What is a Loss Leader?
In retail terms, this is generally a product that is sold at or below cost as an incentive to sell another higher margin product. During Black Friday sales, for example, stores will advertise a certain number of extremely discounted products in the hopes of attracting crowds of shoppers who will then purchase higher margin alternative items.
For in-destination tour operators this may be selling a tour at a discount in the hopes of incentivizing the customer to purchase higher margin add-ons such as a meal, souvenirs, drinks, or photos. Quite often these products may be bundled together as a package where the tour is shown to be discounted heavily or the add-ons are shown to be “free” when in actuality the average margin of the package is kept reasonably high for the tour operator.