2025 is only seven years from now – before looking into the future, you have to know the past, so let’s look back.
In 2011, Phocuswright’s “What they do when they get there” report was one of the first to highlight this “young” market, despite tours and activities as part of the travel journey having been around for ages. It was finally beginning to see some traction from the major players like Expedia.
When focusing on the demand side, the dominant players in those days were: Viator (acquired by TripAdvisor 2014) founded back in 1995 in Sydney, Australia, was still standalone.
On the booking technology side it was even earlier days, with the “first wave of tours and activities startups being around”.
What has happened in the past seven years?
The tours and activities market is currently one of the hottest markets in tourism and has unfortunately often been underestimated. But this has changed!
In recent years the B2C sector really hit the road and moved forward in terms of booking share, besides still covering only 5% of the market (coming from 1% in 2011!).
B2Cs got major financing rounds and M&A transactions were done, including TripAdvisor’s $200m acquisition of Viator and GetYourGuide’s $170m funding.
The B2B software players, a lot slower to take off initially, but seeing new pace now with Redeam’s $7m Series A, bookingkit’s and Rezdy’s Series B.
Today, after years of slow development in the market for tours and activities, more has happened in the past 12 months than in the past 12 years.
The B2B infrastructure is getting more and more important. The starting signal was given a few weeks ago with the Hotelbeds/TUI deal – then followed by the acquisition of FareHarbor by Booking Holdings in April 2018 and TripAdvisor’s acquisition of Bokun.
How will the landscape look like in 2025?
Suppliers see a lot of pressure to digitize themselves coming from both sides: First, their own customers operating more and more digital and second, the distribution channels getting more and more requiring them to provide real time bookability.
In result B2B software will see a lot higher adoption rates and will become a prerequisite for using distribution channels. Both segments – B2C and B2B – will have seen some consolidation: the now known stars of B2C services came under pressure, because large travel corporates entered the area and consolidated the market.
The players such as Google, Amazon and Facebook are selling tours and activities directly sourced from the supplier and B2B saw some consolidation and three main players per destination continent remained, leaving the others consolidated or not relevant anymore.
Asian players like Ctrip and Klook have become worldwide companies supported by a strong home market. Given different European structure with different countries we’ll always see more differentiation in distribution partners amongst the countries compared to the USA and China, where the consolidation will be clearer/more significant.
Our vision for the future
In our view tours and activities products, like attractions and experiences, will be the central point of all travel planning in the future. With the activity being the reason to go to a destination by booking hotels or flights, the tours and activities sector will become the reason for the trip itself, and will not be a leisure “only” event anymore.
In the future, the organization, booking and management of activities for every destination will be just as digital as flight and hotel bookings. The suppliers will grow stronger on both ends of the market: long-tail suppliers will get more visibility and bookings through offers via Airbnb and more professional top-tier suppliers will evolve.
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