Expedia is set to make a massive push into the tours, activities and things-to-do sector, with a major strategy to give suppliers the tools for distribution and marketing.
The company is also planning on giving hotels and airlines the ability to sell products with a suite of services aimed at making tours and activities as important a part of a traveller’s itinerary as a hotel, car hire or airfare.
In short: Expedia is plotting a significant and laser-focused move on the sector, way beyond its existing and somewhat low-key approach to selling things-to-do in a destination.
The ramping up of its strategy is already being talked about privately by those currently in the market and “watching extremely closely” as a game-changing and deliberate move to target arguably the last remaining area of the tourism industry to fully embrace the opportunities apparently associated with electronic distribution.
Why? Because a company with the technical and marketing muscle of Expedia is behind it.
The new and global approach is being housed under a new brand within Expedia Inc known as Local Expert Hub, run by the Expedia Local Expert division, and is due to be unveiled formally in the next few weeks.
The company held a briefing this week, however, led by Kerri Landeis (vice president of ELE) with Ruslana Zbagerska (senior director for ecommerce and partner marketing at ELE) and Cari Thompson (ELE’s marketing manager)
Some of the strategy already exists such as the Destination Services wing, the area which allows tour and activity providers to upload availability, content and prices, either via XML links or manually into the Expedia database of inventory for bookings on its consumer-facing sites (Expedia.com etc).
Local Expert
The Hub’s Local Expert, which has been around for a number of years (was originally called Expedia Fun), is one of four elements now being drawn together.
It is an on-site concierge service, primarily an Expedia branded (or provided), staff-led initiative within hotels to up-sell tours and activities and other products within a destination (Orlando and Las Vegas are the main resorts using it).
Local Access
This is the technology behind the Local Expert service, which has also existed for some time but is being extended. It is primarily a reservation system with live availability for products and services, used by the same hotels.
But in a significant move away from just being for intermediaries looking to up-sell products, Local Access will be also made available to tour and activity suppliers.
Expedia says this system has been massively updated from the original point-of-sale technology in order for suppliers to use it – built in-house but also by licensing a third party system (it will not disclose from where).
Local Custom Link
Then follows two brand new services within the Hub.
The first is Local Custom Link, an API of every piece of inventory on the Expedia tour and activity platform, packaged similarly to the existing Expedia Affiliate Network system for flights and hotels, so third parties (such as hotels and airlines) can integrate products within a tour and activity channel on their own websites.
This will also include content (such as photos etc), real-time availability, booking and reservations.
Local Experiences Xchange
The final piece of the jigsaw is a way for intermediaries (such as hotels or tourism platforms looking to feature tours and activities) to have their own branded website with a feed of relevant local tour and activity content.
Essentially, a white (or private) label service.
Both the Local Custom Link and Local Experiences Xchange are what officials are calling “beta” products.
Why now?
Expedia says the decision to target tours and activities in such a major way is two-fold:
- The company has been gradually upgrading every aspect of its technology over the past few years, including how it distributes product to third parties and its increasing use of APIs to give third parties access to its inventory. Tours and activities is the latest channel internally to get the nod.
- From a consumer-facing perspective, Expedia says it wants tours and activities to be seen as an intrinsic part of what they consider booking online, alongside the flight, hotel and other core features. It is, after all, often the reason why people take a trip: to do things in a destination. It’s all about the “experience”.
But these elements do a disservice to what else is really going on in the wider tour and activity marketplace, and probably another significant strand to Expedia’s strategy.
By producing a suite of services to, in Expedia’s words, “help” suppliers and intermediaries with distribution and marketing of product, it clearly wants to grab some of the marketplace for itself and essentially bring the thousands of suppliers under its wing.
Will it make money?
It hopes so. The affiliate scheme for a commission on bookings on whatever system taken by a customer works along the same lines as those signed up to the Expedia Affiliate Network.
Inadvertently the company last year outlined how important the sector will be to its bottom line. A senior figure disclosed that tour and activities were projected to bring in around $1 billion in gross bookings a year by 2015.
So who will be sitting up and taking notice?
The other tour and activity OTAs (such as GetYourGuide, Isango or Viator) certainly, alongside those dipping in to metasearch for products (PocketVillage) and, indeed, tech providers (Flextrip, TourCMS, Rezgo et al). But perhaps where the most interesting aspect of all this resides is in how its larger rivals might react.
Travelocity (Lastminute.com) and Orbitz (Ebookers) have tours and activities as a channel (here and here, respectively) but have not targeted the B2B end of it in the same way.
Priceline (Booking.com) has tried but not given the sector the same level of focus as hotels (why would it, some might argue).
But there is bounty to be had in tours and activities, as PhoCusWright has outlined, so Expedia’s decision to throw an enormous amount of effort into ELE and the Hub could, err, rub off on the others could trigger an exciting and new battleground over the next few years.
Either way, tours and activities is probably not going to be the same again.
NB: Mountain biking image via Shutterstock.
