mobile travel ocean
631 days ago
 

The next big travel technology opportunity: a mobile-only booking giant for tours and activities

NB: This is a guest article by Matt Zito, an online travel business consultant.

At the Travel Business Academy, a professional online course teaching entrepreneurs how to start a travel business, we have been researching and analyzing the in-destination mobile app travel business.

This article looks at the current online booking and mobile booking landscape for the tour and activity market and shows where a large entrepreneurial opportunity lies.

The PhoCuswright research report When They Get There (And Why They Go), first published in February 2011, shed a boat-load of interesting data on the tour and activity market.

For example, highlights covered in the ten-page summary report include the following:

  • Travelers spent $27 billion on activities, attractions, events, and tours in 2009.
  • Most activity providers (operators) generate revenue under $1 million with 33% generating $250,000 or less.
  • The majority of the operators in the “in-destination” activities industry are self-employed, mom and pop business, true SMBs.
  • The average price of an activity purchase is less than $100.
  • Operators are very limited in their technological know-how.
  • Fewer than four out of ten operators sell activity bookings through a website.
  • One in five operators have no website. Yes, you read that correctly.
  • Phone sales account for 60% of sales.

The in-destination tours and activity business is a run by local small businesses.

After reading the report summary data above you would probably decipher that the tour and activity industry is run by small businesses. Indeed, small activity providers generally employ between one and five people

The guy that takes you on the tour is most likely the guy that you pay when you first check in. The business is conducted by Excel spreadsheets, general ledgers, cell phone and fax. If you have gone on a destination tour, activity or excursion, you know that these people are some of the nicest people you will ever meet.

Many tour and activity operators run a seasonal business and work other jobs when the season closes. They love what they do and they really don’t like other people telling them what they need to do and how to run their business.

From a perspective of selling them business services (B2B) they are very hard to sell.

The majority of their business is booked either by a traveler calling them on the phone or the walk-in at the time of the activity. I personally know this because I’ve successfully worked with a few small operators in Bar Harbor, Maine, US, where I have a vacation home.

Bar Harbor is a global destination that sees two million annual vacationers in less than five months. Travelers come from all over the world.

In Bar Harbor there are 25-35 activity providers providing everything from kayak tours, whale watching trips, schooner sailing trips, National park tours, guided bird watching, bus tours, cultural museum tours, dinner and entertainment shows and biking tours.

Business is conducted locally

On the marketing side of the activity provider’s business, most belong to the local Chamber of Commerce, they network closely with the other travel businesses in the town the destination is located and they tend to listen to and participate in opportunities that the state government or local DMO is pitching or providing.

If you’re a sales representative, an outsider, let’s say an Expedia or Travelocity rep and you’re pitching them about a new sales and distribution program to sell their activity service online, most aren’t going to listen. It’s just very hard to break in as an outsider.

Why haven’t the big travel players cracked this market (though some are now clearly trying)? If you’re not local and the small business owner has never personally shaken your hand it’s a huge uphill battle from here.

What we know about the travel consumer who purchases in-destination tour and activities.

The majority of tour and activity bookings, the one-day purchases are being made within three days prior to the actual consumption or attendance of the in-destination activity. The majority of the purchases are one-time only visits. After the traveler participates on the tour or activity they will most likely never return as they are on vacation.

Consumer mobile data is showing that over 50% of travelers are using their mobile devices to find and search for things to do in-destination while on vacation. It’s only a matter of time for when the activity operators realize that mobile is their meal ticket to enhanced reach and sales.

Who is going to help them?

Stephen Joyce, founder and CEO of Rezgo (technology provider of web and mobile booking software for tour and activity providers), makes a great point in a blog post that to make in-destination mobile truly work, activity providers need geo-location service.

So when a traveler is looking for a thing to do near the activity provider the traveler can find the activity on their mobile device.

If the activity provider has no website, no reservation service, no mobile app how in the heck are travelers ever going to find the activities in the first place?

[NB: Easy tip – an activity provider could add their business to Google places so the business shows up on Google Maps. Recent research is showing that 70% of all travel mobile use is on Google Maps, with the other 30% going to OTAs and travel guides.

Let’s not forget that entrepreneurship is about seeing opportunity, execution, luck, hard work and the ability to be at the right place at the right time.

When you look at all the consumer and activity provider research data, actually talk to and work with activity providers, the obvious sales tool to help the tour and activity providers expand their reach and sell tickets to vacationers in-destination screams the following: a third party mobile activities booking app.

Build a company the equivalent of an OTA or wholesaler, but mobile-only sales, selling the sweet spot of 72 hours or less prior to arrival.

