Most tours, activities and attractions are still sold the old-fashioned way through traditional travel agents using phone and emails – however the balance is set to dramatically tip over the next few years as the fast-growing sector becomes increasingly automated, according to a new Phocuswright report – Escaping the Sidelines, Tours & Activities Get Going.
The report says the Tours and Activities (T&A) sector is growing faster than the overall travel industry and will be worth US$183 billion by 2020. It estimates the sector has a 10% share of the global travel market, ahead of rail, car rental and cruise.
Offline bookings account for more than 80% of all T&A sales, says Phocuswright, lagging way behind hotels and airlines, while online resellers account for just 3% of transactions.
Traditional travel agents still dominate B2C sales, however agency staff are hindered by poor access to product, much of which requires phone calls and emails to confirm arrangements. The same applies to tour operators, who are wasting time by not utilising technology.
But Phocuswright says this scenario is rapidly changing with a new wave of technology companies led by the likes of Livn transforming the sector, while the acquisition by industry giants of reservations systems FareHarbor (Booking.com) and Bokun (TripAdvisor) will further accelerate the shift online.
“By providing agents with access to live, bookable inventory, tour operators can significantly reduce or eliminate some of the gross inefficiencies that have long plagued the offline distribution of their products,” the report says.
“These capabilities promise to transform the T&A segment into a well-organised, online marketplace similar to the end-to-end fulfillment that has come to characterise other travel segments such as air, hotel, car rental and cruise.”
Using the latest technology also means that retailers in particular can capitalise on the just-in-time nature of tours and activities bookings. Phocuswright estimates 53% of T&A are booked within seven days of the activity start time and 20% on the actual day.
“As travellers become more comfortable booking tours and activities via their smartphones and other mobile devices, the share of last-minute bookings is likely to grow,” the report says.
“This presents a huge opportunity for suppliers and intermediaries, provided they are enabled with live inventory that they can make available to their travelling customers.
“The last-minute potential is enormous.”
When choosing a technology partner, Phocuswright advises due diligence. “From a technology standpoint, flexibility and transparency are key. The platforms and application programming interfaces currently offered by tours and activities aggregators and reservations systems vary considerably.
“Though many appear to offer pure online bookings, what’s happening under the hood tells a different story. Often, systems will provide access to a supplier’s inventory but the inventory itself is not live and therefore activities cannot be booked in real time.
“Instead, some human intervention (often in the form of an email or phone call) is needed to confirm availability and complete the transaction.”
Conversely the benefits of providing live inventory is a potential “game-changer”.
Phocuswright adds, “As B2C online resellers and B2B reservation technology companies refine their boundaries, other companies continue to pursue innovation in the T&A segment. Sydney-based Livn has created a unified API that connects more than 20 reservations system companies directly to travel agencies, OTAs and other resellers.”
CEO Mark Rizzuto says Livn only offers live inventory. “There’s a lot of smoke and mirrors out there so when companies are teaming up with a partner it’s crucial to make sure their products are instantly bookable,” Rizzuto says.
Download Report: Escaping the Sidelines, Tours & Activities Get Going