By Rezdy — 4 Nov 2014

In the Tours & Activities sector, there are 3 major assumptions being made:

  • People tend to book tours and activities via offline sources;
  • People tend to book tours and activities last minute; and,
  • The tours and activities market is too hard.

Being a leading online booking software provider geared towards tours and activities, Rezdy’s data has allowed us to dissect these common myths.

Here’s an edited version of what our CEO & Founder, Simon Lenoir, presented at Travel Tech in Sydney, 2014.

Myth #1 – People tend to book tours & activities via offline sources

Theory:

Most tour and activity bookings come from offline sources, such as concierges, VICs, or just plain walk-ins.

This is because tours and activities are seen as being an afterthought, so they are booked in-destination. People will book through their hotel’s concierge, local VIC, or just stumble upon a tour or activity when walking around.

Facts:

Survey data

Over 60% of Australian & American tour operators who participated in Rezdy’s booking channel survey said that their own website was the most effective booking channel.

This was followed by a mixture of online and offline channels, like review sites, travel agents, voucher sites and concierges.

Rezdy data

There simply weren’t enough survey respondents to represent the industry to address this myth. So we took a look at our own stats for a data set that was big enough to be relevant.

Rezdy customer revenues reached about $12M in the last few months, most of it ($7.5M) coming from manually entered (offline) bookings.

Of the $4M direct online bookings per month, about $1M were made via mobile device. Mobile is increasing steadily. Travelers are increasingly comfortable booking via mobile device. There is an increase of 1% per quarter of mobile bookings, with no sign of slowing down.

Verdict: CONFIRMED!

Tour operators using Rezdy’s booking software are getting the majority of their bookings via offline channels. They input these bookings into their online booking system to have a consolidated view of their reservations calendar.

Myth #2 – People tend to book tours & activities last minute

Theory:

People book way in advance for travel elements like flights and accommodation, while things to do are almost an afterthought after arriving to their destination. The majority of bookings will be booked less than 7 days in advance.

Facts:

Of the 110,000 tour and activity bookings Rezdy processed this year, 51.5% were made less than 7 days in advance.

However, in terms of booking dollar value, the bookings made less than 7 days in advance only made up 33% of total dollars spent.

Smaller activities are booked last minute (eg. bike and kayak rental, hop-on and hop-off city tours).

There is a huge opportunity in the 7-30 day range, because it yields the highest dollar value compared to other booking windows.

Verdict: BUSTED!

It depends on the tour or activity.

Only small activities such as bike and kayak rental are booked 24 hours in advance.

The majority of booking revenue is coming from people who book 7-30 days in advance, suggesting that the ‘bigger’ the thing to do is, the more they think about it in advance. After all, these activities will make up the memories of your whole vacation.

Myth #3 – The tours and activities market is too hard

Theory:

There is a perception that it’s too hard to tap into the tours and activities market because it’s very fragmented – thee are many different verticals, scattered across locations. To add to the complexity, most suppliers are small businesses. They are hard to reach.

Facts:

Confirming the myth

  • Rezdy has 50 categories (eg. wine tours, surfing, whale watching, hot air ballooning).
  • Rezdy has 12 product types (eg. single day tour, multi-day tour, rental, shuttle, lesson).
  • There are approximately 200,000 tour operators worldwide.
  • Tour operator average turnover is $240k per annum.

Busting the myth

  • 200,000 suppliers x $240K turnover per annum = $48B addressable market.
  • Tour and activity operators are willing to pay between 10%-25% commission.
  • OTAs‘ contribution to booking volumes is still small compared to the hotel industry.
  • Rezdy’s API provides 14,000 products from 750 suppliers with images, descriptions, rates, and availabilities.

Verdict: UNDECIDED

Only time will tell. In our opinion, it is difficult but can be done if tour operator software providers like Rezdy are successful. Suppliers are too busy running the show to update their inventory in each OTA’s backend.

This makes them shy away from connecting with too many OTAs, fearing the workload will be too much. This is why technological innovation (eg. Viator’s API connecting with third party booking software) will unlock more opportunities for tour operators, and bring them more bookings.

Rezdy currently connects with a bunch of OTAs (and is always working on adding more) to simplify operations and inventory management for tours and activities businesses.

Take a free trial or request a demo to learn more.

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