In the online travel marketplace, tours and activities
represent the next big pot of gold, one that TripAdvisor and Booking Holdings
made runs at earlier this month when each acquired a tours and activities
Tours and activities is the fastest-growing sector in
travel, said Douglas Quinby, Phocuswright's senior vice president of
"It is actually the third-largest in terms of total traveler
spend. The reason why companies are moving so quickly now into this space is
because it's early, and you have to get in early rather than wait. ... We're
like where hotels were in 1999 in terms of online shopping and booking."
Booking Holdings said it would acquire Denver-based
FareHarbor, an activities and experiences booking software developer that gives
tour operators tools to bring their businesses online.
FareHarbor will join Booking Holdings' existing brands,
including Booking.com, Priceline.com, Kayak, Agoda.com, Rentalcars.com and
That news was quickly followed by TripAdvisor's announcement that it had acquired Iceland-based
Bokun, a business management technology provider for tours, attractions and
experiences. Bokun serves as a booking engine, an inventory channel manager and
a price-management tool for tours and activities.
Last year, TripAdvisor CEO Steve Kaufer said the attractions
sector represented "a billion-dollar opportunity" for the company.
Phocuswright research strongly suggests there is huge
opportunity in making a much larger number of tours, activities and experiences
available and bookable online. Last year, Phocuswright reported that while
aggregate in-destination spending on tours, activities, attractions and events
accounted for 10% of global travel revenue, more than 80% of the bookings were
still being made offline.
In order to capitalize on the potential of the tours and
activities market, however, OTAs are going to have to overcome several
For one, the tours and activities sector is hugely
fragmented, consisting of myriad companies ranging in size and sophistication
from small mom-and-pop enterprises to global entertainment companies like
Disney. This is where the acquisition of software providers comes into play.
"Why have they acquired reservation systems, basically
infrastructure companies [that are] like plumbing?" Quinby said. "The
reason is because this sector simply isn't wired up the way other sectors of
TripAdvisor acknowledged as much, stating that, "Our
suppliers run complicated businesses -- they're often small operations selling
multiple products in multiple currencies through multiple channels. Bokun's
software can alleviate these complications, simplify the business of selling
experiences online and dramatically grow distribution."
TripAdvisor said that it intends to do two things with
Bokun: bring more offline suppliers online and help those already online to run
their businesses more efficiently, all with the ultimate goal of creating more
and improved tour and activities options for travelers.
Once they have the inventory up and running, there is
another complicating factor to successfully tackling this market.
"Probably the biggest challenge," Quinby said, "is
that with an activities OTA, from a consumer side, you have to answer a very
different question from an OTA for flights and hotels. It's not, 'What's the
best hotel for my trip?' For activities, the OTA has to ask the question, 'What
does the traveler want to do? What interests them?' How do you answer that
question, and how do you figure that out? It's a multidimensional question to
answer, and that's why it's so hard."
Quinby said that currently, OTAs often suggest products to
online shoppers simply because they are being booked the most often and thus
would appear to be the most popular. But as consumers' tastes change and become
more sophisticated and dynamic, he said, it won't be so simple, especially when
it comes to the much more nuanced tours and activities sector.
Even so, he added that it won't be impossible and that
advancements in artificial intelligence and big data will ultimately help OTAs
achieve success in the tours and activities market.