Barring no major disruptions, the tours, activities and attractions
(TAA) sector will exceed pre-pandemic levels by 2024, with global
revenue reaching US$260 billion.
But the recovery will be uneven, with certain regions, channels and segments recovering faster than others.
Online travel agencies will continue to accelerate the move to
digital. And with niche OTAs entering the tours and activities market,
consolidation is likely on the horizon.
These predictions come from The Outlook for Travel Experiences
2019-2025, part of a joint research project by Phocuswright and Arival, a
company that provides events, research and community for the
The findings are based on desk research, online data capture, dozens
of executive interviews and Arival’s industry surveys. The most recent
survey was conducted in September 2022.
The TAA sector represented US$253 billion in global revenue in 2019,
making it the third-largest tourism sector after transportation and
accommodation, according to Phocuswright and Arival.
TAA is possibly the most diverse and fragmented sector in the global
tourism industry and also the least studied, the report finds. The vast
majority of TAA businesses are small and micro-businesses that generate
less than US$250,000 a year in gross sales.
TAA’s revenue fell 78% in 2020, compared to 69% for airline passenger
revenue and 46% for hotel revenue, due to the sector’s dependence on
cross-border tourism and large gatherings. Although government aid in
North America and Europe appeared to stave off mass closures during the
pandemic, it’s unclear how many businesses survived.
But the industry’s bumpy road to comeback is underway, the study reveals.
Activities will surpass 2019 revenue in 2023, while tours and
attractions will only fully recover by 2024 and 2025, respectively.
North America and Europe will account for nearly 80% of global TAA
demand through 2022, before the market rebalances itself with Asia’s
return next year. However, Phocuswright and Arival caution that high
inflation and the ongoing conflict in Europe will likely be a drag on
global economic growth - especially in Europe - well into 2023.
Since the start of the pandemic, technology and online marketplace
startups in tours and activities have raised US$900 million. Top
fundraisers include OTAs Klook, GetYourGuide and KKday; local events and
activities marketplace Fever; and booking technology provider Peek.
Arival and Phocuswright anticipate that similar levels of investment
will continue - if not accelerate - as the industry recovers.
Online booking surge
Online booking in TAA has traditionally lagged other sectors of
travel and tourism because people simply walked up to a ticket office.
However, online bookings saw a spike from just 17% of global TAA
bookings in 2019 to nearly 30% by 2021, the Phocuswright and Arival
Many software startups entered the sector to make online booking,
ticketing and distribution affordable and accessible for small- and
Google launched a tours and attractions initiative - Things to Do -
in 2021 and has since expanded it; this will likely drive more online
discovery and bookings.
More than seven in 10 operators reported using the downtime of the
pandemic to make significant investments in their websites, digital
marketing and software, the study shows. Operator websites - especially
attractions - benefited from pandemic-related shifts in traveler
behavior and will continue to grow through 2025, according to the
However, tour and attraction operators may lose ground in online
market share to OTAs, whose gross bookings are forecast to rise from
less than US$8 billion in 2019 to nearly US$20 billion by 2025.
Brands equipped to capture the move to digital channels - especially
mobile - will be best positioned to win in this rapidly changing
marketplace, Phocuswright and Arival say.
OTAs’ growing impact
Although OTAs account for less than 5% of the global TAA market, they
continue to have a major impact on how travelers discover and book
experiences, and on general marketing and distribution trends. OTAs are
especially well positioned to capitalize on the rapid move to online and
mobile booking, the study shows.
The rapid growth of OTAs has driven operators to improve their
technology and digital marketing. Many operators have recognized the
potential digital threat from OTAs and have increased investment in
their own direct marketing capabilities, Phocuswright and Arival
As with the hotel industry in the mid-2000s, operators are
increasingly concerned about the control OTAs have over the supplier
relationship. Rising commissions, added fees and changes in terms have
led to strained relationships between OTAs and some operators,
Phocuswright and Arival find.
Startups are stepping in to fill gaps in distribution in key market
segments or geographies that are underserved by global brands, the
report reveals. Phocuswright and Arival predict that the consolidation
of OTAs is likely in the next few years as the travel industry rebounds.
Earlier this month, Booking Holdings-owned OTA Priceline expanded
into the tours and activities market with the launch of Priceline
Earlier this year, Merlin Entertainments, operator of Legoland theme
parks, Sea Life aquariums and other attractions, partnered with Oracle
to deploy its point-of-sale and hospitality technology to improve the
guest experience throughout Merlin's 130 attractions in 25 countries.