Skift Take

Spending on tours and activities may hit $300 billion by 2025. Expect to see more consolidation pressures, growth in demographic targeting, adoption of AI, and attempts to react to climate change.

Jesse Chase-Lubitz

"Experiences" are becoming a growth engine for the travel sector. An expanding segment of travelers are demanding immersive, cultural interactions at destinations as an alternative to checklist visits of famous sights.

The tours and activities sector was valued at $239 billion in 2019 and is forecast to hit nearly $300 billion by 2025.

“The biggest trend that affects all of travel — so hotels, destinations, transportation — is the rise of experiences as the driver of the trip,” said Douglas Quinby, the co-founder and CEO of Arival, an events and research business.

“This is especially noticeable among millennials, which is the largest segment of the traveling population right now," Quinby said.

As experiences boom, executives told Skift they're watching five key themes emerge. The sector faces consolidation pressures, but fragmentation and specialization provide opportunities. Demographic targeting is on the rise. AI and climate change loom as disruptive forces. 

1. A Boost in Mergers and Acquisitions

Deal-making is surging as firms seek scale and nimbler reservation capabilities. This trend could squeeze smaller operators.

Across the travel industry, mergers and acquisitions have been picking up since the pandemic, according to a travel deal tracker by investment firm Cambon Partners and travel research company Videc. 

The travel experiences segment hasn't been immune to the consolidation trend. In just the past five months, GetYourGuide partnered with airline Eurowings, the private equity firm Apollo Global Management acquired The Travel Corporation, Trip.com and Prioticket came together on a deal, and Lastminute.com and TUI joined up.

One of the primary drivers is booking. Quinby said that at least half of the operators do not use a booking system. "This creates all sorts of problems for travelers and for resellers."

Partnerships can help smaller operators get their businesses noticed and their offerings booked.

“Operators are facing uncertainty in their marketing effectiveness as paid ads Google and Meta] become more expensive and less effective at targeting, and organic SEO is getting harder to compete