What is the Truth around Distribution in the Tours & Activities sector of travel?
I read the recent article http://www.tnooz.com/article/tours-and-activities-reality-distribution/ and it left me a little confused and bewildered as it didn’t really reflect the industry that I have worked in, day and night, for the past 4 or so years.
From the talk of lack of connectivity and lack of distribution options available to the extent of distribution through online intermediaries in terms of revenue %, to the graphic talking about collecting vouchers and sending them back to resellers for payment. None of it really looked like the world I work in so I wanted to perhaps question some of those points and give some clarity and perspective on why, from where I sit, this little niche of the travel industry looks so different from where Stephen sees it.
The most obvious starting point is: Are we even talking about the same industry? We are definitely both talking about Tours and Activities. That is all Urban Adventures do. The difference I presume is that Stephen is talking about getting online the existing 80% who already exist in the marketplace but are offline, and into a universal system that allows all and any changes to be made once, by the operator of the tour and have that flow universally through to all and any distribution or resell partner. The comments of the original article theorize that at least a large volume of those suppliers don’t want to go online and see no need to do so. At best, some others point out that without the switch that Stephen is advocating, it is not worth their admin time to do so.
At Urban Adventures on the other hand, we come from a totally different start point. For the most part we exist because the incumbent suppliers of tours, in particular online, didn’t offer any product on which we were interested in travelling on. Our solution therefore was to build a solution where we could hand pick the type of experiences that did interest us and others like us, looking for immersive experiences shown through the eyes of locals, which in turn create local employment and deliver benefits back to the communities in which they operate.
We built a system from the ground up with the absolute intention of answering the questions that Stephen posed in his article with an emphatic YES. I’ll go through each one here below:
What distribution partners are you connected to?
Going by the definition that Stephen is alluding to in his answer to this — Urban Adventures itself is that Distribution Partner for our Urban Adventures Partners. We connect to all the major resellers listed in Stephen’s answer, on behalf of our partners. They provide us with the product they would like to run, the prices and the dates, once a year, and we do the rest. We make the contracts, take care of the information flows — some via API and some manually. Distribution is one of the core offerings we have to add value to our partners.
What agency networks are you connected with?
As per the above we don’t really distinguish between online and offline distribution in terms of resourcing or effort. We chase and contract both. You can book Urban Adventures through Flight Centre brands, the Flight Centre Wholesaler in Infinity, STA, TUI Retail, Hello World, Jet Air, Trail Finders and many others.
There is definitely more of a problem in connectivity here, but even that is slowly sorting itself out. For our partners, the actual suppliers of the product however — they are connected with no more work than the single annual update of product and pricing per tour.
We definitely wish there was greater connectivity via API right now. Between us and most of the major resellers who take our product — we expect this to resolve itself in the next 5 years or so.
Can I sell my tours through the GDS?
We are connected through the Flextrip integration into Travelport which was the one exception provided in the original article. We know Alex and his team at Nor1 are working hard to utilise this to get more product to market and have high and realistic expectations that they will have significant success in doing so.
So what you’re saying is distribution doesn’t exist in tours and activities?
Well I hope so. Aside from myself, we’ve got 2 others working full time on it. The online intermediaries alone bring in well over 25% of total revenue which is well above the Phocuswright quoted figure of 1.45%
I think the point that Stephen would rightly make is that we are not the ones who are going to provide a solution to the entire Tours and Activities market. That is very true. You are probably never going to see skip the line to Eiffel Tower or buy your entry to the Jurong Bird Park via Urban Adventures. That however is more a matter of our culture than a technical problem. Our customers aren’t interested in coming to us for that product. That is different however to saying point blank that right now, there is no distribution channel.
The one piece which may have been inferred in Stephen’s commentary that I think is absolutely true is that there is unlikely to be a time soon where a supplier can go in and tinker with their product and that flow instantly through to all distribution. Whilst that is actually quite simple from a technology point of view to enable — the problem arises mainly in what happens to all the already booked clients on the tour, in terms of how are they notified and what opportunities are they given to change or cancel and all the work that goes into that process, alignment of terms and conditions etc. It is just a process and there is no reason why a process can’t be automated but with everyone including resellers wanting to have their own copy and online content for SEO etc — it is difficult to see it happening under the way the internet and B2B relationships currently work. Hotel rooms rarely change. Tours can change way more frequently than anyone can ever imagine and that is one of the reasons I think many small guys struggle to adjust to moving online. The freedom you have as an offline operator disappears once your tour is syndicated through multiple distribution.
We have seen over the past 5 years that quite a few have taken the P2P path. We love those guys because they create really interesting product. We think they have a problem however because the way they are set up does not allow them to access this distribution being talked about here. There is practically no live, readily available bookable product in pure P2P. If you don’t have those qualities then resellers won’t touch you. Resellers and wholesalers are not interested in just being another component in the conversation to get a small ASP product defined and booked on a case by case basis. The P2P guys therefore have no choice but to build B2C businesses, which take a lot of time and money. They still may win. Side Tour’s great products came closest by having set guaranteed departures but not with enough frequency to have anything sufficient to interest major OTA’s beyond their eventual acquirer in Groupon.
I mention the P2P because it resembles to me more closely what Stephen was talking about in terms of distribution. Had the article been The Reality of Distribution in P2P Tours and Activities — I would have been nodding wildly in agreement.
This brings us back to the portion of the (reportedly) 80% offline T&A businesses who actually do want to come online. We have just this week flipped our model to eliminate all upfront fees for those who are looking to get online and tap this online distribution. The only criteria are that you are willing to offer exclusive product as your Urban Adventure product and that you are willing to participate as a member of our network in terms of branding, communication and values. The other point that stops us servicing everyone — is that each destination is exclusive to a single partner. We only want the best and only one can be the best.
We think this opens up opportunities not only for incumbent offline businesses running really cool product but also the amateurs in the P2P space or anyone considering loading a tour in that space, to actually consider it not a hobby, but a full life change and an actual small business. We now have a lot of experience bringing through passionate people without tourism or business experience and helping them become successful business owners. We don’t want the simple matter of dollars to get in the way of people being able to pursue their passion through tourism. In particular we want to make sure we are able to service community, cultural and indigenous groups looking for a tourism solution but who don’t know how to get started or have previously tried and failed to get customers on their own.
We can’t wait to hear from and meet those passionate people with the energy to change their lives and their communities for the better through positive impact tourism. If that is you, get in touch.