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Assistant Editor’s Note: ATTA Associate and industry consultant Christina Heyniger, of Vital Wave Consulting, recently published a paper on long tail markets, which was also covered in Tnooz. Here’s a reprint of the Tnooz piece, with full permission of Heyniger, and a link to the full report.
A recent Tnooz post explored why web bookings for mainstream tours and activities such as bus tours are still “largely a dream” and focused on operational issues such as the use of vouchers by tour providers.
While mainstream operators are training themselves out of using vouchers, however, a new class of internet-based retailers may be helping the globe’s many long tail activity providers move rapidly into new, automated ways of doing business.
I’ve been watching travel’s so-called Long Tail – think hiking the Simien Mountains of Ethiopia or rafting the Pacuare River of Costa Rica, where the focus is on a smaller number of guests who pay higher prices for “exotic” experiences – and observing the approaches taken by a new generation of online retailers, to tackling operational and marketing challenges to online booking.
A few of the many formidable challenges:
- Long tail marketplaces have a difficult time even finding their sellers because many long-tail tourism activities or services have not been formally inventoried: up to 30% of tour and activity operators do not even have a web presence, and less than 8% of revenues are generated from any form of retail distribution.
- Long tail activity providers vary in their application of and comfort with technology and the more remote the product, often the less likely information exists online or is up to date.
- A clear measure of trustworthiness and reliability for the purchase of niche activities online has not yet emerged and as a result, travelers perceive higher risk in booking online.
Despite these challenges, the adventure travel segment is estimated to be growing at 17% a year, and cultural tourism, often thought to be a small market, actually doubled from 1997 to 2007 and accounted for 40% of international tourism in 2007.
Recently Taleb Rifai, secretary general of the UNWTO, speaking at the Adventure Travel World Summit in Lucerne, Switzerland, on October 9 referred to the adventure travel industry with its mix of culture, nature and physical activity as the “future” of travel.
Facing the enormous opportunity and the myriad challenges to selling long tail destinations and activities online, what can companies like Adventureus.com, Gidsy, Localyte, Lonely Planet, Peek, Tourdust, TourRadar, Vayable, Xola and WHL.travel (just a few of the many sites aggregating niche travel experiences and activities) do to avoid going the way of long tail activities retailer TripFab, closing after just nine months after it launched with a focus on trips in Central America?
1. To solve the problem of identifying exotic and remote activities providers, many of whom currently lack a web presence
- Aggregate long tail inventory.
Long tail travel activities retailers may consider a range of different approaches to identifying and organizing the long tail, such as:
- Creating tools that allow sellers to list services themselves
- Recruiting sellers through focused research and direct outreach
- Attracting travelers to the website’s content, which in turn draws sellers to publicize their unusual, hard-to-find, long tail inventory
2. To solve the problem of reaching high enough volumes in a long tail marketplace to make the business financially attractive
- Identify and cultivate “powersellers”.
Whether a long tail marketplace is focused on selling destinations, accommodations, or tour experiences, recognizing the need for both the “head” and “tail” offerings is important.
Even though a vast array of obscure options are becoming available, a set of powersellers with mainstream appeal, are still likely to make up the majority of revenues.
The powersellers of the new long tail travel marketplaces will have reliable, regular inventory (accommodations availability and trip departures) and they will have implemented standards of service on the part of their guides that are predictable, even as the people providing them are emotional, changeable and human.
3. To solve the problem of traveler awareness for (and fear of) purchasing
- Use traditional channels and technology to reduce perceived risk in purchasing and leverage search.
A common technique for online retailers is to introduce their online marketplaces in offline environments. Successful long tail retailer Netflix continues to send CDs through the post, even as streaming is set to become the dominant channel for distribution.
New technologies will also provide many ways for travelers to get more information and reduce the level of risk they feel in purchasing niche travel online.
By making the best use of interactive technology, travel sellers can make great strides in setting the appropriate expectations with travelers, helping them gather all the information they need to make the best, most informed decision possible about the seller and destination before they book online.
Furthermore, as the volume, variety and velocity of data increases, companies can go beyond traditional internet search optimization to develop new insights and support sales through cell phone data and credit card purchasing history.
Especially relevant to promoting niche travel sales through search will be “recommendation engines”, which allow travelers to see the other selections made by people with similar requirements.
Given that desire is growing fast among travelers for long tail activities and destinations, I’m betting that the online booking problems may first be solved in the long tail, as a new class of online retailers evolve alongside the new class of travel providers.