RISE OF EXPERIENTIAL TRAVEL
MORE EXPERIENCES, MORE SPENDING
A GROWING DIGITAL MARKET
EXPERIENCES FOR BRANDS
At this time last year, there was a lot of talk about whether 2023 would be the year ‘revenge travel’ died down. Fortunately for all of us in the industry - and everyone who is out in the world enjoying the connections and refreshed perspectives that travel creates- we’re seeing no signs of slowing. In fact, 2023 has made it clear that travel is a major priority for most of us. And that experiences drive travel.
Everywhere I looked this year I saw commentary about people’s priorities shifting to experiences over things. Mastercard published that global growth in demand for experiences was up 65% from 2019 significantly outpacing that for ‘things’ up 12% in the same period. Arival shared new research showing a continuing increase in experience spending and consumption. And Phocuswright expanded their estimate of the Experiences market to over $300B for the first time.
For me, experiences have always been my priority, and it’s why we started Holibob . ‘What you do when you’re there’ is always what’s remembered and what takes you to specific places. Angus and my first ventures in the ski space and as an OTA for long weekends were all about helping travellers have incredible experiences, and with our network of incredible partners four years later at Holibob, that mission remains largely the same.
So, while none of the above data was a surprise to me, I believe we’ll look back at 2023 as a landmark year for tours and experiences, where innovation accelerated, consumers put experiences first and the travel industry at large woke up to the growth potential this vertical can deliver. Let’s jump into some of the top trends from this year:
The preferences of modern travellers, and consumers more widely, are undoubtedly shifting. The value placed on material things is diminishing, as people across demographics and geographies are prioritising their time and money on real-life experiences, both at home and abroad.
Especially this year, we’ve witnessed the rise of experiential travel - travellers being more intentional in choosing first-hand experiences of local cultures, communities, engaging with traditions, cuisine and natural environments. A big driver is travellers wanting to experience something they feel is unique and meaningful. As highlighted by Mabrian, there’s much less of an emphasis on traditional holiday activities like attractions and sunbathing, and a far greater rise in culinary experiences, cultural tourism, adventure tourism - as travellers want more than the conventional tourist experience.
As a result, there are greater opportunities for entrepreneurs running these kinds of tours, and for brands distributing to consumers, but the volume of bookings that remain offline highlights how it’s not as easy as it should be in discovering and booking such experiences.
Travellers are consuming more experiences, and spending more in-destination. Even in uncertain economic times where many are being forced to pull back in other areas, travel is still a top priority for consumer's discretionary spend. There was significant pent-up demand in the wake of the Covid pandemic, but this elongated trend of people prioritising their spending on travel is more than just a covid rebound. It speaks to the value people place on experiencing destinations. Arguably now more than ever.
Arival highlighted the lasting nature of the ‘experience-driven economy’ with its recent finding that US travellers are spending on average 25% more on their trips, and taking an average of 7 tours, activities or attraction entries during the course of their trip. Tours and experiences had previously made up around 11% of total travel spend, but this slice of the pie is increasing, and the opportunities for travel brands to capitalise on this to drive value for customers and their brand, is more apparent than ever.
There have been many positive growth indicators for the experiences industry over the course of the year. The industry is now valued at $306 billion for 2024 continuing to grow at around 7% p.a. and outpacing hotels (4.6%) and airlines (5%). OTA’s achieved huge fundraising milestones which is a positive signal for the industry at large and the sector is shifting the proportion of online bookings from around 80-70% in the space of 12 months. The experiences market is growing, and it’s moving online.
Yet beyond the headlines, there are underlying sub-plots and questions that bare food for thought. The major OTA’s achieved record years and huge valuations, with significant funds raised, but still own only 10% of the market. A 10-point shift in online bookings sounds like a lot, but still leaves tours and experiences major leaps behind any other vertical in the travel sphere.
For most, the experience of browsing and booking experiences online, whether through an OTA or trying to book through an operator directly, is a painful one. And simply putting an Ai-driven chat interface in place of a traditional search bar doesn’t solve this problem. Typically people scroll through endless content of generic offerings, with little in the way of the inspiration and personalisation modern consumers have become accustomed to in e-commerce more widely. And perhaps that’s unsurprising. How do you whittle down a product set of many millions, to a personalised recommendation, when you know nothing about the traveller?
Holibob, in our B2B2C model, is trying to resolve this by leveraging the data our travel partners (like hotels and airlines) have, to provide highly personalised and well-timed experience recommendations to travellers, in-destination. Giving them the curation and convenience they crave in destination, where over half of the experiences are booked.
This year we’ve seen many travel brands shift to make experiences part of their offering, as well as non-conventional travel brands like Uber and Revolut adding experiences to their platforms. The revenue opportunity Is undoubtedly a driver, but the value this vertical provides is greater than that. Experiences has been coined as the ‘loyalty ancillary’ - it’s the travel ancillary that truly drives value for travellers, helping them to experience incredible things in their destination and the lasting memories of their trips.
The nature of when experiences are bought means there’s an extended window of opportunity when brands can engage with their consumers. Whereas ancillaries like car rental and insurance are often bought at the same time as flights or hotels, experiences are typically much later. With an engaging and well-delivered experiences vertical, brands can provide value for their travellers throughout their trip, extending customer lifetime value.
With 2024 now close on the horizon, I believe the big step-changes for next year will come in solutions that genuinely meet the needs of travellers. Harnessing the AI evolution to deliver value for consumers, helping to alleviate the current pains of online discovery and booking, and using data to conveniently bring travellers closer to the experiences they crave.