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A global mobile booking platform is the next big opportunity in the $27B Tour & Activity Market.

This article was edited and originally published at Tnooz.

At the Travel Business Academy, a professional online course teaching entrepreneurs, how to start a travel business, we have been researching and analyzing the in-destination mobile app travel business. This article looks at the current online booking and mobile booking landscape for the tour and activity market and shows where a large entrepreneurial opportunity lies.

The PhoCuswright research report “When They Get There (And Why They Go),” published in February 2011 shed a boatload of interesting data on the tour and activity market. If you haven’t heard of this report, you can download the free summary report or buy the full paid report here.

Highlights covered in the 10-page summary report include the following:

1)   Travelers spent $27B on activities, attractions, events, and tours in 2009.

2)   Most activity providers (operators) generate revenue under $1M with 33% generating $250,000 or less.

3)   The majority of the operators in the “in-destination” activities industry are self-employed, mom and pop business, true SMB’s.

4)   The average price of an activity purchase is less than $100.

5)   Operators are very limited in their technological know-how.

6)   Fewer than 4 out of 10 operators sell activity bookings through a website.

7)   1 in 5 operators have no website. Yes you read that correctly.

8)   Phone sales account for 60% of sales.

The in-destination tours and activity business is a run by local small businesses.

After reading the report summary data above you decipher that the tour and activity industry is run by small businesses. Small activity providers employ between one and five people. The guy that takes you on the tour is most likely the guy that you pay when you first check in. The business is conducted by excel spreadsheets, general ledgers, cell phone and fax. If you have gone on a destination tour, activity or excursion you know that these people are some of the nicest people you will ever meet.

Many tour and activity operators run a seasonal business and work other jobs when the season closes. They love what they do and they really don’t like other people telling them what they need to do and how to run their business. From a perspective of selling them business services (B2B) they are very hard to sell.

The majority of their business is booked either by a traveler calling them on the phone or the walk-in at the time of the activity. I personally know this because I’ve successfully worked with a few small operators in Bar Harbor, Maine where I have a vacation home.

Bar Harbor is a global destination that sees 2M annual vacationers in less than 5 months. Travelers come from all over the world. In Bar Harbor there are 25-35 activity providers providing everything from kayak tours, whale watching trips, schooner sailing trips, National park tours, guided bird watching, bus tours, cultural museum tours, dinner and entertainment shows and biking tours.

Business is conducted locally.

On the marketing side of the activity providers business, most belong to the local Chamber of Commerce, they network closely with the other travel businesses in the town the destination is located and they tend to listen to and participate in opportunities that the state government or local DMO is pitching or providing. If you’re a sales representative, an outsider, let’s say an Expedia or Travelocity rep and your pitching them about a new sales and distribution program to sell their activity service online most aren’t going to listen. It’s just very hard to break in as an outsider.

Why haven’t the big travel players cracked this market? If you’re not local and the small business owner has never personally shaken your hand it’s a huge uphill battle from here.

What we know about the travel consumer who purchases in-destination tour and activities.

The majority of tour and activity bookings, the 1-day purchases are being made within 3-days prior to the actual consumption or attendance of the in-destination activity. The majority of the purchases are one-time only visits. After the traveler participates on the tour or activity they will most likely never return as they are on vacation.

Consumer mobile data is showing that over 50% of travelers are using their mobile devices to find and search for things to do in-destination while on vacation. It’s only a matter of time when the activity operators realizes that mobile is their meal ticket to enhanced reach and sales. The only question is who is going to help them?

Stephen Joyce the founder of Rezgo (technology provider of web and mobile booking software for tour and activity providers), makes a great point in a blog post that to make in-destination mobile truly work, activity providers need geo-location service. So when a traveler is looking for a thing to do near the activity provider the traveler can find the activity on their mobile device.

If the activity provider has no website, no reservation service, no mobile app how in the heck are travelers ever going to find the activities in the first place?

*Tip- An activity provider could add their business to Google places so the business shows up on Google maps. Recent research is showing that 70% of all travel mobile use is on Google Maps, with the other 30% going to the OTA’s and Travel Guides.

Entrepreneurship is about seeing opportunity, execution, luck, hard work and the ability to be at the right place at the right time.

When you look at all the consumer and activity provider research data, actually talk to and work with activity providers, the obvious sales tool to help the tour and activity providers expand their reach and sell tickets to vacationers in-destination screams, a 3rd party mobile activities booking app. Building a company the equivalent of an OTA or wholesaler but mobile only sales, selling the sweet spot 72 hours or less prior to arrival.

The one big player that is headed in this direction and most recently launched a mobile app to sell tours and activities is the wholesale aggregator Viator. Viator is the king of the mountain.

Will travelers buy tours and activities online like they book hotel rooms?

There is a new entrepreneurial push to sell tours and activities online. Aggregators and OTA business model type companies are springing up to jump into the action. The reality of the current market is that travelers are not booking tours and activities online and in my opinion actually may never really buy in any matter of volume. I recently read that only 2% of tours and activities are booked online.

Sure you can make arguments to the fact that online tour and activity bookings are increasing and that there in lies the opportunity. I agree with this and do believe that online booking of tours and activities will grow but in my view the bigger opportunity lies in playing in the mobile booking game, aligning with the existing consumer buying habits and fulfilling the need of the activity provider that wants and needs in-destination sales.

I think that any tour and activity operator that doesn’t have a website to sell their services is making a huge mistake. Technology solution providers like Rezgo and Tour CMS that we recommend at the Travel Business Academy are really necessary tools you need as a tour and activity operator to compete in today’s marketplace.

Why pound your head in the sand to try to change something that is already happening and has been happening for years?

What I have learned as an entrepreneur is that it’s very difficult to change people’s habits. I tried betting against this concept once before when I tried to develop an online marketplace for the buying and selling of Maine hand-made products, trying to get artisans to change the way they sold their products. I got burned badly and that story is for another day but it was a great learning experience.

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