Will it suffice for TUI Musement to focus on the partnership side of its business, as it does with Booking.com and major cruise lines, or does it need to master the uphill task of becoming a breakout consumer brand beyond TUI's existing customer base? Acquisitions could be part of the mix when the pandemic dust settles.
The result is TUI Musement, which rebranded from TUI Destinations in September, and has become an important if unheralded European player in tours and activities, although not necessarily a thorn in the side for well-funded European market leader GetYourGuide.
In his first interview since the rebranding, and the maiden in-depth conversation with the press since becoming CEO of TUI’s tours and activities business unit in April 2018, David Schelp thinks the brand isn’t getting its due.
“Only a few people have us on their radar,” Schelp told Skift. “We are a relevant player in tours and activities.”
Acquired by TUI in September 2018, Musement the next year drove TUI’s euro 1.23 billion (about $1.48 billion) in annual gross turnover in tours and activities. That was a 105 percent jump from the previous year when Musement was still independent.
Perhaps the only tours and activities business to disclose its financials, TUI Musement made euro 56 million ($67.3 million) in earnings before interest and taxes in 2019, a 21.7 percent jump over the previous year. Like everyone else’s business in pandemic-strewn 2020, the pre-pandemic 2019 numbers are probably the most relevant.
Tripadvisor lumps experiences with dining, and Airbnb combines experiences with stays so it is very tough to compare financials with TUI Musement.
How to View TUI Musement
“While GetYourGuide dominates many of the headlines with its impressive fundraising and growth, Musement has become an important player across the industry,” said Arival co-founder and CEO Douglas Quinby, referring to Europe. “Whereas innovative startups often suffer when acquired by large, bureaucratic organizations, TUI and Musement have defied the odds and the skeptics by embracing and driving digital transformation within the TUI Destination Experiences division.”
GetYourGuide has attracted some $790 million in funding.
Schelp characterizes his TUI Musement as more like Tripadvisor/Viator, because both have substantial business-to-business partnerships, and less like Berlin-based GetYourGuide and Hong-Kong headquartered Klook, two amply funded startups that heavily lean toward a business-to-consumer thrust.
When it comes to its supply of tours and activities, which numbered 168,000 as of September 30, Schelp places TUI Musement in the “middle” between Tripadvisor/Viator at the high end and GetYourGuide at a lower rung.
TUI Musement markets to TUI’s 21 million annual customers, most of whom buy holiday packages, and had a total of 10 million tours and activities customers in 2019. Of the 10 million, 3 million participated in cruise line shore excursions offered by the likes of Carnival and Royal Caribbean under their own brands, and 1.2 million TUI Musement customers booked its own TUI Collections, which has some parallels to GetYourGuide Originals.
If running your own tours and avoiding paying a commission to operators seems like the holy grail to companies such as TUI Musement, Schelp said TUI Collections, which numbered around 260 activities in 2019, is not a major priority. That’s because although TUI Collections might be a higher-margin business than a partner-operated tour, it can be a brand risk and be challenging if the load factors aren’t optimal.
On the business-to-business side, TUI Musement now powers Booking.com’s attractions tab as the partnership has been rolled out over the last few months in some 150 cities on “all continents,” according to Schelp. While Booking.com is free to offer all of TUI Musement’s attractions, so far it isn’t fielding those that are branded TUI Collections or are delivered under partners’ brands as is the case with several cruise lines.
Schelp said he doesn’t view Booking.com as a competitor.
Where Does Airbnb Fit In?
While TUI Musement has been making strides, GetYourGuide views Amsterdam-based Tiqets, which saw Airbnb lead a $60 million funding round in 2019 and has been aggressive in notching deals with destinations and attractions, as more of a competitive threat.
It’s interesting that Airbnb, which has declined to offer attractions tickets, is a leading investor in attractions-oriented Tiqets. So Airbnb has a potential entry point into attractions tickets if it decides to turn them on. Tiqets founder and President Luuc Elzinga declined to comment about Airbnb.
Commenting on Airbnb’s highly curated experiences business, emphasizing tours by hosts, Schelp said, “Peer to peer experiences are difficult to produce, I would say.”
But he wouldn’t rule out Airbnb eventually operating a viable tours and activities business.
“They might have a formula to get it right,” Schelp said.
Asked whether he’s ever spoken to Airbnb about a partnership, Schelp declined to answer specifically but said, “We speak to many companies about partnering and doing things together.”
The European tours and activities market is highly fragmented. If TUI Musement sometimes gets overlooked, the same happens to some regional or national players, including France’s Ceetiz, Spain’s Civitatis, and Jochen Schweizer Mydays Group in Germany.
The partnership side of TUI Musement appears to be the fastest-growing portion of the business. Schelp said TUI Musement is focusing on organic growth, but he knows that consolidation will eventually take hold in the tours and activities space coming out of the pandemic and beyond.
TUI could be a buyer when that happens.
TUI Musement, which has 70 active direct integrations with venues, operators and tour software providers, including FareHarbor, Bokun, Rezdy and BookingKit, probably wouldn’t have buying a software vendor on its to-do list, Schelp said. Tripadvisor and Booking Holdings made high-profile acquisitions of such software services in Bokun and FareHarbor, respectively, in recent years.
With current strength in Europe, the Mediterranean and North Africa, followed by the Caribbean, the United States and Canada, TUI would probably eye acquisitions in Europe and the Americas to grow its base, and then consider expansion in other regions.
“We are ready to grow as soon as the market comes back,” Schelp said, adding “I also wouldn’t exclude acquisitions if the right thing comes along.”
Photo credit: A Lapland snowmobile tour that's part of TUI Collections. TUI Musement