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 software developer.

Tours and activities is the fastest-growing sector in travel, said Douglas Quinby, Phocuswright's senior vice president of research.

"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,, Kayak,, and OpenTable.

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 complications.

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 travel are."

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.


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