Tours and activities comes of age – but challenges may take an age to fix
There is so much talk about the tours and activities sector in online travel that it had to eventually feature at a major travel conference.
And so the PhoCusWright gig at ITB in Berlin last week saw a panel of figures from some of the sector’s high profile players come together for the first time on a main stage.
The gathering was obviously also in part to highlight a new study from PCW looking at the tours and activities marketplace in Europe, a report which has been released in stages since the latter part of 2013.
So, first of all, what about the report (put together using 5,000 interviews with travellers and companies in the sector)?
The stand-out figures are clear – the tours and activities sector in Europe stands at around 545 million customers per year, achieving gross bookings in the region of Euro 37 billion.
But with a pointer to the scale but also local focus of the sector, nine out of ten suppliers operate in a single region, and 60% serve fewer than 25,000 customers and report under $1 million in revenue.
Online penetration is fairly low at present, PhoCusWright says, at 23% – compared to 47% for air tickets, 29% for hotels and 33% in car rental.
PhoCusWright says that despite their being “big opportunities” for companies entering sector (some of which have been “reasonably successful”), there are “lots challenges” to tackle.
For instance, most of the companies at the supply end of the chain are what vice president of research Douglas Quinby calls “mom and pop organisations”, with many either not spending anything or very little on technology within their budgets.
Furthermore, consumers often do not know how or where to evaluate products and services on offer, with many not booking in advance and intermediaries finding it hard to get in front of consumers.
The diverse nature of the offering in the sector also means it is hard for companies to position themselves in front of potential buyers, as products such as sport events and concerts being booked in advance, but museum trips and natural attractions often secured on the day of taking the tour.
For those operating in the sector, some at least acknowledge the challenges facing those involved.
Paul Anthony, managing director for activities, transfers and experiences at TUI Travel‘s HotelBeds division, says the supply chain management of inventory is a challenge, and one the industry needs to try to overcome.
For example, he concedes:
“For many small suppliers online is something they really do not get and they do no invest in technology. Many today still will not accept something [booking confirmation] that is not a paper voucher.”
Business development director at Viator, Ken Frohling, says there is also a demand-side challenge as well given that many people “do not actually know they can book tours and activities online”.
The key, he argues, is to have last-minute availability for customers (80% of Viator’s product line is bookable within 24 hours, 90% within 48 hours).
The problem, however, is not one of complexity and fragmentation – the tours and activities sector is working feverishly to catch up with other parts of the industry, not least in how it deals with distribution and ticketing.
Brad Weber, president and CEO of Grayline Worldwide, argues that flight and hotel systems have, over decades, slowly “trained the consumer and the industry” to operate in the way that they do – tours and activities, until relatively recently, has not needed much investment in technology.
This means at scale there “isn’t that same [level of] connectivity” in the ecosystem as there is in other sectors, Weber says, with real-time rates and availability the key element in it all.
NB: Guided tour image via Shutterstock.
Kevin is senior editor and a co-founder at Tnooz. He was previously editor of UK-based magazine Travolution and web editor of Media Week UK from 2003 to 2005.
He has worked in regional newspapers (Essex Enquirer) and started his career at the Police Gazette at New Scotland Yard in London. He has a degree in criminology, a postgraduate diploma in magazine journalism and publishes his first book - a biography about Depeche Mode - in early-2017.