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About Kevin May
This was inevitable, and a long time in coming. Expedia has stated they want T&A to be a billion dollar business in the near future (current estimates are they do about $200M/year). They can easily get there if they execute properly on their strategy. This should be good news for everyone else in the industry as every other OTA now gets their wake up call and will need to find partners to help them compete with Expedia. Let the fun begin!
Dear Bruce, where did you find the estimates for Expedia revenue in DS? I would really be keen to know.
Thanks very much,
Miguel
Hi Miguel,
That number has been out there for Expedia for awhile, I believe I got it from a job posting for a leader of their T&A group that I ran across.
Thanks very much. I saw the same job posting… It would be great if they disclossed some additional information on their business…
Indeed Bruce. I can’t wait!
I agree. Expedia has put a big spot light on a sector we’ve been evangelizing for years. This is very good news for everyone, not least of which the in-destination operators. To support proper distribution through OTAs, they are going to need systems that can support them.
Sensible stuff. At last, people realising that flights are a highly commoditised loss leader as far as selling travel is concerned (and whose fault is that, one wonders) T&A’s are less price sensitive and well, to put it bluntly, there is a bob or two to be made, here.
My only caveat would be – mixing tours, activities and flights = package = ATOL etc. Interesting to see how the CAA (in the UK) deals with all this packaging and how it would fit with regulations – That said, Expedia are probably big enough to tell the CAA where to go – dunno about the EU, though. But Expedia say “its all an intrinsic part … alongside Hotel, flight “. Sounds pretty much like a package to me. Wonder how much of a bond Expedia would have to put up?
I don’t think it is about pre-packaging. The companies that crush this, whether it is Expedia, Viator or the other companies that are making great progress, must be connected to live inventory and offer it to travelers when they want it – when they are in destination. That’s why it will be interesting to see what Expedia’s technology can do – it has to tie to mobile, that’s what the consumers require to move T&A to the next level, and it also has to tie to fulfillment, another big mess in this sector.
So I think it really is about individual sale of tours and activities (not packaging) – and Expedia and the other big distributors (airlines, hotels, GDSs, etc.) will have access to travelers when they are in destination. So again – whoever wins the mobile game with connected live inventory and with mobile fulfillment will be the big winners here.
It may not be about packaging – but it will certainly involve packaging. Just booking a flight and a hotel in the same hit (if paid up front to Expedia) is packaging. Given that it is from live inventory, even more so. I don’t see how this can “get around” the EEC Package Travel Regs – let alone the ATOL requirements.
If I book all the various bits of my trip on Expedia (the bit about if I book it all in one hit aside for now) – it’s a package on the grounds that “If it looks like a package, smells like a package and works like a package – it’s a package” – worse (or better) its a package from Expedia.
I can see your very interesting point re: mobile and in location. I had a big fuss trying to book horse riding for my daughter on our last holiday. So, yes, they will be the big winners, and it could be the next big thing. It will be interesting from an airline perspective (they being the ones running around like headless chickens at the moment) as airlines need to sell ancillaries (I mean proper ancillaries, not this stupid extra bag nonsense) and they could really lose out on a terrific opportunity. Rather, the boat will just sail them by. Big Tour Operators (who rely on selling trips etc in resort) will need to wake up, as well.
But, my note of caution remains. One could fall foul of regulations. Oh! I know people will say Expedia is a big firm… money safe … Yes. That goes along with Rolls Royce can’t go bust, Concorde can’t crash and Lehman Brothers is a good strong bank ….
At last a player with resource behind it starts to get its act together. Now I wonder how many of the suppliers get theirs together?
On the face of it this is excellent news. The sector is crying out for someone with the resources (and existing customer base) to make distribution work in the T&A sector.
I can see Expedia making a huge dent in the mass-market day tour category. However, I am yet to be convinced that even a company as big as Expedia can successfully distribute multi-day tours (which represents the meat of the T&A sector market). Talking from first-hand experience, I do believe it is possible to sell complex high value multi-day tours purely online with no servicing interaction, but we’ve found it takes such an investment in content and product knowledge, that the only sensible thing to do is to take control of the margin, badge it up under your own name and call yourself a tour operator.
This will be one worth watching very closely for anyone in the sector.
Ben I agree 100% that it will be day activities and tours that this will impact on most. However, for operators that use day tours and activities as their intro to other multi day tours this may develop into a serious revenue generator.
I also agree selling multi-day tours online without servicing interaction is extremely difficult without serious investment in content and product knowledge , having said that from experience I still think that the more personal interaction with the client prior to a multi-day tour the better. Expectation management in this sector is everything.
Agreed about expectation setting, and of course the more interaction with the client, the more likely you have a repeat customer, a crucial factor in this sector.
The more you think about it, the more obstacles there are to distribution of multi-day product. What I like about this Expedia move, is that it is the ultimate litmus test for the sector, if they can’t do it …
Great to see Expedia tackling this last untamed frontier of online travel. Lots and lots of potential here.
Seconding Ben’s comments, day vs multi day is still going be a big differentiator here and it will be very interesting to see how far Expedia go into trying to tackle multi day too. Will you ever truly be able to divorce the end supplier (or their extremely knowledgable partners) from the sales process here?