Analysis - December 7, 2016



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December 2016


Print Distribution networks, Products and activities,

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.


Source: Airbnb

For more information, see Activités touristiques : la distribution en ligne s’organise.

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.


Source: PhoCusWright, 2016

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.

Challenge #2: The disconnect between online presence and traveller behaviour

There is a very “long tail” of small suppliers: the sector has a few major companies and thousands of little ones. There is a world of difference between an amusement park and an agri-tourism business. The majority of suppliers generate modest revenues and therefore cannot afford to devote major sums to online marketing and merchandising. According to a PhoCusWright study, 82% of all reservations are made offline (by phone, email, fax). For its part, Skift estimates that four out of ten tour operators do not sell their products online and many do not even have a Website. In addition to being heterogeneous, the tours and activities sector does not have an extensive online presence, making it difficult for consumers to make comparisons and then select options.

The fact that few businesses offering tours and activities have adopted new technology poses a real challenge, given that consumers increasingly rely on mobile devices to find activities when travelling. In fact, many travellers look for things to do in the surrounding area and seek information about the day’s events (see our articles on planning and reservation behaviours). While they do some general research on tours and activities before travelling, they do not make specific plans. Decisions and purchases are primarily made at the destination, which is why it is important to have an online presence, be listed on popular sites and, ideally, offer the option of quick and simple reservations. According to Philippe Fabry, writing on the blog, activity organizers must start making it easy for clients to reserve tours and activities while they are travelling.

An opportunity for destination management organizations

Before it’s too late and major players take over the market, as they have for hotel bookings, destination management organizations still have an opportunity to care out a place for themselves in the online tours and activities market. This could be a profitable sphere of activity and some organizations are giving it a try. For example, the Lyon Tourist Office and Convention Bureau has added a module to its Website that enables both tourists and residents to reserve city tours and activities (explore Lyon by boat, on foot, in a double-decker bus or on a Segway) and excursions to the Beaujolais region.


Source: Lyon Tourism and Conventions

In many cases, the process must begin by offering training to tourism businesses and providing support to help them make their products available online. Destinations that already pool tourist information about service providers are ahead of the curve.

The online sale of tours and activities is still a largely untapped market. However, its potential is so great that it will be developed, one way or another.

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-BI Intelligence. "Airbnb will pilot packaging deals similar to other hospitality booking sites," Business Intelligence, 28 April 2016.

-"By 2020, Digital Travel Outlays Will Top $817 Billion Globally," 26 July 2016.

-Fabry, Philippe. "Les opportunités business autour de la vente des activités touristiques sur Internet,", 20 July 2016.

-Fressman, Jeremy. "Fragmentation and the Challenge of the Tours and Activities Business," Skift, 14 January 2016.

-Fressman, Jeremy. "The Future of Tours and Activities Marketing – Executive Summary," Skift, January 2016.

-Only Lyon, Tourism and Conventions. "Lancement du site," Website consulted 10 August 2016.

-"When They Get There and Why They Go," presentation by Douglas Quinby, June 2016.

-Peltier, Dan. "5 New Travel Startups Giving Tours and Activities a More Portable Future," Skift, 18 July 2016.

-Schaal, Dennis. "Exclusive: Kayak to Launch Restaurants, Tours and Activities Comparison-Shopping Features," Skift, 13 April 2016.

-Schaal, Dennis. "TripAdvisor Adds Tours and Activities to Its Suite of Instant Booking Options," Skift, 16 February 2016.

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