I am just back from a few days at the Arvial event in Berlin. A big thank you to the Arival team for delivering an outstanding event. This is the event where those involved in the $180 billion tours, activities and attractions industry come together to learn, share, help each other and try and create a better experience for our customers and for the industry. From the dozens of conversations I had with incredibly motivating and clever people who are all trying to make a difference here are some takeaways from an operators perspective.
1. The digital customer of today is evolving much faster than the industry is and the gap is getting bigger.
We have an issue, and I am not sure how we fix it, and I did not hear anything that gives me confidence that we will!
2. The focus is still very much on getting more operators and supply online to increase distribution.
The biggest gains operators get from moving from pen and pencil, or in-house systems are not increased distribution; it is increased efficiency in their business and flexibility to develop their business model. Increased distribution is the icing on the cake, not the cake.
3. The gap between the most developed operators and the rest is getting wider. We have operators now moving into dynamic pricing and yield management strategies, and the majority of the industry is still not online.
There is a role for highly developed operators to create a cluster of complementary operators around them and raise the standard destination by destination.
4. The industry technology landscape is like a mangrove swamp but not half as useful.
When you are all lost in the swamp planting more trees does not help. Collaboration to find the route out is not an option, it is the only way.
5. Complexity in the technology and channels to market is increasing.
An operators job is to make people smile. The more we demand that the operators spend time understanding the complexity of the industry the less they will make people smile and laugh. Straight forward solutions are required for non-sophisticated operators.
6. Innovation is happening, but it is inward looking.
This is understandable considering how many challenges we have in the sector, and we do need great innovators to help fix them. However, I get the feeling the real industry shaking innovation will arrive from unexpected directions.
7. Rampant growth versus sustainability. The tours, activities and attractions sector is outgrowing tourism in general, and tourism as a whole is outgrowing the economy, so all is great?
The devil is in the detail and the impact. The growth in arrivals is higher than the increase in spending which means less profitability or diminishing returns which is unsustainable and also takes no account of other off-balance sheet costs such as the environment, pollution and over tourism impacts etc. This issue is even more critical and complicated and challenging to solve than all others.
8. Is the industry moving from horizontal to vertical structures?
The customer does not care and probably never will as long as their experiences are great. However, operators and reservation systems who serve those operators do need to understand the trend of this strategic move. Hint this is a winning strategy, and for those with interest in the industry staying horizontal it requires equally bold strategic moves
9. Too much money is flying around and not enough returns.
Operators need to figure out who their partners are today and likely to be in the future. As much as operators are screaming at the increasing commission rates charged by the OTA's they need to understand why they are increasing. With multiple increasing layers of technology between the customer and the supplier it all needs paid for and some I strongly suspect are not yet getting a return on their investments and may never will. That means industry failures are coming. Choose your partners carefully and spread risk.
10. Operators are the people who make the customers smile, laugh, and be thrilled.
If we are going to fix what needs to be fixed and if we are going to build what needs building then that has to start with the understanding of what the customers want and need and how to help not hinder the operators in delivering that.
The above points do not even begin to describe the challenges and the opportunities that the sector is experiencing. The event itself is an outstanding environment for those involved to come together to communicate face to face and try and find away through the current minefield. When you are in a minefield the focus has to be on finding a safe way out as quickly as possible but that is never the end of the mission . That just gives you the chance to move forward to grasp the opportunities.