The one big player so far that is headed in this direction and most recently launched a mobile app to sell tours and activities is the wholesale aggregator Viator. Viator is the king of the mountain.

Will travelers buy tours and activities online or via a mobile like they book hotel rooms?

There is a new entrepreneurial push to sell tours and activities online. Aggregators and OTA business model type companies are springing up to jump into the action.

The reality of the current market is that travelers are not booking tours and activities online and in my opinion actually may never really buy in any matter of volume. Apparently only 2% of tours and activities are booked online.

Sure you can make arguments to the fact that online tour and activity bookings are increasing and that there in lies the opportunity.

I agree with this and do believe that online booking of tours and activities will grow, but the bigger opportunity lies in playing in the mobile booking game, aligning with the existing consumer buying habits and fulfilling the need of the activity provider that wants and needs in-destination sales.

I think that any tour and activity operator that doesn’t have a website to sell their services is making a huge mistake. Technology solution providers like Rezgo and TourCMS that we recommend at the Travel Business Academy are really necessary tools you need as a tour and activity operator to compete in today’s marketplace.

Why pound your head in the sand to try to change something that is already happening and has been happening for years?

What I have learned as an entrepreneur is that it’s very difficult to change people’s habits. I tried betting against this concept once before when I tried to develop an online marketplace for the buying and selling of Maine hand-made products, trying to get artisans to change the way they sold their products. I got burned badly and that story is for another day, but it was a great learning experience.

In-destination mobile sales are a solution that meets the needs of both the traveler and the activity supplier.

Supplier demand for it

Activity providers I have talked to recently including a few major theme parks in a top five global travel destination all said that they will participate in sales and distributions programs that help them get travelers that are already in the destination looking to make purchases in the next 72 hours. Within 72 hours prior to the activity is their bread and butter money.

This is what they want and need.

Activity provider owners, especially the mom and pop small operators are seriously limited in the resources (cash) and time to implement the new technology for online and mobile sales. I am not saying this as a negative I am just stating the reality.

A mobile booking platform that provides the activity provider with low hanging fruit, last minute sales, in which the activity provider has inventory available. Activity providers will jump on this revenue all day long, this is guaranteed.

The solution is not mobile apps or mobile technology that the operator can use to sell direct to consumer, although I think there is an opportunity here and a small percentage of operators will want to market and promote their own apps.

What I envision is a global mobile only booking platform similar to what Hotel Tonight and others have created in the same-day hotel booking space.

A traditional sales model the likes of an Expedia or Groupon will not succeed in selling the activity operators in the thousands of global destinations like a Bar Harbor, Maine. A new type of sales model is needed. One built on social, local and networking may succeed.

I’d love to get into this big travel business opportunity. Wanna build a mobile booking platform for the $28B tour and activity market?

NB: This is a guest article by Matt Zito, an online travel business consultant. The Travel Business Academy helps entrepreneurs start and grow travel businesses.

NB2: Mobile travel ocean image via Shutterstock.

 
 
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  1. Abdul

    Isn’t Viator already doing what you propose?

     
  2. Tanto

    Hi Matt,

    Excellent article and opens my eyes and mind ! A slap in the face ! As a programmer (web), I’ve been thinking for years about “how to sell travel via web”. I thought, I was on the right path, which so far didn’t work. I created a website, http://www.iniindo.com for a “brick and mortar” company started by 2 (two), yes … two persons only, in Jakarta, Indonesia, in November 2011. One of the many “moms and pops” travel agency in Indonesia, just like mentioned in the “ten-page summary”. Both of them had more than 5 years experience in travel business. Today, the company is three people only, busy 24×7, and making good money. At first, my idea was to create a web for them (my share), and do some marketing via web, golf travel. I’ve tried everything, LinkedIn, Twitter, Facebook, direct e-mail (hundreds of them) sent to travel agents overseas. Nothing works. People (travellers) or agents don’t even bother to send back email, confirming their willingnes to cooperate. Travel agency business is still run in traditional way, by phone and e-mail, and trust. Referal is the key word. If one agent says “good”, the others will come and send their customers. Website, yes, they will get impressed, but, that doesn’t bring in customers. Not even single customer booked via email directly ! All customers comes via “partner agents” overseas, which are also moms and pops brick and mortar company. Perhaps you have some unique idea you might share with us, business model, for travel mobile web that really works ?

     
  3. daley

    We are helping this industry right now. Only mobile, only on the day – last minute ticket sales.

    Check it out: http://www.yplanapp.com.

    Sorted.

     
  4. Krish

    Nice write-up. I agree many SBs are looking way to get listed in tripadvisor.

