Is Asia’s booming tours and activities marketplace ripe for disruption?

Quinby: tours and activities sector expected to grow faster in APAC than other regions in the world (photo credit: Facebook/Arivaltravel)

The tours and activities marketplace has been one of the hottest and most closely watched segments in travel and tourism in recent years, with growing acquisitions and investments pumped into the segment.

At Arival’s inaugural Asia event in Bangkok earlier this week, co-founder and CEO Douglas Quinby said the tours and activities sector in Asia-Pacific has been “significantly growing faster” than other regions and is expected to post an average of seven per cent in the 2017-2022 period, versus four per cent in the US and three per cent in Europe for the same five-year period.

Quinby: tours and activities sector expected to grow faster in APAC than other regions in the world (photo credit: Facebook/Arivaltravel)

“Asia-Pacific will add US$150 billion in gross market value over this five-year period – this is equivalent to the entire travel markets of Japan, Taiwan, South Korea and Hong Kong. This is extraordinary,” Quinby remarked.

As the fourth largest tourism sector in the region after airlines, hotels and rail, gross bookings for tours and activities in Asia-Pacific is expected to reach US$45 billion in 2019.

“Investors of all types have poured US$1.2 billion into start-ups of all types in our industry since 2017. Where has all the money gone? You guess it – Asia,” Quinby added. This, he says, is a nod to how the in-destination sector is becoming a key and growing revenue generator in the region.

“But not all this investment has gone to one particular OTA in Hong Kong,” he quipped, alluding to the fresh injection of US$225 million that Klook has snagged in its latest funding round.

Wilfred Fan, chief commercial officer at Klook also attests to the “excitement” that investors are seeing in Asia’s tours and activities segment, even as the tours and activities sector is characterised by “fragmentation” in terms of connectivity, suppliers, operations, transactions and payments.

In Asia, a “newcomer” to the tours and activities sector, “connectivity is just at the beginning,” noted Fan. “Most service providers are not yet connected or still rely on physical bookings… The infrastructure and technology platforms are already there, but operators don’t know where to go. There is huge amount of untapped potential.”

Blanca Menchaca, CEO and co-founder of Singapore-based B2B technology and distribution specialist BeMyGuest, agreed: “We are just at the tip of the iceberg when it comes to online distribution. In Asia, the majority of tour operators are just starting to sell online, and a lot of activities are not even online.”

With a mobile-savvy travel population, tour operators and suppliers more used to legacy booking systems, and OTAs hungry to scale up their content and marketshare, all these point to an imbalance in demand and supply in Asia – and that disruption in a fast-growing but fragmented industry is probably not too far off.

Renato Domini, CEO, Panorama Destination, certainly thinks so. “The next two years are going to be disruptive,” he said. “DMCs have to reinvent and continue to invest in product innovation, not just offer sightseeing tours.”

In anticipation of unrelenting changes in the tour operating space that the digital travel economy will bring, Panorama Destination has already restructured the company with a new department to look at OTAs – which has been a “good distribution channel” for the DMC so far, Domini revealed.

While tours and activities sector in Asia is comparatively less mature than the US and Europe, travel consumers in the region are ahead of other regions in its mobile usage – a key factor that will enable the region to pivot its growth and unlock further opportunities in the in-destination marketplace.

The connectivity gap underpinning the tours and activities sector have also spurred the growth of a vibrant reservation technology development, Asia and worldwide. BeMyGuest, for instance, will pump its undisclosed amount of Series B funding into improving its technological initiatives as it enters its next stage of growth.

Global players in online travel have also moved into the space, as evident in TripAdvisor and Booking Holdings announcing their respective acquisitions of tours and activities tech providers Bokun and Fareharbour last year.

What’s clear is that Asia’s exciting tours and activities sector is just starting to sizzle.

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