Sizing the prize
The market for attractions and experiences is forecast to reach USD832 billion by 2024, with its promise of high volume and lower value transactions. Currently, only 12% of sales are made online, compared to the rest of travel at 48%.
Complex and fragmented
There is a high level of fragmentation between product suppliers and distributors, complexing the category with the added challenge of a short booking window, being sold directly via booking platforms or even on Google.
Brand loyalty is a challenge and players are offering experiences with a high degree of localisation and “authenticity”, promoting their worthiness through Instagram, and offering benefits like VIP access and priority entry.
TripAdvisor’s leadership is holding up, but it faces intense competition from Booking.com and Expedia, who can offer multi-line travel products. Investing in booking software like Bokun will help TripAdvisor defend its position for now.
Thanks to Soft Bank Vision Fund, there are two unicorns in the activities and experiences sector – Klook and Get Your Guide – both recently enjoying new funds injections, pointing to more consolidation and scale expansion in the future.
Have API, will travel
Thanks to APIs, activities and experiences can break out of the traditional travel context and be targeted more at people in their day-to-day lives who use marketplaces like Groupon and super apps like WeChat and LINE.
S-commerce will cause further disintermediation, with influencers and consumers being able to promote and sell activities and experiences via social media platforms.
With greater emphasis on promoting the positive benefits of tourism, activities and experiences must increasingly be viewed through a sustainable lens.
Online sales behind the curve for travel experiences
Source: Euromonitor International
Attractions and experiences are way behind the curve in terms of digital transformation with only 12% of sales made online in 2019, compared to almost 70% for airlines and 47% for lodging.
The wider travel activities and experiences sector has benefited from the shift to mobile, however, is held back by high levels of fragmentation due to localised SME suppliers.
The future points to a great opportunity for bringing activities and experiences online by arming direct suppliers with software or expediting the shift to online distribution platforms and further integrating experiences into the end to end trip offer. The advent of 5G in years to come will accelerate the shift to online.
Dynamic packaging a boon for experiences
The ability to combine travel products has helped boost sales of activities and experiences, with dynamic packaging combinations having been extended from flight + hotel + car to encompass flight + hotel + car + activities by global OTAs like Expedia and Booking.com.
Sarah Essa, Lead Travel Analyst at Microsoft, reported in “Unlocking Cross-selling in Travel” that in 2019, 55% of travel searches in the UK are multiline (ie involving the purchase of more than one product), where activities are a popular add on.
Microsoft stated that 46% of users exclusively bundle flights or hotels with activities, with a 23% growth rate year-on-year, for January - August 2019.
However, there is a key challenge, in that consumers are the least brand loyal when searching for activities and experiences, with 90% of searches un-branded, compared to other travel products – flights (68%), lodging (72%) and car rental (57%).
Most Popular Activities by Number of Searches
Source: Microsoft – Unlocking Cross-selling in Travel 2019
Sustainable high value, low impact experiences poised to go mainstream
Airbnb social impact
Launched in 2016, there are currently 40,000 Airbnb Experiences available across 1,000 cities. In 2018, there was a sevenfold increase in seats booked for its eclectic range, from paddle boarding with corgis to yoga with goats.
Joseph Zadeh, VP of Experiences at Airbnb said that there is potential for Airbnb Experiences to be available through DMOs and hotels via an API. The recent investment in Amsterdam start-up Tiqets, which provides tech to museums and attractions, and works with intermediaries like Ctrip, points to deeper collaboration to come.
Airbnb has ring-fenced “Social Experiences”, where it waives fees for not-for-profit organisations. 65,000 people have taken part, raising USD4 million through fundraising and volunteering. One day, the social experience model may well be the standard.