Why Everybody Now Wants a Piece of the Tours and Activities Sector
Skift Take
Large travel corporations can't seem to get enough of the tours and activities space. It's one to watch as the year unfolds. Deals can be a great way to get a foot in the door, but don't forget to make sure there is a strategic fit — and, of course, that the price is right.
Travel's tours and activities segment has been on quite a ride lately, attracting new suitors looking to invest or to snap up companies outright.
Two back-to-back acquisitions shook up the space last week as Booking Holdings acquired FareHarbor and the very next day TripAdvisor purchased Bokun. This follows a slate of deals such as Mr. and Mrs. Smith’s purchase of SideStory, the sale of Hotelbeds’ destination management unit to TUI, and Marriott's investment in PlacePass.
It’s not just M&A either; the hits have been coming fast on the venture capital side as well with tours and activities startups raising at least $80 million so far this year. That builds off of 2017 when GetYourGuide raised $75 million and Klook raised $60 million in a tight contest to close the largest VC deal in the history of tours and activities.
So what’s going on in highly-fragmented tours and activities to create all this activity? Skift Research analyzed the space using proprietary insights on the state of tours and activities, including a breakdown of online tour platform inventory, affluent traveler spending, and venture capital investment trends.
Skift Research sees three main drivers of investments and acquisitions in tours and activities. First, the sector has strong internal growth dynamics, in part driven by consumers shifting to experiences over things. Next, while the sector is still mostly offline, that is is rapidly changing due to a shift reminiscent of the early days of online hotel and airline booking. Lastly, all of these changes are happening at a time of consolidation for the largest, hyper-competitive global travel brands. These corporations are also beginning to shift business models toward a full-service platform approach. We examine each trend more closely below.
1) The inside view: strong growth dynamics within the tours and activities sector
The tours and activities segment represents an addressable market of $160 to $180 billion and growing, according to research analysts at investment bank SunTrust Robinson Humphrey, making it one of the largest opportunities in travel.
Skift believes that tours and activities are seeing above-market growth rate because of changing consumer behaviors such as the increasing premium that travelers place on activities a