    The problem with in-destination activities booking is combination of two things – technology less + awareness more. As you rightly mention, new sales channel need to be created to sales in-destination activities book. I believe when platform exists that includes tour guide with booking facility. By saying platform, I mean to some sort of wiki like functionality where every-one update travel guide – suppliers (activity operator) can upload product for sale using integrated booking feature of platform. When a travellers can not book particular in-destination activity (can book everything else), he/she gonna speak to supplier. There remain chance that suppliers get motivated. Take an example if you plan go to Fort Myers beach, of course you search stuff in online. You can book walking, golf and you can not book boating… you gonna be like ‘shit, why not boat and make call to supplier’. I believe this will increase awareness level.

     
  5. Edward

    Hi Matt,

    Yes we at Zaui software whom also specialize in tour and Activity booking systems have noticed the same trends

    We launched a mobile version of our software (http://www.zaui.com/press-releases/free-mobile-engine-for-all-zaui-customers-world-wide/) that allows tours and activities to be sold through mobile devices,.

    As our software allows for the tracking of Google analytics from the e-commerce perspective, the trend is growing stronger month by month and more and more people are turning to their mobile devices for these types of purchases. Having said this – there is also a price point whereby consumers are willing to shop at ease online.

    Our approach has been not only to facilitate the mobile perspective of our software for the consumer but also to bring this approach to the SB operator, as you mentioned they are quite often the sales staff, the tour guide, and all other facets attached to their business, meaning that they do not want to be tied down to a desk.

     
    • Matt Zito

      Hi, Edward can you elaborate more on what you mean by there being a price point whereby consumers will shop online?

      Thanks for your comments.

       
  6. Jussy

    I like it! Kind of like the dark sky app with geo boundaries for tours

     
  7. Simon Lenoir

    Hi Matt,

    At Rezdy, the mobile friendly booking site has been available to our client for over a year. Tour operators using our reservation system have seen some increase in the percentage of bookings coming from mobile (we track the source: website, mobile, facebook, agents), but it’s not such a major change yet, even if I agree it’s the trend.

    I hope this article will create vocations, because Rezdy provide all the tools such entrepreneurs need to build an app:

    With our recently launched COMMUNITY plan, you can create a free account, create catalogs with hundreds of available products (aggregated direct from supplier with high commission rate) and use our existing mobile technology. You don’t even need to be a developer to get started.

    Here is an example of a vendor that create a local hub to resell Hot Air Balloon in Australia: https://ballooning.rezdy.com

    Developer looking to build innovative native mobile app can register here: http://rezdy.com/developers.

    The sky the limit in term of innovation and niche markets as we currently have partners working on:

    - Destinations specialised app (think push notifications, last minute price, on destination discount, near field connections, recommendation near you, etc…)

    - Industry verticals (think about an app to book all surf trips on the planet, or specialised for scuba divers)

    Of course, Rezdy offer a true 2-way real time availability, so if a booking is made by one distribution channel, all other channels are updated, to avoid overbooking and refunds.

     
  8. Brandon Lake

    Great post Matt! Resmark Systems released a more mobile-friendly online reservation experience several months ago and we’ve really seen some great results from the tour operators using it. Some operators are using the platform to create in-store kiosks that allow travelers self-service booking. We’ve certainly seen a trend towards more last-minute bookings for in-destination activities where mobile becomes very important.

     
  9. Daijie Huang

    Would be great to include the estimated percentage of travelers willing to book on mobile for the next 5 years and how ready SB owners to adopt it during the time frame. A nice reading. Thanks

     
    • Matt Zito

      Hi, Daijie
      You raise a really good question about how many will actually book and I think this data is yet to be determined. A recent report published by Hotel Tonight states that a high percentage of people are now surfing through the mobile app looking at the hotels and the offers. I think this is good news for app developers and businesses that rely solely on revenue from a mobile app. I believe the SB owners will adopt quickly once they see bookings coming through mobile.

      I was talking with an entrepreneur earlier in the day today that helps tour and activity providers with online bookings and he viewed this as a marketing play and not necessarily a technology business which I got excited about because my core strengths are in marketing and sales.

      Thanks for your comments.

       
      • Daijie Huang

        Agree, more and more travelers are using mobile to search the options. Actually, I am one of this kind. It is definitely the direction and just the matter of time. One key is how easy to use the system, though it is not a high tech kind of business. Believe or not, there are quite a few SB still trying to figure out how to get listed on tripadvisor which seems to me a really simple one.

         
  10. Peggy Lee

    Bring it on. I’ll be happy to feed SpaGypsy content.

     
 
 

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