As travel giants circle, understanding the economics in tours and activities is vital
03/05/2020|8:58:27 PM|PhocusWire

In the past 24 months, the tours and activities sector has moved from, to borrow a Cinderella analogy, the cinders to the palace, where its untapped potential has moved into the sights of major travel retailers and investors.

These retailers and investors, as we know, included Booking Holdings, Tripadvisor and SoftBank via their investments in Klook and GetYourGuide.

These moves have led to lots of opportunities for operators and consumers alike, but, as always, change does not come without its casualties.

Some operators are to dealing with distributors and they understand that such partners can be both partners and competitors.

For others - and, in the case of tours and activities, this is a sizable portion - it is entirely new and some operators are now selling themselves short with online travel agencies.

The situation has been complicated further by vertical integration in the sector, where OTAs - in the form of Booking Holdings and Tripadvisor - purchased B2B offerings (FareHarbor and Bokun).

These companies control operators' direct channels - i.e., their websites, pricing, availability and connections to distributors. There is a moral dilemma around expecting the B2B and B2C parts of these businesses to operate independently and not prioritize their profits over operators (more on this later).

But, at a simpler level, it is just incredibly confusing. Operators have moved from an era of low online penetration to high online penetration, from low levels of OTA penetration to high levels of OTA penetration.

In the midst of all these changes, it’s not surprising that some operators are getting caught out. 

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