Can the newbies of tours and activities sweep aside the old kids on the block?
Recent fundraising by GetYourGuide and Peek is good news for the tours and activities sector. These investments reflect the growing awareness that “the things you do when you get there” are a crucial component of why people travel.
They shouldn’t be treated as an afterthought by travel sellers who have traditionally focused on how you get there, and where you stay.
But I have a nagging suspicion that these investments may turn out to be courageous rather than well-timed. I’m fighting that suspicion, hoping it’s not some form of confirmation bias, but I can’t shake it off. Here’s why…
A quick glance at the T&A marketplace reveals many new entrants over the past few years, but further research reveals most have quietly faded from view. Expedia and Viator are prospering as the market leaders—Tnooz reports that Viator has annual sales of $280m, and Expedia is likely higher.
No other entrants have gained enough traction to put a dent in their market share.
This isn’t the only sector in our industry where it’s become immensely challenging for new entrants to attract customers – travel is a universe where the market leaders act like the major planets, exerting massive gravitational pull that inexorably sucks in all the passing traffic.
The problem is particularly severe in the T&A space, where the proliferation of small, independent suppliers means there are only a few larger suppliers who exert any influence at the retail level, a far cry from other sectors where global brands compete head on with resellers to create a more balanced marketplace.
So Expedia and Viator dominate, with well-established footprints in SEO and SEM, all the supplier relationships they need, and plenty of momentum. New entrants find it hard to gain traction and end up being acquired (Isango) or continuing as profitable but boutique operations (City Discovery).
GYG and Peek enter the space with young, smart and enthusiastic management and market pitches that talk about disruption. So far so good.
But GYG’s early attempt at that disruption, the acquisition of peer-to-peer tour operator Gidsy, didn’t produce the momentum expected. Less than a year later it’s a largely forgotten topic, with Gidsy founder Edial Dekker gone to Eventbrite and no mention of peer-to-peer experiences anywhere to be seen.
Peek, on the other hand, is talking about a distribution platform for suppliers as the key element of its disruption strategy. That may turn out to have a shorter half-life than peer-to-peer experiences: there’s just too many good companies in this business already, with TourCMS, Rezgo, Rezdy and Zerve all offering robust, proven systems.
While I applaud the idea, I think entering this business is under-researched and a little too late to have any impact.
The other thing that might be a plus for GYG and Peek is their line-up of savvy investors: well-heeled, plenty of online travel experience and certainly capable of follow-on funding.
Having said that, Room77, Travelpost and Hopper each have all-star investor lineups and that doesn’t seem to be helping them. Maybe there’s no real connection between who your investors are and how well you perform?
So I’m still not seeing any evidence that we’re going to see a change the status quo of the T&A sector anytime soon. That’s a pity: disruption is a force for good, keeps the market leaders on their toes and gives consumers new options, expanding the market for everyone.
NB2: Kid attitude pic via Shutterstock.
Special Nodes is the byline under which Tnooz publishes articles by guest authors from around the industry.