any manufacturing business. We design and manufacture the product. We sell it to the wholesaler, who sells to the retailer, who sells to the consumer. And then we have to secure distribution to get our product on the shelf. We have to build relationships, maintain them, and build new ones.

“That’s how we get listings and co-op deals for promotions and marketing. We forge relationships by having a unique product which complements what those in the travel business are trying to do with their companies. It has to be worth their while. We’ve made it worth their while by gaining the reputation of providing a superior product—whether it’s the end product or part of a package. We have excellent worldwide distribution—since September, we’ve gained 10 new American tour operators who previously weren’t selling Canada. We already deal with most of the large operators, but we like to have distributors of all sizes.”

Gilley joined RMR in 1997. At that time, the company’s marketing was very much grass-roots. There was no database, no print advertising. And the marketing budget was only 2%.Well, now the marketing budget is only 4%.

“It’s not a large budget, but that’s the nature of this business,” explains Gilley. This is a very labour- and capital-intensive business. To make a train move 10 feet, it takes literally every employee we have—350 people in sales, operations, reservations, guest services, maintenance. That’s why there’s a tremendous reliance on the travel and tourism network.”

RMR has come a long way, however. Its marketing strategy was set up in four stages, with each stage taking one year to implement and all four eventually running concurrently. The four stages are Response, Anticipation, Experience and Referral.

Gilley explains: “Response involved retaining an advertising agency [Vancouver’s Bryant Fulton & Shee], then ensuring that our brand was in place, and that our ads were ready to go, so we had a way of generating response from potential guests. And we provided our PR people with the messages required to generate exposure for the brand.

“Phase two was Anticipation. The best part of any trip is the anticipation of it—the ability to say ‘I’m going on this vacation and this is what I’m going to do’. If we wanted people to say ‘I’m going on an incredible rail tour in an awesome part of the world’, we needed to capture those elements in our materials. So we re-did our letterhead, our corporate identity, our brochures, vouchers, itineraries, travel guides—everything down to the travel wallets. We built a presence in the hotels and started to get into response marketing.

“The Experience component begins when you arrive at the train station to board. We created a product department which is a group of people dedicated to designing itineraries and improving the on-board experience. We own 28 motor coaches, so we branded those and changed the colour of our trains—to red, white, blue and gold. And we looked at all our souvenirs, to make sure that there was consistent branding and delivery throughout.

“That leads to the Referral stage. This is very important, as 26% of our guests are referred by friends and relatives. This is why service is such an important element in the branding of Rocky Mountaineer. It has always worked without prompting, but we decided to formalize that relationship and make our clients our ambassadors. So if they want to refer a friend or relative, we’ll send personalized referral materials. And this year, we gave all of our guests a three-minute commemorative video to take home and show their friends and relatives.”

RMR also sells full-length souvenir videos for $18.95. Gilley wouldn’t give any precise figures relating to profits, but did note that annual souvenir sales are well over $1 million.

In 1999, RMR started conducting direct-response campaigns, all of which have been very successful. Last fall, it spent $37,000 on mailing a win-a-trip package to 20,000 people who had previously requested brochures. The result was 203 bookings, 511 guests and $1 million in sales. Another campaign was simply a questionnaire sent to 20,000 US households; it received 13% response.

The company does some market research, though not much. Focus groups are the communication check for creative and there has been telephone research. But the best research is done on the trains. Four hours before the end of each trip, guests are given reply cards. They have the time and the motivation to fill them out, and about 32,000 cards are received each year. The cards are checked every two weeks; if adjustments are indicated, they are immediately made.

“This is the best way to know how we’re doing,” continues Gilley. “But it also allows us to build relationships with our customers. We employ three people who do nothing but look after responses to guest comments. If someone says his coffee was cold, we send him a letter. If someone says that he wanted to buy a sweatshirt and they were all gone, we’ll send him a letter. If there’s something a little more serious, we’ll send an appropriate refund. We send out 10,000 personal letters annually in response to comments.

“Our market is people who are older—they love to be communicated with. They’re not used to getting acknowledgements of their comments from travel companies. So this practice, in addition to creating referrals, creates lots of goodwill and improves their overall experience. We aim to please and the follow-up makes the entire Rocky Mountaineer experience that much more satisfying.”