In tours and activities, online travel agencies get more than their share of love from media, conferences and investors.
Earlier this year, Arival undertook an effort to track startups and funding for tours, activities and attractions since 2017. We identified nearly 50 companies, which in total have raised some $1.8 billion.
The vast majority of that funding went to B2C marketplaces such as Klook, GetYourGuide, Huangbaoche, Fever, Tiqets, as well as multi-day tour marketplaces Evaneos, Tourlane and TourRadar.
Reservation systems and other B2B tech providers accounted for just 5% of that funding. They also receive far less media coverage and invitations to speak at industry conferences.
While there’s no question that several OTAs are having a significant impact on this part of travel, the role of reservation system companies should not be overlooked.
Over the past decade and a half, there has been an explosion in startups entering this market offering accessible, affordable business management software to tour, activity and attraction operators around the world.
These companies are enabling even the smallest operators to manage their inventory, take online bookings, track their financials, and automate a range of functions they have otherwise handled manually.
Connecting an offline industry
These companies are doing the hard work of laying the technology plumbing across travel’s third-largest and most fragmented sector.
They are wiring up our industry, bringing hundreds of thousands of small businesses online, and connecting them to the broader online travel ecosystem.
Many of these companies have also been investing heavily in connectivity to OTAs and other distributors, and several initiatives are underway today, either with specific OTAs or with the small but growing group of channel managers stepping into this sector.
The work they are doing here should not be underrated.
Phocuswright research has indicated that less than a quarter of this market is booked online, far below that of air, hotel and car.
The ubiquity of online availability and booking in those sectors is something we have long taken for granted.
The work that began about a half century ago (or so) in airlines and eventually moved to other sectors is now happening - and rapidly - in tours and activities.
Join more than a 1,000 of the leading operators, OTAs and technology providers in Orlando for the event for tours, activities and attractions.
Consolidation to come
The reservation system tech landscape remains very fragmented, despite all of the media attention given to the acquisitions of Bokun by TripAdvisor and FareHarbor by Booking Holdings.
There are at least 150 companies worldwide (some say many more). A few of them have a few thousand customers. Most have a few hundred, or even fewer.
This fragmentation has spurred choice and opportunity for operators, but it is also a source of friction with so many sub-scale providers.
Pricing and feature wars amid increasing customer churn put pressure on profitability. Several of these firms have also raised venture capital and will need to deliver a return on investment.
As the broader travel industry pays more attention to this sector, such fragmentation will not stand.
Whether through mergers, acquisitions, a roll-up funded by investors, or sheer attrition, consolidation of reservations tech companies in tours and activities is inevitable, as it was hotel and vacation rental tech.
Larger distributors are already driving this through acquisitions, alignments (GetYourGuide’s Preferred Partners Program), and simply by prioritizing which systems to connect to.
Natural selection will do the rest, as larger, better-funded leaders make it that much harder for smaller tech companies to keep up.
* At the upcoming Arival conference in Orlando, we have a special session devoted to the state of reservations tech and what’s next.
The CEOs of four system companies – Jason Morehouse of Checkfront, Max Valverde of FareHarbor, Ruzwana Bashir of Peek and Chris Atkin of Rezdy – will take the stage for a roundtable on the state of tech and what it means for operators and distributors today.
This is a theme we will continue to explore at future Arival conferences in Europe and Asia.