The travel industry is chasing a trillion-dollar prize with a broken map. Travelers no longer book a destination. They are looking for an unforgettable experience. They crave authentic, memorable moments, from a local cooking class in a private home to a guided hike through an unfamiliar landscape. This shift has turned the tours and activities sector into a powerful decision-driver that can make or break a trip.
Despite its immense value, the market for travel experiences remains frustratingly fragmented. Travelers face an overwhelming sea of options on clunky platforms. Small, passionate operators struggle for visibility, as their unique offerings are often lost in generic listings. And large distributors, from booking platforms to hotel chains, have yet to crack the code on profitably delivering curated, high-quality experiences at scale.
The challenge is no longer about recognizing the importance of experiences. It’s about solving the deep-seated friction between travelers, providers, and distributors. The organizations that can eliminate these pain points and bridge the digital gap won’t just claim a share of a growing market; they will redefine brand loyalty for the next generation of travelers.
Experiences Are No Longer an Add-On; They’re the Main Event
The traditional trip-planning funnel has been inverted. Where travelers once chose a destination and later figured out what to do, many now start with the activity. A specific interest, whether it’s street food or rock climbing, now dictates the destination itself.
”The evolving role of experiences in travel” report confirms this shift. When travelers were asked about the most important factors in selecting a destination, the range and quality of local activities were cited almost as frequently as essential needs, such as safety, cost, and lodging. The ability to engage with authentic local culture was an equally powerful motivator.
This trend is set to accelerate, driven by the spending habits of younger generations. According to the same study, 52% of Gen Z travelers report splurging on experiences, a stark contrast to the 29% of baby boomers who do the same. This demographic prioritizes spending on activities over saving for flights, local transport, or even food, signaling a permanent shift in travel demand.
A Trillion-Dollar Market Still Trapped Offline
The global market for tours, attractions, and activities is massive, but the portion directly addressable by the travel industry is still significant. Destination visitors account for an estimated $1.1 trillion to $1.3 trillion in annual spending. The core opportunity lies within paid, structured activities, such as guided tours or ticketed events, which represent a serviceable market of around $250 billion to $300 billion per year. Yet, despite this digital-era growth, the industry remains surprisingly analog.
In 2023, 51% of travelers booked their trips via online travel agencies, 37% booked directly with airlines, 23% booked directly with hotels, and 13% used vacation rental platforms like Airbnb. Online travel platforms, despite their dominance in flights and hotels, handle only 22% of experience bookings. This digital gap highlights a massive inefficiency and a significant opportunity for companies that can streamline the process.
Why Booking an Experience Is Still Broken
For travelers, the process of finding and booking the right activity is often exhausting. Instead of joyful discovery, they are met with poorly curated lists on aggregator websites, presenting a paradox of choice. Hidden gems are buried, and quality is a gamble. The thumbnail description of a boutique food tour may not accurately reflect the reality of an impersonal and overcrowded excursion. This disconnect creates friction across the entire value chain, impacting operators, platforms, and legacy travel brands alike.
The Operator’s Dilemma
For the thousands of small businesses that form the backbone of the experience economy, online platforms are a double-edged sword. They offer invaluable access to a global audience, boosting visibility far beyond what a single operator could achieve through their own website and SEO efforts.
However, the one-size-fits-all format of many platforms fails to capture the nuance of unique offerings. A thoughtfully designed historical walk is fundamentally different from a high-energy jet ski rental, yet they are often forced into the same rigid listing templates. This commoditization erodes value. Furthermore, when a customer needs to reschedule or experiences a service issue, the platform’s role as an intermediary can lead to communication breakdowns, leaving both the customer and the operator frustrated.
The Platform’s Scaling Problem
Online booking platforms face their own set of challenges. Aggregating a highly fragmented market of small operators is a costly endeavor, both in terms of inventory acquisition and the technology required to manage it. As a result, many platforms have prioritized top-line growth over profitability, and the path to sustainable margins remains unclear.
The central question is how to scale without sacrificing quality. Effective curation is key, but it’s difficult to automate. Vetting thousands of individual providers requires significant human oversight, creating a conflict between rapid expansion and delivering a trusted, high-quality product.
The Integration Gap for Hotels and Airlines
Legacy travel players, such as hotel chains and airlines, are eager to enter the market, attracted by the high margins that operators can achieve. However, they face a critical challenge in integration.
Consider a major hotel chain that promotes a curated local adventure through its loyalty app. The guest books the tour, expecting a seamless experience endorsed by a trusted brand. Instead, they are routed to a third-party aggregator that delivers a generic, low-quality tour. A negative experience harms not only the tour operator but also damages the hotel’s brand equity and undermines customer loyalty. This gap between brand promise and delivery is a significant hurdle.
Blueprints for Success in the Experience Economy
The path forward requires a strategic shift from pure aggregation to intelligent curation and seamless integration. Stakeholders across the industry have distinct opportunities to capture value by focusing on solving specific friction points for the traveler.
For Operators: Engineer the Magic
Success starts with the product. A memorable experience is built on a few core components: genuine entertainment and exceptional guides who make guests feel safe and valued. Once the core experience is perfected, operators must focus on a more brilliant distribution strategy. This means choosing platform partners that align with their brand and diversifying their booking channels to avoid over-reliance on a single source.
For Platforms: From Superstore to Boutique
The next evolution for booking platforms is to move beyond being a digital superstore. Winning platforms will act more like trusted editors, using data and human expertise to curate collections of high-quality experiences. A seamless booking process is table stakes. The real differentiation will come from simplifying discovery, guaranteeing quality, and providing flawless customer service. The most innovative platforms may even use their market data to identify gaps and help create new experiences to meet unmet demand.
For Hotels and Airlines: Own the Journey
Large travel brands are uniquely positioned to integrate experiences into the entire customer journey. Instead of simply reselling third-party offerings, they can create a branded ecosystem of experiences that cater to their customers.
Curated Partnerships: Hotels can move beyond the concierge binder and forge deep partnerships with a select group of high-quality local operators, integrating booking directly into their apps with precise quality control.
On-Premises Innovation: The hotel itself can become an experiential hub. A lobby can be redesigned to host social media-worthy pop-up events, and spas can offer wellness experiences that reflect the local culture.
Data-Driven Recommendations: Airlines can leverage booking data to offer personalized experiences at the optimal time, transforming a flight confirmation email into the beginning of an exciting itinerary.
The Future Is Curated
The trillion-dollar travel experience market is not a technology problem waiting for a solution. It’s a trust and quality problem. The winners in this space will not be those who aggregate the most listings, but those who can deliver magical moments most reliably.
This requires a fundamental shift in mindset for B2B leaders. The goal is no longer just to sell rooms or tickets. Hoteliers need to start crafting a cohesive and memorable journey for the traveler. For an industry built on the logistics of movement and lodging, this pivot toward the intangible represents both the greatest challenge and the most significant opportunity.
The companies that succeed will be those that embrace a new role as curators of travel, blending digital scale with a human touch. They will need to prioritize quality control over inventory size and build strategic alliances that ensure brand consistency. Solving the fragmentation of the experience economy is a complex task. But for the organizations that get it right, the reward is more than just a new revenue stream. It’s the chance to build deeper, more resilient relationships with travelers who are increasingly loyal to experiences, not just brands.
