The case for tours and activities as the "loyalty ancillary"

From revamped points systems to subscription-based travel, the full cross section of the travel industry is driven to keep customers coming back, again, and again. This is not new or surprising, but the increased focus is logical - an extrapolating number of communication and distribution channels combined with Gen Z’s significantly different approach to travel consumption has made customer acquisition strategy more complex and customer loyalty more important than ever.

The tours and activities market was one of the hardest hit travel segments during the pandemic but will soon be bigger than it was in 2019 and will be valued at $306 billion by 2024 , with an annual growth rate of 7%. Experiences, which we will define as one or half day excursions, activities and attraction tickets are a large, diverse and increasingly digitalized part of the travel industry – and this is where a loyalty opportunity lies today.

Experiences arguably deliver the most memorable parts of a vacation - the incredible artworks of a museum, the thrill of a roller coaster, street food full of flavor, an inspiring story of a local resident, the splendor of a cascading waterfall – the examples are endless. Travel businesses looking to boost their brand image, awareness, recall and loyalty should want to be associated with these memories, and experiences OTAs provide a straightforward solution to make this possible.

“We know lots of our customers like to get out and about while on holiday, so we’re really pleased to be able to offer an extended range of attractions and tours to help them make the most of their trip away,” says Roy Stratford, head of commercial partnerships at EasyJet holidays on the roll out of its tours and activities offering through partnering with an experiences OTA.

Experiences: Strong growth in online bookings

According to a recent global survey, online is now the primary way to research - and more importantly book -excursions, with 61% booked via website or app. Almost 50% of travelers are researching experiences before booking other travel components, and one in ten travelers wish to book experiences online with their flight, accommodation or ground transportation – this number is higher amongst millennials and Gen Z. Across all traveler demographics, 80% are researching experiences before they arrive in a destination.

While the jury may still be out on super apps, in the travel space the biggest brands are making plays to provide customers with a single, seamless booking flow for all travel components. Booking.com, Priceline and Expedia are among those selling experiences with, or following the booking of, another travel component. The interest in experiences extends to other areas of the travel industry as well . Google Maps is changing how they offer experiences , while more recently Uber made a relatively low-key announcement that experiences are now available in North America via the Uber app . The trend of travel brands adding experiences to their online offering is only set to rise as consumers demand a more convenient and connected booking experience for all parts of their vacation.

“We strive to provide a seamless booking experience for our customers through our connected trip strategy. By embedding activities into our platform, we’re able to further engage with our customers throughout the booking funnel to help deliver against all of their travel needs, all in one place,” says Brett Keller, CEO of Priceline on the launch of Priceline Experiences.

Digital distribution: Quick entry to a growing market

For travel businesses such as hotels or airlines, experiences can be a good source of incremental revenue and drive greater profits. They are available in all destinations – many of them all year-round, as an in-demand offering for both international and local customers.

However, the tours and activities market is greatly fragmented, consisting of millions of small, independently-owned operators that don’t have their own online booking systems to connect with. Experiences OTA’s offer a platform for these products to be distributed online, while providing travel businesses with a relatively quick route to market through API and white label solutions that efficiently add experiences to a travel business’ existing online platforms. These digital solutions enable businesses to offer a curated product portfolio of the most relevant and sought-after experiences per destination, all of which meet strict quality, health and safety and sustainability criteria.

The more advanced white label solutions offer a plethora of customization options, from branding and language options to customer booking flow and an even more refined portfolio of experiences, by destination or experience type. Established experiences OTAs offer further options, such as customer service delivered through dedicated call centers and marketing support, with the digital capabilities of the solution and the content-friendly nature of experiences, providing a relevant opportunity to stay in contact throughout the customer journey. With three out of four experiences sold being booked in-destination, this ongoing communication before and during a customer’s trip is vital for driving bookings and enhances customer satisfaction by offering a higher level of flexibility.

The combination of a customizable, digital distribution solution, curated product portfolio, customer service and marketing support, is providing businesses with a comprehensive solution to quickly enter the growing tours and activities market.

“Experiences are more important than ever. They make a trip special, meaningful and above all, memorable. Booking.com offers an enviable breadth and choice of quality experiences to travelers across the globe, all bookable in a couple of clicks from the palm of their hand. We seamlessly connect millions of travelers with memorable experiences, a range of transportation options and incredible places to stay - from homes to hotels and much more. We're on a mission to make it easier for people to experience the world around them,” says Matthias Schmid, senior vice president for Booking.com’s Trips division, on its attractions offering.

Tours & activities driving loyalty – the opportunity is now

According to a TUI Group customer survey, vacations that include excursions, activities and tickets have an 18% higher net promoter score (NPS) against those that don’t – a very significant difference and a statistic that shows the key role experiences can play in driving customer loyalty. Combine this with a growing tours and activities market with an ever-increasing volume of online bookings, and travel businesses have a prime opportunity to grow incremental revenue and foster customer loyalty by adding experiences to their offering.

Despite this, there are still a relatively small number of businesses selling excursions, activities and attraction tickets online – so for businesses looking to boost customer loyalty, tours and activities presents a strong opportunity right now.