A day after Booking Holdings announced it was buying tours and activities tech provider FareHarbor, TripAdvisor answered the challenge as it announced that it, too, entered that connectivity space with the acquisition of Iceland’s Bokun.
TripAdvisor did not reveal the terms of the deal, which closed in the last 24 hours. A spokeswoman said TripAdvisor plans to expand the roughly 20-member Bokun team.
Until now, TripAdvisor’s Experiences unit relied on third party integrators such as FareHarbor, Peek, and Bokun, which has been working with TripAdvisor since 2016, to connect tour suppliers to its platform, but now it will be able to handle booking, inventory management and tour operations through its in-house tech company. Bokun, founded in 2012, has a dominant presence among tour companies in Iceland, and also has a customer base beyond the country, as well.
“As the industry leader, our opportunity in this space is enormous,” said Dermot Halpin, president, TripAdvisor Experiences and Rentals, in a statement. “We’re committed to taking the experiences sector far beyond its current online penetration of just 20 percent, and Bokun will play a critical role in this mission.”
TripAdvisor bought Viator for $200 million in 2014, and is the dominant online player in tours and activities. Skift broke the news that it has rebranded the business to the industry from TripAdvisor Attractions to TripAdvisor Experiences. In 2017, TripAdvisor’s non-hotel segment — including attractions, vacation rentals and restaurants — grew 24 percent to $360 million.
In a Skift interview, Halpin said of Booking Holdings’ acquisition of FareHarbor: “There is no surprise that everyone is interested,” adding that the entire sector is emerging. “My reaction to that deal is that it is validating, and it is a good team. None of this is a particular shock to us. We know we have to be competitive to stay in front.”
Halpin said TripAdvisor’s acquisition of Bokun “will help cement our lead. We never take our business for granted.”
He said that experiences providers will not be disadvantaged if they use integrators other than Bokun. “We’ll do business with you on your technical terms,” Halpin said but if you don’t have a provider then we can offer Bokun.
“The idea is not to exclude companies but to accelerate market adoption,” Halpin said. “Nothing will happen with other integrators. We won’t dictate terms.”
Halpin said the deal just happened, and there are no plans to eliminate the Bokun brand. He added, though, that TripAdvisor is the brand that consumers and suppliers know on a global basis.
One big change that TripAdvisor is making is changing Bokun’s business model from a subscription basis — it currently offers subscriptions for about $123 per month (euro 100) — to a per-booking model. It is now offering a free three-month trial, and Bokun plans charging clients a 0.1 percent commission per booking in a bid to take share.
Bokun will remain based in Iceland, the companies said.
Asked about TripAdvisor’s purchase of Bokun and Booking Holdings’ buy of FareHarbor, Stephen Joyce, the CEO of tour operator software vendor Rezgo, said he has “mixed feelings” about the developments because it skews the competitive dynamic.
On the one hand, it’s really exciting to see this kind of activity in the space,” Joyce said. “It means the larger players are diving in with both feet. On the other hand, it leaves the market unbalanced with a few well-funded and now publicly owned applications on the one side, and a bunch of small independents on the other side trying to compete. When all the applications were in the same boat, we were competing with similar resources for the same relatively large customer base. This move gives a couple of players a huge advantage in terms of customer-acquisition capabilities.”
TripAdvisor’s decision to provide Bokun software to tour companies at a steep discount only makes it more difficult for the rest of the players to compete on price, Joyce said.
“The challenge now is how do we continue to compete in the face of these changes in the marketplace,” Joyce added. “I don’t have the answer to that yet, but as I’ve said many times, this is a long game. There are no winners, just players, and we’re still in the game.”
Meanwhile, Ruzwana Bashir, CEO of Peek, likewise sees validation of the sector in the latest crush of deals.
“All the recent demand in the space is validating our model and approach — consumers expect online availability and as the largest U.S. provider of real-time activity inventory, we’re excited about our position,” Bashir said. “As an independent company backed by top tech investors, we will remain 100 percent focused on helping tour operators and leading product innovation. Our latest additions include abandoned shopping cart tools, the first fully integrated POS (Point of Sale), and a powerful rentals platform.”
Peek’s investors include Eric Schmidt, Jack Dorsey, Brad Gerstner, David Bonderman, Ray Lane and Pete Flint.
According to Crunchbase, Bokun had received about $420,000 in grants, but it’s unclear what it’s total funding has been. While the company had a great footprint in Iceland, it struggled to expand meaningfully outside its base.
“We’re thrilled to join the world’s largest attractions, tours and experiences business,” said Hjalti Baldursson, co-founder and CEO of Bokun in a statement. “TripAdvisor gives us the opportunity to serve customers in every corner of the world, and we’re excited about the significant growth that’s to come.”