10%, $183 billion

Don’t you have the experience of choosing your travel destinations or tours based on what you want to learn, explore, and experience something new? The segment called “Tours and Activities” has emerged in the travel industry. Today, the tours and activities segment has begun to grab its share of the limelight and according to the Phocuswright Research, ranked as the third-largest (10%) in the travel industry after flights (40%) and accommodations (33%).

The Phocuswright Research shows that the tours and activities segment accounted approximately $135 billion in market size in 2016 and forecasted to reach as much as $183 billion by 2020. Over the past several years, key industry players; including hundreds of technology start-ups, have turned their attention to this segment and poured millions of dollars in investment to tours and activities aggregators and other online intermediaries. Key major online players such as TripAdvisor, Airbnb, and Expedia are making significant inroads in the tours and activities segment.

However, despite its significant potential, this segment is less digitalized and remains tremendously untapped. The segment is heavily dominated by several small operators many of whom manage their businesses manually and uses rudimentary databases to keep track of their reservations. The Skift study shows that around 55% of tour and activity suppliers at the global level do not have a third-party reservation system, and, among them, 67% use ways such as email or calendar to manage bookings. Even in Japan where the tours and activities segment is getting significant attention, especially for its inbound business, the segment remains fragile as a result of lack of information and inconvenient payment methods.

The fact that this segment remains less digitalized, it leads to several barriers, such as manual work, poor marketing, and inconveniences in payment methods, etc. Hence, tour and activity suppliers should seriously consider adopting technology in order to stay competitive, access to the wide variety of customers, and benefited from the enormous potential of last minute bookings. The automation of the tours and activities segment will also enable travellers to confidently shop and book activities without any stress. In addition, the fact that the tours and activities segment is highly fragmented, partnerships and communications among stakeholders (including suppliers) will help streamline the entire segment through time.

（Tom）

Source: Phocuswright, Skift