In an era of constant change and innovation in travel, with new business models and companies appearing every day, there is a great contradiction in the fact that the transfers and activities sector has remained disconnected from the travel distribution ecosystem.
NB: This is an analysis by Paul Anthony, managing director for transfers and activities at Hotelbeds Group.
As a highly fragmented market, there are not that many players in the activities sector capable of providing a real global integrated offering.
Instead, the landscape is dominated by small providers, often family-run businesses, many of whom usually operate locally and sell their activities through offline channels, either over the phone or in person at kiosks in the hotel or in destination.
Combined with limited or ineffective marketing strategies, lack of sophisticated technology and challenging economics, the growth of the activities sector has been hampered, despite its importance within the travel industry.
The travel industry’s largest players have continued to focus on packages, flights and hotels, ignoring the market opportunity of activities.
The activity segment is made up of a wide range of quite distinct sub-sectors and products.
Tours, activities, attractions, events, ground transportation and multi-attraction passes are the main activity types defined by PhoCusWright’s When They Get There (and Why They Go) 2014 report.
This study explains that, while the dizzying range of products is enriching, it is also a factor that has hindered the establishment of large scale, efficient sales channels.
Mobile makes its mark
But in the past few years there has been a growing recognition that mobile platforms have the potential to revolutionise the way travellers search for and purchase activities and related products.
The activity and ancillary market represents a huge opportunity - Phocuswright says European travellers alone are expected to spend more than €40 billion annually
Furthermore, in an era where the cost of customer acquisition is ever increasing, the transfer, activity and experience sector presents options for cross selling and upselling.
The revenue can then help to lower the customer acquisition cost.
Elsewhere, it is important to consider that for many travellers the choice of destination is directly related to the activities available in that destination. Music concerts, festivals and sports events often rank highest as drivers of destination selection.
For obvious reasons, these types of activities are usually booked far in advance compared with other activity products which tend to be booked just before the trip or in the destination itself on the same day.
Consolidation benefits still to come
Most online bookings for activities are made in advance. But this segment is mostly controlled by well-established websites that specialise in events.
The current key players in the online travel activities market are the online activity specialists (OASs), online travel agencies (OTAs), the web site of the traditional tour operators and search & discovery engines.
The latter channel does not always take bookings but is finding new ways to promote the activities the user is looking for.
In this context - many different actors competing in an environment that offers an endless range of product options from many different local providers - is true consolidation even possible? How can tourism companies leverage the underlying potential of the activities industry and increase their own revenues?
Technology is the key
As the accommodation sector has shown, IT developments empower companies to provide a wide product portfolio at a global level, enabling consumers to gain consolidated, easy access to products in ways that would have been simply impossible in the past.
This model can also be applied to the activities businesses as well as its customers. Technology makes it possible to aggregate content and create product pools that are easily accessible by travel providers and consumers.
The creation of advanced interfaces, easy-to-use booking platforms, customisable white label solutions and website widgets is key to providing that experience.
But this change in dynamics, in which travellers increasingly seek out online channels to book activities, will only happen if companies can offer easy, attractive and intuitive online tools that provide a single point of access to an integrated worldwide portfolio of transfers, activities and experiences.
This will also drive increased conversion rates.
Of course, mobile developments need to be at the forefront of this change. The new consumer demands access to responsive, mobile-enabled websites or apps that enable a quick and easy transaction anytime, anywhere. Mobile has a key role in driving sales, both in destination and pre-travel.
Data roaming costs, particularly in Europe, have held back the uptake of booking activities while travelling.
But there has been a movement in Europe to abolish end-user roaming charges and a ban will come into effect from June 2017, although operators will still be allowed to apply a 'fair use policy'.
Activities are a key part of any trip and can turn a run-of-the-mill holiday into a memorable experience.
Two of the most important developments that will drive the activities market are the need to provide the end-user with affordable mobile access, together with increased investment by providers into cutting-edge technology.
These factors will drive uptake and help the segment catch up with the consolidated dynamics that other travel products have enjoyed for quite some time.
The integration of this segment into the travel distribution ecosystem undoubtedly represents an attractive opportunity.
Travel companies therefore need to focus on how they can distribute a global, consolidated product portfolio profitably, both in the pre-travel and in-destination stages of the holiday booking cycle.
NB: This is an analysis by Paul Anthony, managing director for transfers and activities at Hotelbeds Group. It appears here as part of Tnooz's sponsored content initiative.
NB2: Hotelbeds was one of the main sponsors for the THack Dublin event this May. Click here to read Tnooz's coverage of the event " "Proximity-based and time-limited apps capture interest on the Emerald Isle"
NB3:Activities image via Shutterstock.