Tours & activities sector grapples with context, not content

The tours & activities sector is grappling with not just content and distribution, but context, according to Douglas Quinby, senior vice president research, Phocuswright, in a presentation at a breakout session at Expedia Partners Conference 2017 in Las Vegas last week.

Quinby argued that it’s a lot harder for players in the sector, particular the online platforms, to know what to put in front of a customer in order to get his bookings, even if they already have a history with that customer.

Tours & activities segment a different ballgame than hotels

Unlike hotels, where guest preferences are finite – type of room, fitness centre use or not, etc – it is not easy to know what tours or activities a customer wants at any given time.

He or she might have booked a Broadway show and museum tickets on a romantic getaway in New York but his next visit to New York could be a business trip or a family trip with kids, where recommendations of Broadway shows or museums would be irrelevant. “So it’s not just content, but context. It’s so hard to make this work as efficiently as (segments such as air or hotels),” he said.

The sector is worth US$147 billion this year, a growth of nine per cent over last year, which is higher than global travel industry’s average of six per cent. This covers traveller spend on ground, events, attractions, activities and guide/host but not shopping and dining. “With due respect to hotels, tours & activities is why people travel – that’s why it’s travel’s next big thing,” he said.

It is at a stage where online travel booking in the US was in 2003. But Quinby believed it won’t take as long as 14 years for tours & activities to grow to the level online travel booking is today.

For that to happen, small and medium-sized players, which account for more than half of tours and activities suppliers, need to automate and make their inventory bookable, and use technology that will enable them to, say, base pricing on yardsticks such as historical and forecasted demand, not gut feel, he said.

Phocuswright’s survey shows the number of tour & activities suppliers globally that are using a third-party reservation system rose to 45 per cent last year, from just 14 per cent in 2011 when it first conducted the survey.

Meanwhile, distribution of tours & activities is becoming as complex and diverse as the supply landscape, he said. The field runs the gamut, from online sellers such as Viator and Klook; wholesalers/package tour operators such as TUI and Hotelbeds; attraction passes such as CityPass or Smart Destinations; points of sales such as concierge, hotels (not concierge), airlines, DMCs, local tour operators; and peer-to-peer platforms such as ToursbyLocals and myRealTrip.

Local tour operators are reselling other tour operators inventory, local attractions are selling tickets to bus operators, hotels are reselling tours (GTA, for example, has tied up with Bokun, using its content and technology to allow hotels to re-sell tours and activities). Marriott International invested in PlacePass in March this year, a meta-search platform for tours & activities, to give guests a complete travel experience, whether they are in planning mode or already staying at Marriott hotels. Quinby thought this is a good way out for chains to prevent a commoditisation of their loyalty programmes, as it opens up an array of experiences to members.

He believed with a lot of interest in the sector, including more investor funds (such as Klook’s US$60 million in Series C funding recently, led by Goldman Sachs), tours & activities will be professionalised as quickly as the alternative accommodations sector has.

Lodging’s final frontier – individual home owners providing supply – was “totally chaotic in 2008, the wild west of the lodging industry at the time”, he reminded. Then startups started to come in to help home owners professionalise.

“Hotels didn’t pay attention, or if they did, laugh it off. Now, 10 years later, I don’t think they are laughing. It (alternative accommodations) is now mainstream. How did that happen? Fundamentally, startups make them discoverable, beautiful to book…(and) bookable.”

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