We deep dive into ‘The travel industry turned upside down’ report by Skift in partnership with McKinsey & Company to share insights on why the Tours & Activities sector will succeed in the future. 

Overview

Over the decades, travel had seen consistent growth even when financial crises and pandemics affected the global economy. The COVID-19 pandemic presented a different challenge, when in a matter of months, international mobility decreased by 65% due to COVID19.

Before the pandemic hit, tours and activities was one of the fastest-growing sectors in the travel industry. One of the reasons for this growth, was the significant interest it garnered from venture capitalists who invested $850 million in 2017, and it jumped to $935 million in 2018. This showed increased investment potential and excitement as well as trends driven by travellers.

Additional investment became a response to the increasing global travel trends. Unlike in previous years, travelling had become more affordable and was facilitated because of technology. Booking flights and hotels could be done with a few clicks, which spilled over into local tours and activities, allowing operators to offer products to book online.

The report gives five key insights on why the Tours & Activities sector will recover: 

• Signs of latent demand for travel. Customers are interested in traveling again when restrictions lift, even willing to do so before a vaccine is available at scale. Globally, an increase has been seen in travel search and advanced bookings (both domestic and international). 
• Travelers are keen to travel but feel restrained in the leisure space. There is a sense of inability to do anything meaningful at a destination due to necessary public-health measures (quarantines, closures, and other restrictions).
• The working-from-anywhere trend could permanently blur the lines between leisure and business travel. However, the pandemic and the rise of remote work seem to accelerate these travel segments' growth. 
• Nonprice factors have become more important to customers. The industry needs to cover other terrain before “demand stimulating” and instead restore traveller confidence. Customers need to be comfortable with all touchpoints in their journeys.
• Self-reported sentiments may not accurately reflect preferences or behaviour, despite being easy to gather, and especially in the depth of a crisis. For this reason, travel companies need to improve the way they keep a pulse on travellers’ actions through leading indicators.

How is the Tour & Activity sector responding? 

While remaining one of the fastest-growing sectors within travel, Tours & Activities was particularly hardest hit with the pandemic (bookings decline 85%, April 2019 vs. April 2020). Aside from the abrupt halt to international travel, a key factor for this decline was the nature of the sector focusing on group travel and bookings. 

Then again, there are many reasons for optimism in the sector:

• Rising consumer appetite for experience and growth of online distribution platforms. This helps create a central point to bring together numerous small tour operators in one of the most fragmented sectors.
• Demand will return as people will once again feel safe to travel in groups.
  
• High growth venture capital. As Skift Research reported, tours and activities have been among the fastest-growing categories for venture-capital investment in all of travel.
• Partnerships with travel agents, distributors, and tour operators form a one-stop travel shopping platform. Livn has continued to drive meaningful partnerships with key travel players, successfully filling the gap to add value to these platforms:

• Advantages of online travel agency partnerships include distribution scale, customer loyalty, marketing, and suppliers.
• Distributor network has a highly variable cost structure, allowing for quick response and adaptability to the market needs.

Innovate to stay ahead of the curve

For Livn, innovation was vital to stay ahead of the curve. We asked ourselves how do we keep momentum and maintain real-time connection to our open connectivity hub of Tour & Activity. We then, focused on four factors:

• Unrivalled scale of network: digitally linking a large number of tour reservation platforms and tour operators, overcoming the common problem of complexity in disparate technology platforms.
• Livn API provides technical access to a massive last-minute tour & activity inventory (100% instantly bookable products). Livn only integrates inventory which is real ‘last seat availability. This gives customers the flexibility to book in real-time and gives tour operators more opportunities to fill bookings.
• Livn can help travel companies drive additional revenue without the need for additional expenditure. 

Ability to adapt to key trends

Tour operators can adjust their products to cater to a smaller group or local travel for families. Health concerns have caused a decrease in activities with other people, but this provides an opportunity for family-friendly experiences to keep businesses going.

It has also seen the rise in domestic travel and searches for local experiences and makes these opportunities more attractive.

With tour operators adapting to the changes to meet the challenges, technology can help achieve growth. Travel companies, therefore, have an incredible opportunity to pivot their offering by either adding or operating these bookings more efficiently.

In the end, experiences are what moves travellers to travel.