How tours and activities can drive revenue for travel brands

The tours and activities sector is the most exciting part of travel. The pandemic, which caused the industry to almost implode, is well in our rearview mirror as the part of travel, long touted as “the next big thing,” makes progress in fulfilling its potential and taking its position alongside flights and accommodation as a fundamental pillar of the travel sector. 

Furthermore, the tours and activities industry is still taking shape – key players are vying for position, technology innovations continually alter stakeholder dynamics and there is strong and growing customer demand for experiences.

All this has naturally led to more and more travel and lifestyle businesses exploring how they can participate, but in a fast-evolving industry as diverse and fragmented as tours and activities, knowing where and how to sell experiences is vital.

Online is growing, offline still rules, omnichannel makes sense

According to research from Phocuswright and Arival, the pandemic saw a surge in digital distribution of experiences, with online bookings growing from 17% in 2019 to 30% in 2021.

Dedicated experience online travel agencies are both trying to serve and drive this online demand, currently representing 5-10% of industry sales, but growing fast at 37% compound annual growth rate. This was reflected in the earnings reports of some of the major tours and activities businesses in the last quarter.

Ease of online booking, the growing trend of experiences driving the vacation decision-making process, and the customer friendly combination of real time availability, instant booking confirmation and free cancellation, are all driving growth of online sales of experiences. This is being further bolstered by leading businesses from across the travel sector, including airlines, hotels, tour operators, ground transportation companies and OTAs, adding experiences as an online ancillary to their primary offering.

Having said all this, most experiences - at least 70% - are purchased offline. Some customers are buying experiences in travel shops prior to a vacation, but the vast majority are sold in the destination.

Experiences are still often a last-minute or spontaneous consideration and have a short booking window. In-destination sales are either direct with experience operators, or via an in-destination intermediary, such as reps from a hotel or tour operator or a hotel concierge. New platforms designed to combine the practical necessities and convenience of in-person sales by reps, with the aforementioned benefits of the OTA channel, are enabling more businesses to take advantage of the in-destination intermediary channel and delivering strong results.

Customers will be sold to when and how they want to buy, and it is up to businesses operating in the Tours and activities space to recognize and serve this requirement. For a business to be successful in tours and activities, it needs to be able to sell profitably at scale, and the best way to do this is by leveraging omnichannel distribution.

Defining the “why” for customers

There are many reasons why businesses want to sell tours and activities as an ancillary - it’s a fast-growing part of the travel sector, enables increased dialogue with customers, and can help drive customer loyalty, to name a few. However, despite being the best part of travel and what people remember most about their holidays, businesses need to be proactive in selling experiences to customers.

Naturally, a business’ priority when it comes to marketing and communication will be to focus on their core offering, and the more successful businesses are those that have clearly defined and explained why customers should purchase their products or services, whether it be hotels, flights or package holidays. Businesses need to extend this approach to their tours and activities ancillary product and outline why customers should buy experiences from them - and there are a whole host of reasons. 

• The convenience of booking everything in one place at the same time. One in 10 travelers wish to book experiences online with their flight, accommodation or ground transportation – this number is higher amongst millennials and Gen Z.
• Offering a curated portfolio of high-quality, good value, responsible experiences. During various research projects carried out between 2021–2023, “High Quality”, “Good Value” and “Responsible” were consistently identified as travelers’ key priorities for experiences. “High quality” is defined as a knowledgeable and engaging guide, and small group size. “Good value” is focused on an affordable price and the number and quality of points of interest included in an experience, and in one research report was the number one purchase consideration across all nationalities and age groups surveyed. Finally, “Responsible” revolved around both limiting any negative environmental impact of an experience and supporting the local community.
• Skip the line and exclusive access at top sights. Regardless of nationality, or if travelers are in a city or beach destination, a priority is visiting the must-see sights, which are often crowded during the peak hours of the high season. Benefits such as skip the line, or access outside normal visiting hours or to normally off-limits areas, are popular with customers, and were found in one survey to be the third-most important factor in the decision-making process, after value and guide quality.
• Strong health and safety standards, 24/7 online and call center customer support - there are numerous other potential reasons “why” a customer should buy experiences from a business, but there must be a proactive approach to communicating these. Leveraging customer relationship management to deliver email campaigns, seasonal promotions, inspirational content – all businesses have channels on which they can highlight experiences to customers to drive sales.

Make tours and activities work for your business

Customer-centricity is key. A business needs to identify and communicate why customers should buy experiences with them and ensure they are then selling them in the channel and at the time customers want to buy them.

Yes, online distribution is the fastest growing channel, has low barriers to entry, can be set up almost instantly and will bring sales, but with the majority of experiences bought in destination, the way to drive sales at scale is through omnichannel distribution. And yes, as the best and most memorable part of travel, experiences should sell themselves and to some extent will, but to drive sales at scale businesses need to proactively promote them to customers.

Tours and activities is a great sector with which to be involved; millions of potential customers, across all nationalities and demographics and a younger generation that is giving more importance to experiences - interesting times, and, with all this in mind, I stand by original statement - tours and activities is the most exciting part of travel!