A few years ago, most travelers could name one, maybe two, companies that were in the tours and activities business. Now, by PhoCusWright’s reckoning, it is the third largest travel segment after airlines and hotels, reaching $135 billion in 2016 and surpassing the car rental, cruise and rail industries.
As it comes of age, the “T&A” industry is following a similar historical path as airlines and hotels, according to Bob Gilbert, head of North American sales for Rezdy, a developer of online booking solutions for tour and activity providers.
Back in the 1950s, as commercial air travel began to grow in the post-war era, airlines found the need to develop automated reservations and distribution systems to maintain control and accuracy.
Initially, hotels were not participants. Their technology, such as it was, was disparate and fragmented.
“But UltraSwitch was created, and that became Thisco, and that became Pegasus,” Gilbert said. That gave hotels the ability to link their central reservations systems to all the GDSs – and back then there were seven of them – through a single interface.
Ultimately, it would also enable onward distribution to other channels.
Gilbert believes that tour and activities companies should not look to the existing GDS platforms as their saviors. That indicates “a high degree of naiveté,” he said.
“The reality is that a GDS will simply integrate with other third parties like Rezdy, as we are the most neutral booking platform,” he said.
What makes Rezdy neutral?
“We’re very neutral: We charge a flat fee. We don’t charge commissions,” Gilbert said. In the tours and activities industry, “that makes us Switzerland.”
It’s all about the transactions, he said. “We don’t care what your rates are. It’s about providing the lowest possible transaction cost.”
Charging a commission interferes with the customer’s business, he said. The typical commission is 6%, which puts higher-end operators, such as Grand Canyon air tour companies, at a disadvantage.
A $500 tour, for example, would incur a commission of $30. The operator either has to eat that cost or pass it onto the consumer.
“The transaction cost is the same regardless of the cost of the flight,” Gilbert said. “Why should they have to pay $30?”
By maintaining neutrality, “Rezdy is the modern-day version of UltraSwitch or Thisco for travel activities,” he said.
Rezdy also is fully integrated with all major OTAs and other travel producers, generating more than $1 billion a year,” Gilbert said. “We are the GDS for travel activities.”