Tours, as a category in travel, have been around since the beginning of well, travel. Laurent Kuenzle, CEO of destination management company Asian Trails, subtly reminded delegates attending Arival last week in Bangkok, “We’ve been doing tours since the beginning, tours are our DNA, experiences are our DNA.”
What’s changed of course is that technology has enabled travellers to find these tours more easily – and add to that, the slew of things to do associated with in-destination such as activities, food, attractions and now, there’s one word to rule them all, experiences.
It was George Orwell who said, words form our world and we have to come up with new terms to visualize whatever new world we are living in at the time and today, two words “digital” and “experiences” rule the in-sector space which, as co-founder of Arival, Douglas Quinby, said, is the fourth largest sector in travel. On average, he said, people take seven activities per trip, and 80% book between two and four weeks of arriving in destination.
Laurent Kuenzle: “We’ve been doing tours since the beginning, tours are our DNA, experiences are our DNA.” (Image credit: Asian Trails)
Companies like Asian Trails and executives like Laurent Kuenzle, who started his career in destination management as a young executive working for Kuoni in Tokyo, have had to adapt to the changing times.
The biggest decrease has been in the group series business which used to form the bread and butter of DMCs and as customer tastes change, and move towards more independent and tailormade travel, DMCs are also having to design new tours and packages that fit the new customer.
“We’ve been designing experiences from the start, that’s why we have so many product managers scouting for new tours and activities that we can bring to our customers via our own as well as other distribution channels,” said Kuenzle, who started an e-commerce division a few years ago to respond to this trend.
And just as we have traditional companies like Asian Trails embracing the new world, we have new players such as GetYourGuide and KK Day who have chosen to create their own experiences. GYG has a Bali Instagram Tour that was created based on data analysis and KK Day offers up to 50 of its own branded tours, and operates tour buses. It claims to have carried 1.5m travellers on its branded tours in the last three years.
The biggest sea change of course has been in distribution. Now creators of tours and activities no longer have to rely solely on B2B partners, they can also list themselves on a variety of consumer-facing platforms – from OTAs (global, regional and local) to peer-to-peer marketplaces like Airbnb. Arival’s Quinby estimated there were at least 40 digital distributors in Asia alone.
You could say providers have never had so many choices as to where to distribute and it can all be a little bewildering as to which channel you choose.
The key question to ask is, advised Baidi Li, TripAdvisor Experience APAC regional director, is “what are you trying to achieve with your business?”
Take Fiona Sweetman of Hidden Secrets, Melbourne, as an example. Her walking tours are a niche product for Western-speaking customers. “But now we have new customers finding us on mobile and that data helps us to understand that maybe we should work with OTAs in Asia and get customers from Asia. This wasn’t possible 15 years ago.”
She added, “I am careful about where I want my brand to be seen. I sell tickets on Google and I pay commission to TripAdvisor because I pay for a booking that comes to me, not like spending on Google Ad Words which is like shooting in the air. If I work with a travel agent, I pay for the listing in the brochure and I pay commission on top of that. With OTAs, I pay when I get the booking.”
What’s also changed is pricing and if we know the Internet, it is really good at democratizing pricing – good news for travellers (short-term because longterm, it can erode quality) and bad news for suppliers (short or long term).
Wilfred Fan: “Internet shopping behavior is influenced by demand and supply and what cusomers are willing to pay.”
There was a lot of concern raised by providers about the loss of pricing control, and they point to well-funded players like Klook as leading the discounting trend.
Chief commercial officer of Klook, Wilfred Fan said that Internet shopping behavior is influenced by demand and supply “and what customers are willing to pay”.
“In-destination has a static structure, the price point comes from the operator understanding what the cost is, not what customers are willing to pay for. The Internet accelerates that decision. I believe pricing will become dynamic in future.
“Now the pricing is static because customers still do not have a lot of channels to pick and buy. We are the first one to ask the customers, this is the product, this is the price and we offer incentives, and we are starting to find the sweet spot and we share that understanding with our partners.”
Sweetman of Hidden Secrets sticks to retail selling price, as opposed to recommended selling price. “If you don’t teach customers to respect your product, you are teaching them to ask for a discount. Working with partners who undercut your margins is scary. Building commissions into the price from the beginning is important.”
When asked if Klook should think about selling “value plus” versus pure discounting, Fan said, “We are trying to work with major attractions such as theme parks on how we can upsell. On average we capture transactions two weeks before arrival, so we have 14 days to upsell.”
His previous experience with Agoda has also given Fan insight into how dynamic pricing can take hold in a sector. “There was a lot of resistance from hoteliers at first but after 10 years, everyone has adapted and everyone has benefitted.
“In-destination is going to move a lot faster, helped by technology, mobility and low cost carriers. This is a different generation of growth.”
Note: Klook’s Wilfred Fan will be speaking at WiT Japan & North Asia in Tokyo happening this Thursday and Friday. Still time to book your seat.