Tours and activities sector has made many people feel a bit uneasy lately. We know that it’s a huge market that is estimated at about $100 billion, but it still looks like a piece of a pie that no one can eat.
This year it has attracted much attention and I think the hottest discussions on Tnooz were around T&A articles. In July Tripadvisor acquired Viator – it’s a serious move showing how important the tours and activities sector is for major industry players.
NB: This in a viewpoint from Valentin Dombrovsky, vice president of innovation at Excursiopedia.
At the same time Viator's valuation was only $200 million. Well, $200 million is a sum that many of us would like to have in a bank account, but it’s still less than the $2.6 billion paid for Opentable by Priceline – an acquisition that happened about a month before – and not a huge valuation for the company that is a year older than Booking.com.
David Litwak came up with an interesting piece about carving up the tours and activities segment into more than 20 different verticals. And he’s quite right in his assumptions. It is really a market of multiple different products that require different approaches.
However, in my short piece I’ll try to explain how tours and activities supermarkets (a very accurate term that Tnooz node Evan Konwiser used in comments) are still needed and will, in my opinion, prevail niche players in terms of market share.
I think that such companies are important and useful for everyone in the market:
· For consumers
· For suppliers
· For industry players who seek to make additional profits from tours and activities as an ancillary service (for distribution partners as we call them respectfully)
Supermarket for consumers
I like the term supermarket or "one-stop shop" because it gives a real offline experience analogy to what tours and activities services like ours try to bring online.
Really, we go to supermarkets to buy everything that we need in one place (I personally prefer buying everything in online supermarkets) – in the same way it’s convenient for customer to have one place to get activities required for travel.
There’s a need for a brand that answers the question “What can I do during my trip to X?” and we're try to build it.
It’s right that different activities sometimes require a different approach, but it doesn’t mean that it is not convenient to get a scuba diving tour and airport transfer for one trip in one place.
More than that, "supermarkets" show the activity opportunities that different locations have to offer and I see them playing an essential role in the inspiration and planning stages as well.
A "supermarket" might be with the customer during all of his trips – no matter if it’s surfing in Bali or a trip to see sights in Europe. It might understand a traveler’s habits and adapt to them providing a better booking experience and smart recommendations (and in this case, we’re talking about the big data game).
It can be an entry point for those who just try online booking buying something simple like a city pass or skip the line ticket and be with the customer during all the time while he gets used to the online activity shopping experience.
And finally, once again - yes, the right product representation is important and we’re moving towards presenting products in each of the tours and activities verticals in the right way.
While we’re on our way, we have developed a messaging system that allows customer to connect directly to the activity provider and to ask about all the details of a selected listing (the supplier can even up-sell additional services directly during a chat with a customer).
We’ll continue listening to our customers and suppliers to make our service good for everyone. It’s a challenge, but we think, it’s worth it.
Supermarket for suppliers
In general, suppliers welcome the opportunity to present their activities to different customers. And they benefit from being among many of their colleagues as much as the customer benefits from having a big choice.
When we tried to tie up the loose ends on tours and activities market in an article with Oliver Nutzel, we wrote: “The power of the platform is the power of multiple providers based in different locations all over the world who work together to make travel more enjoyable”, - and we still believe in it.
Again, the power of data and diverse marketing channels (see the part about distribution partners) can bring benefits to suppliers as well as for customers. "Supermarkets" that have experience in working in many tours and activities verticals might help with some opportunities that are not so evident.
Moreover, they can support some selected suppliers with special marketing activities that might be held together with distribution partners that have a target audience that these suppliers are looking for.
I think Emile Breure was right in his comment on David’s article when he said that, for example, for a canal cruise company it’s useless to be listed among other canal cruise companies because it usually sells an activity that is part of a big "activity cart" in some specific area.
Therefore, it needs to get a place in a traveler’s itinerary during his trip to Amsterdam, for example. At the same time it’s true that there are activities that inspire travelers to go somewhere (like scuba diving tours, for example).
However, it doesn’t mean the traveler will need only this tour and nothing else – and again a supermarket might help suppliers to find their customers through an upsale that can be made by the platform (and they can make the customer happy too).
Therefore, it’s all about making activities in different verticals work with each other for the sake of common client.
Supermarket for industry players
We all are aiming for the stars and see major travel industry players as our future partners.And here I want to say a few words about such a specific niche as airport transfers which is part of both "tours and activities" and "ground transportation" sectors (although sometimes it might be a canal transfer via boat, but we take more general cases – all in all it still transportation).
Airport transfers is quite a specific vertical – final link for the whole chain of door-to-door travel booking. That’s why you may build an airport transfers startup and knock at the doors of big bosses who might seek greater experience for their customers.
And it’s much harder with other niche projects. So, if you build for the niche you lose opportunities for many potential distribution channels. Big industry players look for some big moves while building their ecosystems and you have to get lots of supply for all types of customers if you want to make their customers happy.
All this said, I still believe in niche players within the tours and activities market. Usually they’re built by big fans of specific tours and activities vertical (take Winerist (Startup pitch here) and other wine travel startups that are usually built by wine lovers, for example).
I founded a niche activity startup related to event travel and have ideas for startups in some other activity niches. And Excursiopedia seeks for partnerships and for potential acquisitions in different T&A niches too. It’s all just a question of scale and the size of the business opportunity.
NB: This in a viewpoint from Valentin Dombrovsky, vice president of innovation at Excursiopedia.
NB2: Supermarket image via Shutterstock.