How much is on the table with destination services for travel companies? [Hint: it’s huge]

A study by Euromonitor estimated the total leisure spend on travel and destination-related products was a massive Euro 2.5 trillion during 2012.

Roughly half that of expenditure is on so-called “commodity items”, such as flights, hotel and car rental.

That leaves a mammoth chunk – around Euro 1.25 trillion – accounting for money spent by travellers on in-destination products, such as transfers, things-to-do, attractions, shopping and tours.

It’s no wonder then that the tours and activities market is trying to explode, at least in terms of the number of startups and established players that have given the sector plenty of focus in recent years.


Inevitably it has been the startups which have captured a lot of the attention over this period, with the likes of GetYourGuide trousering lots of investment dollars, Isango selling to TUI Travel, and the likes of PocketVillage, Flextrip, Vayable and many others all eyeing the opportunity.

Pure-play technology suppliers in the sector, such as TourCMS and Rezgo, continue their work behind the scenes and the somewhat old kid on the block, Viator, is still seen by many as the pioneer in the sector.

Many cite the release of the PhoCusWright report in 2011 – When They Get There (and Why They Go) – as a wake-up call to many inside and outside of the industry as to the potential in the tours and activities sector.

But it was perhaps late-last year, when Expedia started pushing its Local Expert platform for activity suppliers, which saw a further validation of the opportunity available.

This is not to say that given the bounty to be had that the task is an easy one – it isn’t, as many in the sector will privately concede to varying degrees.

These issues range from the huge fragmentation in the marketplace (no-one REALLY knows the size of the global product base), different rates of adoption of technology by suppliers and adoption of booking capability and real-time availability.

Depending on who you ask and the mood they are in, destination products and services are the few remaining areas in the industry that are still relatively untapped in terms of web-based search and booking.

Stalwarts looking on

TUI Travel, one of the biggest travel businesses in Europe, is no stranger to all this. As mentioned earlier, it bought Isango in February this year and has been helping customers in-resort with local services for years.

But it now believes, through its HotelBeds B2B division, industry intermediaries such as online travel agencies are in a good spot to capitalise.

The company, under the tutelage of director of destination services, independent traveller, Paul Anthony, has been crunching the numbers even more as it looks to unleash its in-destination services to customers.

It believes of the Euro 1.25 trillion spent by leisure travellers each year on destination products, once you strip out shopping, there is around Euro 33 billion available as an “addressable market size”.

Big numbers still.

HotelBeds currently has around 6,000 unique products on its portfolio, not including transfers. It wants to increase this to around 20,000 within five years and is now pushing it heavily to customers (not least during a keynote at the HotelBeds Market Hub conference in Spain last week).

Anthony concedes that there are numerous wrinkles in the wider tours and activities landscape that need to be ironed out.

  • Suppliers are often small and require help to distribute and market products. A big technical challenge across the board.
  • Around a quarter of destination products are booked at the customer’s origin, compared to 55% which are purchased once they have arrived on a trip. This needs some re-engineering if intermediaries looking to get a piece of action are going to capitalise.
  • Many products are still seen as something that are purchased as an after-thought, rather than as the motivation for visiting a destination in the first place (perhaps with the exception of the world’s major theme parks, such as the Disney-owned facilities in the US and France).
  • XML feeds, similar to how hotel or flight inventory and availability is piped around, are perhaps NOT the best method of distributing product from the suppliers to intermediaries. HotelBeds suggests, instead, a widget-based search and booking tool that sits within an existing OTA’s site is the best route forward (“priorities within an IT department’s mindset is on flights and hotels, not ancillaries, in terms of development”).
  • Intermediaries need to think of selling destination ancillaries in a better, more strategic way. Cross-selling at the point of purchase of the flight and hotel, as well as up-selling closer to departure date through CRM and when issuing ticket confirmations.
  • The mobile element in all this needs to unlocked. Data roaming will continue to be an issue, but equally intermediaries should think of destination services as part of the in-resort servicing they do for customers (HotelBeds plans to launch a white label activities app later this year).
  • Disparate nature of listing products across the sector. Some companies say they X number of products, when in fact the unique number is often lower as a product which is available in ten languages, for example, is sometimes counted as ten individual products.

There is no definitive answer as to how all this works, of course, which perhaps explains why it is a fascinating part of the industry and why organisations are taking different approaches to it.

But with TUI/HotelBeds taking the intermediary route extremely seriously and other big players such as Expedia making a lot of noise as to how important all this is, new questions emerge:

  • Will intermediaries see the opportunity and push destination services as important a part of the trip as the process of getting there and where travellers sleep at night (i.e. the flight and hotel)?
  • Does having the customer power-base (and marketing muscle) of the big boys now wading in put additional pressure on the newbies trying to establish a presence in the marketplace?

NB: Disclosure – author was a guest of HotelBeds, which supplied travel/accommodation during the event.

NB2: Disclosure – the CEOs of TourCMS and Rezgo, as well as FlexTrip’s COO are contributing Nodes to Tnooz.

NB3: Diving equipment beach image via Shutterstock.

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Kevin May

About the Writer :: Kevin May

Kevin May was a co-founder and member of the editorial team from September 2009 to June 2017.



