Experiences arms race heats up as long tail of tours & activities sector moves into digital age

Tours and activities have been one of the longest tails in the travel industry, as the sector’s slow rate of online adoption is encumbered by challenges including fragmentation of small disconnected suppliers and buying habits of travellers...

The travel industry is witnessing an arms race in the tours and activities sector, as travel providers and sellers seek to tap opportunities in one of tourism’s fastest-growing segments. According to Phocuswright, tours and activities make up around 10 per cent of the global travel market, and steady advances over the next few years will take this segment to US$183 billion by 2020.

That tours, activities and attractions sector is a piece of the travel pie that everyone wants a piece of is a no brainer. Tours and activities have been one of the longest tails in the travel industry, as the sector’s slow rate of online adoption is encumbered by challenges including fragmentation of small disconnected suppliers and buying habits of travellers, who tend to book activities closer to their trip, which could range from a few days to a few hours prior.

But changing consumer behaviours, which see travellers placing a growing premium on in-destination activities and experiences, is a driving force for the above-market growth rate of the tours and activities sector.

On their part, OTAs have also been applying greater sophistication to their marketing and distribution efforts, helping suppliers streamline the complicated process of selling experiences online.

Tremendous growth opportunities and investment have been observed in the travel and activities marketplace. Airbnb ventured into the space when it launched Experiences in 2016, and has been readily expanding its portfolio to offer 30,000 activities in over 1,000 locations. Tours and activities booking platforms Klook and GetYourGuide have received massive funding in the past year, while Booking Holdings and TripAdvisor have acquired tour specialist technology providers FareHarbor and Bokun respectively.

Now, major industry players also want a bigger slice of the action, as travel corporations are starting to shift their business models toward a full-service “ecosystem” approach to own the customer journey.

Having tested destination development with the “successful” launch of Atlantis Sanya, Fosun Tourism Group – the leisure and travel arm of the Shanghai-based investment conglomerate Fosun International – is keen to generate synergy among its resorts, destination and tourism products business to create a “Fosun holiday ecosystem” for Chinese customers, chairman and CEO Qian Jiannong has revealed.

AirAsia, under its outspoken chief Tony Fernandes, has never been shy about its expansion plans beyond the business of flying people, including incorporating financial services and activities to build a wider brand experience. At the recent Skift Forum Asia in Singapore, AirAsia’s deputy CEO, technology and digital Aileen Omar reaffirmed the airline’s “ambitious but doable” plan of being the “Amazon of travel”.

The online ascent of the tours and activities sector has only just begun. But with most tours and activities continuing to be booked in destination and in person, how easy is it to bring more of these offline transactions online?

And while most travellers have no qualms about purchasing a tour lasting several hours online, they are likely to express hesitation at buying longer, more complex multi-day tours without speaking to an agent.

Furthermore, what about privacy issues, as travel companies make use of data for personalisation?

Everyone wants to be an Amazon, but who will get there? The tours and activities sector is now a space to watch.

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