After strong financial results in 2022, Viator is looking for further growth, and the tours and activities marketplace sees opportunity on a number of fronts.
Viator brought in $493 million in revenue in 2022 for parent Tripadvisor, up 168% year over year to contribute a third of the reviews giant’s total revenue.
Gross booking value was $2.7 billion for the experiences marketplace, representing a 186% increase on pre-pandemic highs, according to Viator president Ben Drew.
“We still want to do better. It’s really early days in this industry, and we just think there is really tremendous opportunity on the table long term.”
Drew attributes its recent growth to “changing almost everything about the business” in the past three years.
This includes initiatives such as prioritizing quality over quantity, and its Accelerate program, controversial at launch, enabling operators to pay for increased visibility.
“We started taking a view that there had to be a higher standard of product and to some extent a higher standard of operator. We did turn off nearly 100,000 products that didn’t meet the standards. So our overall base of supply quality became much higher. That led to conversion growth on the traveler side and overall a very positive consumer reaction.”
Meanwhile, regarding the introduction of Accelerate in late 2021, Drew says that commercial relationships with suppliers had been pretty static up till that point.
“We would agree on a price upfront, and that would be the rate for the rest of the relationship. There was no product to get more bookings when they need it or fewer when they don’t.”
He adds that Accelerate is an “ongoing product,” which is improving margins for Viator.
“We want to achieve two things for operations. We want to offer them a marketing service that is flexible. We want to allow them to increase, decrease and shape their marketing budget. The second principle is transparency. We want to show an operator what they get for the commission they’re spending with us. That includes things like analytics and data.”
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Viator has made further developments on the traveler side around getting its products to customers whether via desktop, mobile or mobile app, which Drew says has led to conversion and repeat rate growth.
Partnerships are a third area where the business has seen growth. For example, Viator announced a deal to be part of pilot program Uber Explore, adding experiences to the platform, in late 2022.
While it’s early days for the partnership, Viator is live in 17 U.S. cities and there are plans to begin marketing Explore to users in-app and add more cities. Global expansion is further down the road.
Where next?
Currently in the industry, travelers search multiple sites because the information they need is fragmented, according to Drew.
“A traveler searches 40 different sites. That’s not a specific number, but they get unstructured information, they maybe don’t get the information at all and they don’t know when they’ve compared all the options. They can’t get reviews easily, and overall it’s a bad experience. What could be worse is that you turn up at the destination and take potluck. Viator is solving that problem.”
He compares the level of online sophistication in tours and activities to the hotel industry 10 years ago, saying “it was more online then than experiences is now.”
Phocuswright research, in partnership with Arival, reveals that more than 7 in 10 operators used the downtime in the pandemic to invest in their digital channels.
However, simultaneously online intermediaries are boosting their tours and activities distribution game with gross bookings forecast to rise from less than $8 billion in 2019 to nearly $20 billion by 2025, according to the research.
The Outlook for Travel Experiences 2019 to 2025 study concludes that brands that take advantage of digital, especially mobile, are most likely to emerge top in the tours and activities industry.
Viator's parent Tripadvisor has already talked about the potential for mobile, its mobile-first approach and the development of in-destination planning tools for travelers.
But it’s not just about accelerating offline to online; Drew says educating travelers that online marketplaces exist is also part of its strategy.
“We do surveys with a group of 100 random people and say, ‘Here is a proposition that allows you to research, compare and book experiences' — 94% say they either want or really want it on their next vacation, but 76% have never heard of that proposition. So awareness of what we do is still really low, so that’s fuel that we’re going to tap in to.”
Viator has already invested in an “upper-funnel marketing” campaign targeting U.S. consumers this year.
“We spend every day in the details of these travelers, but that’s the main challenge. You’re trying to change consumer behavior, get them to do something different and work with a fairly fragmented supply side in order to deliver this.”
Viator does not break out its B2B versus direct to consumer distribution, so the impact of various marketing initiatives will be hard to discern. And, says Drew, even if it were to break down those numbers there would be “a lot more noise in the calculation.”
On what still needs fixing in tours and activities distribution, Drew goes back to the lack of online penetration.
“It’s amazing to me that in 2023 so much of this industry is still offline. Research shows it has gone a little bit more online so if you ask ‘What’s broken?’ well, there’s a much better experience online, and that’s a really exciting place to be.”