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  1. Luciano

    Sometimes not all the answers are in the big distribution channels. Also we have to think in the thousands of tour operators on each country. Would they accept a button in their websites? Because in that way the operators have to give commission on each single transaction instead of just the one that comes trough the distribution channel.
    I f I would be TripAdvisor, I think a possible solution would be a fee per click or a fixed fee to get listed. Less trouble, more revenue and I keep both travellers and companies in my territory 🙂

  2. Kevin May

    Kevin May

    @all – a note from my contact at TUI Travel/Hotelbeds:

    The figure does not come from a specific report but is from the Euromonitor proprietary database/data sheets. This is accessible through Euromonitor’s Passport service.

  3. Tony Carne

    “Addressable” is really the key word in this market. For sure it is huge but who really has the reach, the content and the eyeballs to unlock it all in a game changing way.

    The mysterious G for sure is one possibility and their conference talks have definitely hinted at returning bookable results in search rather than just links to something that may or may not be bookable. In the example at ITB I think they even mentioned returning different results based on the weather if someone asked for “things to do in Paris tomorrow”.

    More obvious for mine is Trip Advisor who already has the content, the brand and the eyeballs specifically for Day Tours, Activities and Attractions already loaded, ranked and reviewed for practically every corner of the earth (anyone looking for Things to do in Ouagadougou?). No doubt they know how many are looking at what, what they are clicking on and what people are buying via their partnerships with Get Your Guide and Expedia with the Book Now buttons.They have the ability to contact en masse a huge proportion of the listed Tour, Activity and Attraction providers to make the deals. Going transactional would be difficult but a marketplace model is imaginable.

    Would customers book off the strength of a short owner introduction and reviews from others (both already exist – no work to do here) via a simple booking widget next to the listing (that could also be added to the multitude of non transactional activity providers websites)? I think so. The intriguing question for is why they haven’t, can’t or won’t. Maybe someone knows? Maybe Alex has already answered this question?

    • Alex Bainbridge

      Hi Tony
      There is *A LOT* of tour churn (even from a single supplier).

      Book now widgets don’t work because they need constantly refixing back to a single tour ID (VS say a hotel, where the hotel is constant ID (well at least via a single channel!)).

      Instead, a widget should be “results” of a tour search, limited to 1 or 2, that meet certain criteria. Over time (and seasonality) different tours will drop in and out of that result set……

      i.e. if I were a hotel (or a hotel listing page), I could list 10 tours geocoded to my hotel….. that is better than trying to fix to specific tours.

      Just a thought

      • Tony Carne

        Definitely not as easy as flicking a switch 😉 but if a marketplace approach was taken with TA just the transactional tool between supplier and customer then maintaining of the results shown on a booking widget would be the responsibility of the tour provider and I daresay conversion would become one of the overall ranking factors in the search results as the carrot to keep the results updated.

        NB: The tour operators wouldn’t need to rely on Hotels to have their tours listed – they have their own listing and section on TA.

  4. Daniele Beccari

    You are right Stephen, don’t get too excited.

    I did a lot of homework (post isango!) on this problem, and the numbers above are not far from what I found, and not from Euromonitor (Greg you can double check my numbers). So you obviously wonder if there’s a $/€/£ 1 trillion market out there how come everyone is smaller than their shadow?

    The wrinkles above partly explain it, but there are 2 more important wrinkles :
    – customer segmentation
    – weather

    The former explains why it’s complex to sell online, the latter explains why it’s complex to sell online.

    The good news is that there are technology trends close to easing both problems : data and mobile.

    I think within 6 months there will be something like “TourToday” instead of “HotelTonight” kind of apps, for local tours and activities, with offers of the day, heavily discounted perishable inventory from local tour suppliers or last minute tickets (real last minute). Limited to domestic travel as a start, because of the roaming problem – but this is being solved faster than expected.

    The real big thing would be technology that will connect any traveller with any relevant service provider. I know of one company who could get there before anyone else and its name starts with G, if they didn’t have other bigger things to solve first.

    • John Pope

      Nice one, Daniele.

      Weather – a variable that wasn’t glaringly obvious and aware to my pea brain, until now. Cheers for that.

      BTW, I know of another company who will get there soon and its name starts with S… and ends in… O – still under the radar, but a guaranteed fast mover when they start the journey.

      And yes, “TourToday” (great analogy) would also fit their value prop, too.

  5. Stephen Joyce

    Stephen Joyce

    Euro 33 Billion is not that far off the addressable market for the U.S. as determined by the PhoCusWright study from a 2011. I’ll wait for the results of the upcoming PCW report on the European market before I get too excited about the opportunities.

  6. Alex Bainbridge

    This sector is so large it is tempting to look at the big numbers and believe that it is easy to make a viable business in the sector. Actually its really hard!

    • Kevin May

      Kevin May

      @alex – yes, thus why this line was included:

      “This is not to say that given the bounty to be had that the task is an easy one – it isn’t, as many in the sector will privately concede to varying degrees.”

  7. Greg Abbott

    @Kevin Is the Euromonitor study cited public or pay? If public, can you share link? Thx.


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