Benefits of Offering Destination Experiences Alongside Hotel Stays
Albert BarraDecember 4, 2018 · 6 min read
Offering local tours and activities is a multi-billion-dollar business, and OTAs have shown growing interest in this sector. Expedia is looking to increase its local tours and activities sales fivefold: from approximately $400 million a year to more than $2 billion. Expedia currently has 4,000 suppliers offering 27,000 tours and activities worldwide. Through its Experiences offering, Airbnb has introduced tours and activities in many of its key destinations, with the goal of expanding its offering to 1,000 cities. Recently, Booking.com acquired Fairharbor.com and TripAdvisor acquired Bokun.com; both platforms enable local tour and activity operators to make their services bookable online.
However, despite all the industry’s momentum and enormous potential, fewer than 20% of tours, experiences and attractions can be booked online. Why is that? There are two main reasons: the highly fragmented nature of this sector and travel consumers’ preferences.
This sector is highly fragmented and made up of millions of small independent operators. This explains the lack of businesses offering online bookings. They simply do not have the resources available for booking systems.
Another reason is travel consumers’ preferences. Travel consumers are not fully convinced that booking tours and activities in advance delivers any value in the form of better choice, better service, unique offers, significant savings, etc. It is no surprise that 85% of activities are booked at the destination: in fact, many of the best local experiences and activities are simply not available online.
Why should hoteliers consider offering experiences, tours and activities?
Hotel product marketing has become the sale of a commodity, forcing hotels to compete with OTAs strictly on price, leaving hotels with few opportunities to communicate the value of their product to prospective guests. To counter this and “sell on value” rather than “sell on price,” hoteliers need an effective marketing strategy that includes a broad range of experiences as part of the hotel website’s offerings, in multichannel and seasonal campaigns.
The direct online channel offers unlimited opportunities for hoteliers to position the hotel as the “destination hero” and the perfect place to stay while exploring everything the destination has to offer, such as personalised activities, private cruises, galleries, family attractions, shopping, restaurants, nightlife, entertainment and more. Combine this with a strong online marketing programme focused on the uniqueness of the hotel product and its value proposition, and you will have a successful strategy.
Hotels are local businesses, and this is a major advantage over OTAs when selecting and contracting local activity operators, monitoring their performance and customer service, and ensuring payments.
So, what makes hoteliers best suited to offer experiences to their guests?
This sector is highly fragmented and made up of millions of small independent operators. This explains the lack of businesses offering online bookings. They simply do not have the resources available for booking systems.
Another reason is travel consumers’ preferences. Travel consumers are not fully convinced that booking tours and activities in advance delivers any value in the form of better choice, better service, unique offers, significant savings, etc. It is no surprise that 85% of activities are booked at the destination: in fact, many of the best local experiences and activities are simply not available online.
Why should hoteliers consider offering experiences, tours and activities?
Hotel product marketing has become the sale of a commodity, forcing hotels to compete with OTAs strictly on price, leaving hotels with few opportunities to communicate the value of their product to prospective guests. To counter this and “sell on value” rather than “sell on price,” hoteliers need an effective marketing strategy that includes a broad range of experiences as part of the hotel website’s offerings, in multichannel and seasonal campaigns.
The direct online channel offers unlimited opportunities for hoteliers to position the hotel as the “destination hero” and the perfect place to stay while exploring everything the destination has to offer, such as personalised activities, private cruises, galleries, family attractions, shopping, restaurants, nightlife, entertainment and more. Combine this with a strong online marketing programme focused on the uniqueness of the hotel product and its value proposition, and you will have a successful strategy.
Hotels are local businesses, and this is a major advantage over OTAs when selecting and contracting local activity operators, monitoring their performance and customer service, and ensuring payments.
So, what makes hoteliers best suited to offer experiences to their guests?
- Hoteliers know their guests and their preferences far better than OTAs do, enabling them to personalise and tailor local experiences and activities accordingly.
- Hoteliers know their local areas and destinations much better than OTAs based who knows where.
- Hoteliers know local tour and activity suppliers far better than OTAs do. In many cases, hotels have been using trusted local operators for many years.
- Locals working together: local properties can connect with local operators on an emotional level, as fellow local business operators—something entirely absent from any relationship between large OTA operators and small operators.
- Bundling local tours and activities with hotel accommodation: city tours, family, museum, theatre, shopping and weekend packages, girls’ getaways and romantic escapes, etc.
- Referral fees and commissions from tour sales and local operators. Hoteliers can easily negotiate a reasonable commission for offering a local operator’s tours and activities: through advance sales, at the front desk and via the concierge. Typically, OTAs charge local tour and activity operators commissions of 20%–35% to list and sell their offerings on OTAs, so there is ample room to negotiate fair compensation for the hotel.
- Packages combining hotel accommodation with local tours and activities.
- Experience add-ons that can be added to a hotel reservation in advance, upon arrival or while the guest is staying at the property.
- Offer local tours and activities departing from the hotel or with a pick-up point near the hotel.
- Guarantee departures for local tours and activities, for example:
- City tour, departing daily from the hotel lobby.
- Museum visit, departing Friday, Saturday and Sunday.
- Shopping tour, departing daily from the hotel lobby.
- Include local tours and activities in the property’s online marketing campaign messaging, including SEO and SEM, social media and multichannel campaigns.
- Include local tours and activities in automated marketing promotions (if available) or CRM campaigns sent to guests who already know your hotel and repeat customers.
- Present the property as the “destination hero” in all PR and press materials, and during social media influencer visits.
- On the website, create a Local Travel Guide: destination guides featuring local points of interest, tours, activities and attractions to influence travellers, making the hotel the destination hero for advance bookings. An added benefit is that these Local Travel Guides typically have tremendous SEO value, which will increase rankings, bookings and revenue.
- In the website’s Special Offers section, include detailed descriptions and images of the local experiences and activities offered by the property, including prices, schedules, etc.
- Promote local packages and tours throughout the website’s marketing platform: pop-up promotional messages, featured-offer banners, marketing messages, reminders, etc.
- Run activity promotions on the website.
- Promote experiences and activities through your marketing messages and calls to action.
- Include activities as add-on options to the stay booking:
- in the booking confirmation
- in pre-stay CRM messages
- At check-in, give every guest a brochure describing all the local experiences and activities offered by the property.
- Include local tours and activities in on-property CRM messaging.
- Promote and sell activities through the front desk and concierge.
- Include local tours and activities in post-stay CRM messages and CRM campaigns targeting previous guests and repeat, loyal customers.