The so-called experience economy has shifted to buying memories not things. Illustration / Alex Green, Getty Images
Screen-dependent millennials are turning to their phones for impulse bookings and to break down language barriers
While on their honeymoon in Hoi An in central Vietnam last month, Sharadhi Gadagkar and Kunal Patel didn't bother a hotel concierge with questions about things to do. Instead, the couple signed up for their first Airbnb experience, a tour organised by SecretEATS, during which they hit five locations serving original cocktails, including a spiked iced coffee in the wood-planked loft of a designer boutique. It was a perfectly tipsy three hours with two other guests and two guides.
"We love booking these types of experiences," said Gadagkar. "They give you a unique perspective on the local culture that's much harder to get on our own."
The push to get travellers to book tours and activities through mobile apps and websites has never been more vigorous. The majority of these day trips, unlike hotels and flights, are still booked offline, representing the next major growth opportunity for online travel companies. Players large and small are racing to aggregate existing group tours, activities and attractions — from river cruises in Chicago to "Sound of Music" tours in the Alps. These tech companies, a mix of established businesses and startups, also are developing more personalised, local "experiences," like a butchery class at a London gastro pub or a tour of Buddhist temples in Ho Chi Minh City.
Recent advances in technology for booking and buying activities and tours, as well as travel envy spawned by social media, have accelerated the growth. Investors are ploughing money into the sector in record amounts, like the US$484 million round of funding that Berlin-based aggregator GetYourGuide announced in May.
"There is a real unique leap, more of a quantum leap being made in the experience space," said Jamie Wong, founder and chief executive of San Francisco-based Vayable, which has been offering urban experiences hosted by locals since 2011. "It's a pretty massive pie and its growing far faster than hotels or car rentals, so it's a place where people are starting to sink money."
The so-called experience economy and shift to buying memories rather than things has been tracked since the late 1990s. In truth, all travel is an experience, but the branding and marketing of "experiential travel" has been one of the top tourism trends in recent years.
Typically, these excursions would be found through a hotel front desk or a local tourism office. But tourists, especially screen-dependent millennials, are increasingly turning to their phones for instant booking. Not having to struggle with a language barrier is also an incentive.
Operators of tours booked online can be the same ones used by local tour offices. But when they're not, deciphering which guide to choose, or even which site, can be tricky. Online platforms say their quality control includes monitoring reviews to weed out underperformers, and some have instant messaging for customers to send up red flags on-site and secret shoppers to test tours.
Even so, tourists like Zeena Bacchus and Felix Eke, who were traveling in Southeast Asia last month, prefer an in-person transaction. Bacchus, 29, a nurse practitioner from Pennsylvania, used online booking platforms TripAdvisor and Klook to get an idea of things to do when in Hoi An. But they arranged sightseeing through a local tourism office, figuring they could negotiate a better price and establish trust in person.
"I've just found that when traveling in other countries, I can tell a local tour company exactly what I want and see if they can work out my activities for the amount of days I have," Bacchus said.
Gadagkar and Patel, San Francisco-based tech workers, are sold on online experiences. Besides their Airbnb cocktail adventure, they booked wine, rafting and cycling tours in New Zealand last year through TripAdvisor and its Viator business.
"We prefer this to booking through local tour offices, because it helps us plan our trip ahead of time, and the unbiased reviews and pictures are super helpful in differentiating between two similar experiences, whereas that's harder to do when booking with local tour offices," said Gadagkar.
Paradoxically, the travel search-and-buy supply is growing so rapidly that it's easy to be sucked into another digital ecosystem of choices that can distract travellers from exploring where they actually are, or from immersing serendipitously on their own for free.
The expanding experiences segment splits into a few groups.
Major online travel companies like TripAdvisor, Expedia and startups like Klook, KKday and Musement have amassed inventory from the million-plus tours, attractions and activities available. Many are also recruiting entrepreneurs to upload less commercial offerings with personal connections to local culture and residents. Booking.com jumped into experiences in 2016 in Europe and the Middle East. In May, the company opened its attractions offerings to all travellers, regardless of whether they had also bought accommodations. It started with attractions in 10 cities, from an Edinburgh castle tour to a Flamenco show in Barcelona. The goal, like with other big aggregators, is to be a mobile concierge desk for all points of a trip. "To be very honest, these are humble beginning days," said Ram Papatla, Booking.com's vice president of global experiences. "We have a lot to learn in terms of how deep we need to go and what kinds of tools we need to build."
Some startups are focused mainly on building their own supply with local guides, who design encounters where travellers have a deeper engagement with a place. Context Travel was one of the first in 2003, with experts leading private art, architecture and food tours, followed in 2005 by Global Greeter Network, where volunteers show visitors highlights and hidden spots in cities for free. Traveling Spoon, with locals hosting cooking classes and making homemade meals, came on the scene in 2013. Airbnb quickly became a dominant player in the space after it introduced its experiences in 2016, now with more than 30,000 offerings in 1,000 cities.
Dozens more have crowded the scene recently, with apps coming last year from Lyfx, which pairs travellers with outdoor adventurers, and this year from VeloGuide, matching travellers with local cyclists for personal tours. There are also niche players like Tiqets, which offer tickets to attractions and museums like a priority pass to the Sistine Chapel, and Tinggly, whose website sells gift vouchers for multiple-experience packages including dining in the dark in Estonia. Finally, vacation package resellers like TourRadar, Stride and Evaneos aggregate multiple-day tours around the world and let users customize a vacation with an agency operator.
The escalation in experiences has been a boon to entrepreneurs like Alexander Bradley, a Paris-based photographer who listed a photography tour on Vayable in 2013. He now has 33 photographers leading tours in 17 cities, mostly in Europe and Asia, and lists them on seven booking platforms, including Viator and Expedia.
He's not bothered by the 20-25% commissions, he said, because the platforms gave him global marketing and the incentive and confidence to charge more for his tours.
"If it wasn't for Vayable, I wouldn't have started," Bradley said. "It gave me the ability to have a risk-free start."
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