Everybody wants a piece of the tours and activities sector, but how easy is it going to be to migrate all those businesses that currently operate offline to online?
The tours and activities sector has received a real boost lately with a series of deals and announcements creating a major buzz in the sector.
Having mostly watched from the sidelines over the past few years, some of the industry’s major players now want a bigger slice of the action. But how easy is it going to be to bring more of these offline transactions to online?
Bookings for tours/activities/trips/experiences still largely happen in destination and in person, very close to the intended time of departure — a major challenge for any company looking for a significant degree of scale.
“Because business is generally offline, so much of the sale happens physically at a desk somewhere with people handing over cash, it’s a really old school way of booking,” said Tony Carne, general manager of Urban Adventures at EyeforTravel Europe 2018.
Urban Adventures is one of a number of companies trying to change all that. The burgeoning sector contains operators, resellers and technology providers. Urban Adventures, which is part of Australia’s Intrepid Group recruits locals to show tourists around 162 cities.
“The change in the landscape since 2011 — it’s night and day in how it was just a short time ago,” Carne said.
“It took a long while for everyone to appreciate the size of the market, the opportunity of the market, now everybody is rushing into the market. And the beauty for us I guess is that somebody has to run the product. We’re fairly agonistic as to where the sale comes from.”
Airbnb, for example, has committed to rolling out tours and activities and wants to bring it to 1,000 cities.
“I think it has huge potential. For every euro that is being spent on accommodation, three euros is being spent on any type of activity so it’s an incredible market,” Jeroen Merchiers, Airbnb managing director for Europe, the Middle East, and Africa, said at Skift Forum Europe 2018.
One of the challenges to new entrants and smaller companies is making sure any trips visible are bookable.
The importance of being able to make an instant transaction with reference to ancillaries like tours and activities. came up a number of times during the conference.
“There’s a lot of smoke and mirrors out there about what looks to be bookable and actually then isn’t then booked in real time. There’s people on a pony, email, telephone, taking that reservation, processing it, circling it back. It’s invisible to you but in 2018 there’s still gross inefficiencies in the model,” said Mark Rizzuto, CEO of Livn, an Asia-Pacific-based aggregator of tours and activities product.
Connecting up the offline world with the online one has been a primary driver in the latest wave of consolidation within the industry. But the question remains: are the small businesses that use these platforms ready for the digital world?
“There’re a lot of reasons why those businesses are offline. They make enough sales now offline… there’s a lot of resistance in those businesses: they don’t want to be online, they don’t understand commission, they don’t like commission, they don’t understand the pricing structure around commission. It’s not as simple as saying there a lot of little guys out there that want to be online,” said Carne.
Getting Personalization Right
Travel companies have offered tours and activities for decades, the difference these days is the size, scale and booking process. Customers are also looking for a certain degree of flexibility on their trip, that maybe older companies aren’t able to accommodate.
“We offer personalization, but they starting point can be really simple. If you’re not a morning person and you don’t want to leave at 6 a.m. in the morning for a day tour, something that’s really nice you can say is: ‘hey can we make it 11 a.m.’,” said Matthijs Keij, the CEO of experiences marketplace Withlocals.
Customizing—whether that’s time of day or mode of transport— certainly appeals to tourists but it all come back to availability and bookability. After creating your perfect travel experience, if you then can’t book it when you want to, what’s the point?
Then there’s the privacy aspect – the other side of the coin to personalization.
“I think that super creepy: we know everything about you and we’re going to spam the hell out of you is probably not the best way to treat customers,” Keij said, and it’s hard to disagree.
Supposedly Europe’s new General Data Protection Regulation is going to smoke out companies that engage in this kind of marketing but it will be an ongoing battle even for reputable companies that want to offer customers a more targeted product.
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Photo credit: An Airbnb painting experience in Chicago. The company is making a big play in the sector. Airbnb