Mar 11, 2021 / Livn PR

A Paradigm Shift

As we come to terms that 2021 will be another year of our lives under COVID-19 restrictions, one of the biggest obstacles still hurting the travel industry is the limited scope of international tourism. According to the World Travel and Tourism Council (WTTC), the one billion-plus international tourism arrivals that our industry was accustomed contracted by an astonishing 75% year-over-year in 2020. Travel restrictions, safety and hygiene, and social distancing rules, have flipped the travel and tourism industry upside down. Even though there has been slight relief in the form of solo travel, family travel, sustainable travel, and domestic travel momentum, travellers continue to be hungry for more.

Despite subdued global travel demand, the macro trends actually bode well for the tours & activities sector, and more so for the small- and medium-sized tour operators. Often, these providers offer intimate and perhaps offbeat experiences – which travellers today vie for, so as to escape their urban arrest and crowds.

However, changing times may call for a change of the guard, too. What worked in the past, may not work in the present or the future. Remember the traditional travel agencies? Those that survived the digital transition are of a different breed now.  We envision a similar changing of the guard – or rather a paradigm shift – with the online travel agencies (OTAs).

The OTA Void

Battered and bruised in 2020, OTAs had to lean down dramatically owing to diminished travel demand worldwide. With little or no travel to book, and amid a chaotic refunds and cancellation vortex, the majority of the OTAs lost their sheen. This dynamic has serious implications on how and where travellers will discover, get inspired and ultimately purchase travel products in the future.

Narrowing down to the tours & activities sector, major OTAs never made deep inroads in this space. Most of them have prioritized your operators and experiences that have mass appeal. Obviously, these are the front-runners of our sector, and also a primary draw at local destinations. Strategically too, it was right for the OTAs to onboard and retail these products before addressing the long tail. But with the industry turning to its head, these bookings vanished rapidly. Most OTAs were left with little to none experiences that were designed for intimate groups.

Even as travel restrictions are lifted, travellers are now keen on quick and shorter getaways. By now it is obvious that 2021 will see a spurt in travellers seek diverse domestic tourism experiences, including exploring local activities and attractions. Once again, major OTAs are unlikely to have unique, local tours and experiences primarily due to technology and onboarding limitations. As a consequence, not only are travellers missing the opportunity to experience something unique in their own backyard, but also the local tour operators who could have potentially tapped into a major demand channel.

Is Hyperlocal the Answer?

Most tour operators want to identify alternatives who are capable of driving demand in the present and future. While the question may be daunting in itself, the answer may actually be quite obvious. Picture this – As travellers stayed at home, and unloaded travel apps and cleared their bookmarks, usage of several non-travel, hyperlocal and super-apps began surging. From food to grocery deliveries, local transport to movie ticketing, these apps are designed to gratify real-time consumption habits.

But does it make sense for tours operators to consider these apps? We have already seen hyperlocal and super-apps such as Groupon, Grab, DiDi, Go-Jek take a stab at travel retailing, but to no avail. However, a closer look reveals their core focus on transport – air, rail, taxi – and hotel distribution. These were relatively high-ticket items compared to the diverse experience pricing. Some apps did dabble into the local experiences space but were, quite simply, ahead of the curve as the industry wasn’t as digitally onboarded as it is today (and we still have a long way to go!).

Now consider this: Hyperlocal apps dominate on consumers’ devices. These users discover new offerings even at a granular level of a suburb – unlike the retailers our sector has worked with in the past. As these users travel within the domestic markets, tours and activities could be perhaps be the next major product category for the hyperlocal apps. Not only could tour operators offer product variety but also leverage the apps’ infrastructure to support dynamic pricing, multi-product bundling, and special deals. Hyperlocal apps are in the ideal position to address this opportunity gap.

What’s Next?

Tours operators have an opportunity to identify new potential partners. A factor that needs to be given utmost consideration is consumer behaviour, and to fathom how individual customers or groups select and buy products. Clearly, hyperlocal apps fit the bill now more than any other distributors of the past. Even if they may not have yet considered selling experiences, an amalgamation of connecting the dots between the consumer psychology and demand could result in the emergence of a new product category.

The overall travel industry may take longer to recover, but there can be short-term gains for players who are willing to take bold steps and experiment with new, and rather unconventional partners.

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