(At Connect Travel’s recent RTO Summit New York, Bob Gilbert, CEO of Captivation Marketing, moderated a panel discussion on the ways in which channel managers are changing distribution for tour and activity companies. We asked him to synthesize the panel forum’s work and its topical discussion into a single piece so that we could share it with our readers. The multilingual Gilbert is well suited to the task, having served some four decades in a wide swath of the tour and travel industry, including key roles in the hotel, food service, tours and entertainment, destination marketing and travel trade publication sectors.)
Overlooked? No more: The $190 billion global tours and activity business is coming of age as more focus is given to this industry segment.
The most fun part of planning any leisure trip is deciding where to go. Sounds uncomplicated enough. The travelers will discuss the all the things they want to see or do in the destinations they are considering. They will compare the options. The decision is made and the transport and lodging is booked. Price is a secondary factor where most people’s thought process is made on the emotional side of the equation. In fact, according to an Expedia Media Group survey, price follows activities, bucket lists and cultural experiences in the decision path. Validating this is the fact that at least 97 percent of leisure travelers booked a tour, visited an attraction or did an activity on a trip in the past year, according to a recent Arival survey.
What’s upside down (or back to front) about the process is that the most significant part of trip (the experiences) are mostly not booked at the same time as the transportation and lodging. However, it’s the experiences that are remembered most, not the middle row of your flight or the hotel room next door to the elevator. The fastest growing experiences, according to TripAdvisor, are family friendly trips, then trips with a thirst to learn and engage with the community – one way and another. This includes classes or workshops, wellness, outdoor activities especially water sports and food and wine experiences – even marijuana facility tours in some states! Today’s travelers want to bring home memories not just a tan.
Today, booking software dominates: Trip Advisor (Viator’s parent) purchased Bókun; Booking Holdings purchased FareHarbor and rumors of consolidation and other mergers and acquisition abound.
When one studies the core differences between the booking software providers, these days there is little to meaningfully separate their competitive functionality. These differences are narrowing. So what are the key differences?
The most important piece of the puzzle is distribution: If we accept that fact that there are mainstream booking software businesses like Rezdy, Fareharbor, Peak Pro, TrekkSoft et als, in one camp, then we see more activity-specific providers who focus on museums, zoos, aquariums etc. Yet another group specializes in booking software for events and catering, the specialist list is getting longer day by day.
Now it gets more complicated. Is your booking software provider owned by an OTA? Does your booking software provider compete with you with a B2C and B2B facing strategy? Does your service provider have a variety of pricing options including monthly subscriptions and commission based?
The point is that you may have a product that you work hard at being unique and provide exemplary service with rave reviews. You work hard at building or licensing the best booking software for the best price point. (Unless you decide to pass the booking fee to the customer, which can be dicey, with a current 81 percent cart abandonment in online travel bookings.) Also check how many countries they operate in. You want reach vis distribution. To me, the most important piece of the puzzle is distribution. Built into distribution is channel management. Channel Management should provide you with a single point of contact for all of your booking agents, large or small.
If you want to play in the Big Boys OTA poker game, the cost of entry, (as well as the stakes), are high.
True channel management should allow you to pick and choose which OTA you wish to work with. Yes, it comes at a cost, 20 percent, 25 percent and perhaps 30 percent. But if you want to play in the Big Boys OTA poker game, the cost of entry, (as well as the stakes), are high. How much inventory do you want to offer to OTAs? 20 percent? More? How will you drive more direct or more profitable business?
Better to find a booking software provider that has the biggest list of agents in its marketplace and allows you to open and close inventory agent by agent (or collectively), and allows you to change commission and net rates “on the fly”. This then helps you develop a long tail distribution strategy.
There are thousands and thousands of smaller agents and tour operators out there who are happy to get 10 percent, 12 percent. 15 percent. And you are happy being more profitable conducting business with them as well.
These “long tail’ agents are tough to reach on your own. You also want a channel management platform where you can easily add your own agents. Remember to compare both booking software costs as well channel management costs.
The next part of the journey is revenue management (AKA dynamic pricing): This, as it was back in my hospitality days, will become increasingly relevant as suppliers “Channel Manage” with a well thought out pricing and distribution strategy. But remember, you can’t have a pricing strategy and dynamic pricing without a channel manager and its distribution. Today’s challenge is not about the lack of great tours and attractions, not the lack of booking software, it’s identifying which provider has the largest most comprehensive channel management platform. Today, huge distribution channels are easily accessible—you just have to do a little digging.
Centralized Channel Management is the future, existing methods are outdated, time consuming to manage & prone to errors. Channel managers offer two-way connections to the best booking sites & channels globally and locally. They can easily manage all your products online to increase revenue. Eliminate guesswork and use data to drive your decisions. Here is a guide to come key players (note that these companies often change options and pricing:
TrekkSoft (Established in 2010, Independent) https://www.trekksoft.com/
Highlights: A suite of tools to connect your front and back of house.
Channel Manager: Connects with leading OTA’s including Viator, Expedia, Get Your Guide, and more.
Pricing: Plans start from under $60 per month for their entry package and $225 a month for enterprise accounts. Offline booking fees start from $0.60, and online 2 percent.
Rezdy (Established in 2011, Independent) https://www.rezdy.com/
Highlights: Good solution for tour & activity companies of all sizes. Tailored to the type of business. Solid suite of customized reporting. Zapier and TOMIS integrated. Winner: Capterra Best Ease of Use Award 2018
Channel Manager: Most comprehensive Channel Manager with over 14,000 booking agents including OTA’s such as Expedia, Get Your Guide, Ctrip, Trip Advisor Experiences, Klook, Musement, Reserve with Google and more. $3.5 million in booking revenue daily.
Pricing: Rezdy pricing start at $49 a month for their entry plan up to $249 for Expansion (Enterprise accounts) and includes Developer API. Custom plans available. Offline booking from 0.70 cents. Online bookings from 1.75 percent.
FareHarbor (Established in 2013. Acquired by Booking Holdings in 2018) https://fareharbor.com/
Highlights: Pay as you go models. Scale could be a challenging. No Zapier integration and unable to bundle multiple products on one package. Suitable for smaller businesses.
Channel Manager: You can connect with Booking.com and other larger OTAs.
Pricing: Suppliers are charged a credit card processing fee and supplier passes fees to customers as a suggested 6% “convenience fee.”
Peek Pro (Established in 2012. Independent) https://www.peek.com/pro/
Highlights: Peek has both a B2B as well as B2B offerings. Acquired many Zozi assets in 2017. Good shopping cart. Limited Reseller program.
Channel Manager: You can connect with Expedia and Viator with this solution. This could limit or restrict your audience, or increase admin time and costs to manage.
Pricing: $199 supplier set up fee, then 2.3 percent per transaction plus $0.30. Manual booking fees are also 2.3 percent per transaction plus $0.30. There is a commission charged for business booked via Peek B2C website (similar to OTA commissions)
(Full disclosure: Mr. Gilbert’s company, Captivation Marketing, handles business development for Rezdy)