European travel giant TUI Group has bought Italian tours and activities tech specialist Musement as it starts to build up its destination experiences business line.
The price paid for Musement has not been disclosed. The Italian business has raised €15 million since it was founded in 2012.
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TUI said that Musement “will initially be managed as an independent unit within TUI Destination Experiences.”
The tours and activities sector is one of the most globally active in travel tech. Research from Phocuswright, produced last July and often referenced since then, says the value of the tours and activities market will reach $183 billion by 2020.
The launch of Airbnb Experiences in October 2016, and the continued expansion of this product line as part of the continued expansion of the Airbnb mothership rattled many cages. Within the space of a few weeks this April, TripAdvisor bought Bokun while Booking Holdings bought Fareharbour.
Investment over the past few months include Evaneos getting $80 million, Klook getting $200 million, Tour Radar getting $50 million.
So where does TUI fit in?
Earlier this year at its AGM it identified “tours and activities” as a strategic growth area for the business as part of Destination Experiences. It bought back the destination management business from Hotelbeds a few months to grow its critical mass in this area.
It is looking for ways to improve the TUI holiday experience for its 20 million or so customers by offering them personalised tours and activities. But it has always talked about “third parties” when framing the growth profile for this unit - selling inventory to consumers who are not travelling with TUI or working with other travel companies as a B2B partner.
Its official press release about the Musement deal explains how it sees the relationship with Musement working in practical terms.
“Customers will be offered the opportunity to create their own individual experiences from a range of products designed to be as diverse as possible. If a traveller wishes, for instance, to visit the Vatican’s museums on a specific date and time and be accompanied by a French-speaking guide, the holidaymaker’s wish has to be matched with the offer of a guide with corresponding skills – in a fully automated and completely seamless manner for the customer. In future, Musement’s online platform will contribute these technical requirements and competences to the Group.”
Musement's confirmation talks about its B2B2C appeal to TUI. It appears as if Musement’s inventory will be made available to TUI’s 20 million customers - at the moment Musement has one million users.
But Musement also provides B2B tech to the tours and activities sector, and this is of interest to TUI.
Alessandro Petazzi, co-founder and CEO Musement said:
“[The deal] opens new opportunities for us to first of all better monetize our technology and our offer by accessing the huge TUI’s customer base and take advantage in terms of acquisition costs, as well as also potentially vastly expand Musement B2B2C strategic distribution relationships.”
TUI's role in the tours and activities gold rush is a bit of an outlier. It has a captive audience of 20 million travellers to sell tours and activities to so there is no standalone customer acquisition costs. Its long-standing commitment to and investment in a single platform will help ensure that the tours inventory can be personalised, targetted and fulfilled.
If that inventory can then also be distributed to other non-TUI travellers - directly or via white-label partnerships - then the addressable market goes from tens of millions to hundreds of millions.