Welcome to the experience economy
Half a million micro firms turn over $200 billion and extra juicy profits up for grabs!
Once upon a time, travel was about going there doing stuff and coming back. The key was… Where was there? The pulling power of the destination dragged the passengers in.
Now 50 years later the business has become bigger, ordered and homogenised margins are as thin as ever.
Ever a leader, TUI, with its 30 million or so pax, has morphed into something really interesting. No longer a tour operator, TUI has reconstructed itself as an experience-provider.
Why? Because it can not only make much more money out of experiences, it can also own them. If you want a TUI experience (like a TUI cruise or a TUI hotel) there’s only one place you can go – that’s TUI.
In this way it can pick the best out of an astonishingly fragmented market – globally about 450,000 suppliers turning over some $200 billion – and give clients curated experiences backed up by TUI credibility.
So, its 30 million or so clients get to their destination with their holiday paid for, a wish to enjoy themselves on a new experience and money in their pockets.
This is a massive profit, branding and customer satisfaction opportunity. Look at the power that TUI has –
- Its customers already trust it, TUI knows who its customers are and is already in communication with them. It probably already knows what they want. It’s not out in the webspace looking for business – it knows who its customers are.
- The only competition is local excursion/experience suppliers (who TUI probably already works with) or internet suppliers like Airbnb and Tripadvisor who offer a random, un curated, un guaranteed range.
What a risk clients would take if they booked outside the box at this stage.
And it’s a massive financial opportunity too. Margins on experiences are much higher than the bread and butter of travel and accommodation alone. Plus with TUI it’s a branded value-added offer, no-one else can offer the same or as good.
On top of all that, TUI can use the experiences rather than the destinations to widen its brand appeal and pulling power
Musement destination experiences is TUI’s latest 110m Euro aquisition
So TUI starts 2020 as another kind of company entirely. Like in the 1970s it has become more vertically-integrated and focused on fulfilling customer needs rather than competing in the rush to the lowest price.
The Experience Economy is a new world for tourism – one in which there are opportunities for all.
The Sustainable Tourism Report 2020 deals in depth with this subject. TravelMole readers can get a spcial discount: A limited number of review copies may be subscribed now at a 50% discount
Valere Tjolle
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