It’s nearly over for tour & attraction retail and we were just getting started

I spend more time than healthy looking at the potential industry structures for tours, activities & attractions. It holds fascination to me because when you are building a new platform over a 5-10 year timeline, you have to call it right.

In recent years I have swayed from thinking the online travel agents with hotel (or hotel & flight) bookings will win – e.g. Expedia, TripAdvisor (and more lately, Booking & Airbnb) – because they have consumer visitor flow already paid for by hotel / flight booking advertising, a proportion of whom will buy tours & activities. However the long standing companies of this type are being a bit cautious in making the most of their current positions of strength so my confidence they will ultimately win is waning. They will ultimately regret not locking in their early mover advantages when they had the opportunity 2014-2018.

More recently I have been more positive about GetYourGuide, Klook and Airbnb’s position because they are vertically integrated – both retailing to consumers and delivering experiences on the ground in their own brand. This will give them the advantage of fast innovation (vs online travel agents who have to bring suppliers, and supplier reservation systems, with them). I am a fan of vertical integration in our sector, although perhaps experience suppliers are not.

Last week Google showed what they are working on and now it is clear that with these Google / Android services, change within retail is going to accelerate. The second video, specifically, shows their prototype booking flow (in this case for car rental):

ok fine some of you aren't impressed. dark magic? here's assistant literally clicking through websites and booking a car you like while you just watch

ARE YOU NOT ENTERTAINED pic.twitter.com/4rCegzpM3Y

— Owen Williams ⚡ (@ow) May 8, 2019

With this technology they have effectively made large scale retailing a commodity. The Google retail experience will become the one consistent user experience consumers will learn and wish to repeat.

Leith from Redeam spots the threat:

Oh, and OTA's should be petrified. https://t.co/AbPIviEWNj

— Leith Stevens (@leithstevens) May 9, 2019

If that is not sufficient to raise concern with existing retailers Google is also working on Reserve with Google. Experience suppliers, and online travel agents, are giving their key data to Google in return for Google’s current 0% commission offer.

On the surface this looks appealing, everyone wants growth:

• Suppliers believe they need to build non online travel agent growth as they are wrongly concerned about online travel agents. Google ticks this box
• VC backed online travel agents need growth because growth is what VC demands.

The phrase “if you are not paying for the product, you are the product” could not be more apt. Interesting to watch where Google takes us!

The retail data moat was a myth

Supplier res systems have now made it easy for online travel agents to access availability and make bookings for local experiences. This has lead to weakening of supply side data moats for retailers. For example, give me 12 months, a product contracting team and a couple of developers to connect to existing supplier reservation systems and those online travel agent supply “moats” can be matched.

It isn’t easy (e.g. airlines or hotels chains won’t try doing this themselves, they will partner), however, with the right team, its possible, without spending millions of USD.

With no data moats and Google now becoming the meta retailer for every local tour provider, this could spell the end of pure retail strategies as we currently know them. Google is going to win this particular retail battle.

People will still try of course 😉

“We can be as strong as any online travel agent in terms of selling hotel content. I think we can be stronger than Klook at selling activities,” Tony Fernandes – ⁦@AirAsia⁩ ramping up #toursandactivities

— Tony (@tonycarne3031) May 13, 2019

What next for everyone else…..

The potential industry wide pivots:

• Discovery – focus on curation / suggestion, using human curators or AI machine learning. To do this well we need a lot of data about the customer (e.g. what experiences they enjoyed on previous trips to the same city or other cities, and also, what they chose not to do, and why) and this is not trivial for infrequent purchases such as tours & activities. And yes, I am old fashioned, I liked the original curation model that Viator had.
• Experience creation – what I am focussed on with autonomous vehicle sightseeing with Autoura. For the first time we are creating & optimising real world experiences using digital technology and mobility platforms. Klook, GetYourGuide and Airbnb also into experience creation with their branded tour guide products. This market segment is where the action is.

The big question for local suppliers navigating the disruption happening between them and their customers is:

• Are they like Uber drivers? Where they are independent, but provide a service within certain defined brand standards, via a central marketplace
• Or are they more like restaurants? Where customers, at least customers with a budget, seek out individual chef creativity although restaurants share commodity booking platforms.

Having a world view on these big questions is critical to thinking though what to do next:

• For suppliers (& supplier res systems) –  right now all technology development projects are focused on helping retailers. No one is innovating industry wide new forms of experience discovery. Nothing much on digital experience creation that can be delivered in the real world
• For non-Google retailers – do they pivot (back) to curation? Are their customer bases sufficiently homogenous for curation to work? Is curation a layer on top of contracting “the whole market” or does curation mean that you can focus on contracting an easy to manage 50,000 experiences and from that stock you can deliver a sufficiently meaningful volume of bookings to a sufficiently large subset of customers?

If they are a general flight / hotel online travel agent, the answer is probably that they have insufficient customer homgeneity for supply curation to be applicable so they have to go whole market supply and add curation as a layer above. This is right where Google is going to compete. Tricky zone to be in.

What would I do to compete with Google?

Any “compete with Google” strategy, I would start by looking at what Google strengths are, hence what they may as a result have as weaknesses:

• Data hoarders – once they have the data, if you want it, you pay for it
• Aggregators not curators – they want all the data, they are not selective
• Possible not memorable – very focused on what you CAN do (e.g. opening hours) rather than what you should do, to have the most memorable trip
• Products not services – which is why they like attractions over e.g. private tour guides
• AI rather than power of the crowd (human marketplaces) – although they do have local guides and e.g. transport traffic done by tracking phones so they do use human marketplaces occasionally
• Zero customer service (unless it can be done by AI)
• Global rather than scaled local – all services (where not excluded for politics) support all Google services

Fundamentally the challenge for large scale retailers competing with Google comes down to using the same experience suppliers as Google, with less knowledge about the consumer and their trip than Google. This is not the position you would choose to start from.

The vertical integrators (GetYourGuide, Klook, Airbnb) are slightly protected against the forthcoming Google onslaught. Other retailers are not.

If any retailers or travel brands want to pivot to digitally driven real world experience delivery at global scale, call me 😉

Photo: Woman Smoking a Cigarette by Dmitry Karyshev (CC BY 2.0) (Source) – Lady will be getting up to sing soon (Yerevan)