US travel activities sales forecast to outpace leisure travel growth

Looking for a travel-related investment opportunity? A new PhoCusWright study points to a sizable opportunity in the online sales of travel activities, attractions, events and tours.

The report, When They Get There (and Why They Go): Activities, Attractions, Events and Tours, projects that U.S. online sales of trip activities will climb 13% in 2011 and 11 percent in 2012.

The sector’s growth pace would surpass that of U.S. online leisure travel, which is forecast to grow 8% and 9% in 2011 and 2012, respectively.

In fact, the study says, the $26.8 billion U.S. travel activities market grew faster than the U.S. leisure travel sales market during the economic woes of 2009 by 11 percentage points.

The study notes that the car rental ($14.2 billion), cruise ($12 billion) and packaged travel ($10 billion) sectors pale in comparison to the $26.8 billion U.S. trip activities market, although the latter is extremely fragmented and a portion of it isn’t addressable by the travel industry.

So how is all of this online growth of travel activities and tours going to take place, given the fragmentation of activities’ operators, their lack of big budgets, the relative dearth of online distribution and only the very beginnings of industry standards?

“There is a convergence of trends at play — consumers’ continued the shift online, mobile, and lower-cost technology enabling more suppliers to participate in the travel distribution system,” says Douglas Quinby, PhoCusWright’s senior director of research.

Of course, plenty of these activities and tours will be booked last-minute, when travelers already have secured their hotel rooms and are looking for something to do at the destination, Quinby says.

“The growth of smartphones and rich, locally aware mobile travel applications will play an enormous role in influencing activity selection and purchasing,” Quinby says.

In addition to mobile solutions — or in tandem with them — the report says user-generated content will be a driver of activities’ sales online.

The study looked at some 20 activities’ verticals, including spas; air, water and land tours; adventure activities [kayaking, trekking]; spectator sports and performing arts; attractions and ground transporation — almost everything except dining and shopping.

Out of such a large pie, defined as $26.8 billion in 2009, about $20.8 billion is addressable by the travel industry, the study estimates.

“The market is so fragmented, there is a tremendous opportunity for online intermediaries to step in,” Quinby says, adding he expects significant investments by online intermediaries in the in-destination activities’ sphere.

From 2009 to 2012, online intermediaries’ activities and attraction sales are forecast to more than double, albeit from a smaller base than the supplier channel, the study finds.

In the same period, suppliers’ online sales of in-destination activites and tours are expected to climb 33%.

“I expect to see online intermediaries leverage the opportunity around the convergence of influencing travelers in-destination around mobile services,” Quinby says.

One such intermediary, Viator, which was one of the study’s sponsors, states traveler behavior is shifting, with more travelers purchasing trip activities in advance.

Of course, Viator specializes in the advance, online booking of trip activities.

“We’ve long known what the study reveals — that activities are an extremely relevant part of the travel industry and travelers know the value in researching and purchasing them online before they go,” says Barrie Seidenberg, Viator CEO and president.

The emergence of mobile, however, means there will be a lot of spontaneous, in-destinations bookings — and online intermediaries and suppliers will have to address the trend with mobile websites and/or  apps.


Disclosure: The author does some work with PhoCuswright as an analyst.

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Dennis Schaal

About the Writer :: Dennis Schaal

Dennis Schaal was North American editor for Tnooz.



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