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The challenges of the online tours and activities market

Making tours and activities available for purchase online like airline tickets and hotel rooms is a challenging prospect, but a necessary and promising one with potential for destination management organizations.

Nowadays, tourists reserve flights and hotel rooms online without a second thought. However, a trip involves much more than these two elements, as it also includes everything you do once you reach your destination. The market for tours and activities is huge: according to studies cited by business intelligence platform Skift, overall spending on such activities reaches somewhere between US$100 and $200 billion. In terms of online penetration, however, the share of tours and activities booked online is much smaller than that of hotels and flights.

The primary reasons behind this low online sales volume are the following:

    •    The huge tours and activities market is fragmented.
    •    Few tours and activities providers have adopted technology.
    •    Major players in the distribution network have, until now, paid little attention to the sector.

Changing times

Things are starting to change. TripAdvisor bought Viator—the largest player in this market—in 2014, Kayak and Expedia now offer online reservations for tours and activities, and Airbnb is getting into the act by offering the option of purchasing activities provided by individuals. Booking is also starting to offer the service. At the same time, sites that encourage tours and activities businesses to upload their inventory and the use of geolocation enable travellers to find nearby activities without a middleman. Startups are appearing; numerous sites and applications offer to digitally connect consumers and suppliers of activities. In addition, some tour operators are now promoting their products to both tourists and locals. In other words, a small revolution is brewing. However, the realities facing most of these stakeholders bring their own set of challenges.

Challenge #1: A collection of heterogeneous sectors

Tours and activities do not make up a distinct industry sector. In fact, this umbrella term covers a number of different sectors. The table below summarizes this complex market.

All the businesses supplying the activities in the preceding table have very different cultures and modes of operation. On many Websites, these sectors are randomly thrown together in a section called “Things to do.” The tours and activities market is very fragmented; TripAdvisor alone lists over 650,000 attractions and experiences.

Flights, hotel rooms and car rentals are presented in such a way that consumers can make comparisons and select products to suit their needs. This is not the case for tours and activities, as each individual product has its own special features.

Read more | tourismintelligence.ca