Travelers increasingly prioritize activities over destinations, driving demand in the $1 trillion experience market, especially among younger generations. Despite this, nearly half of bookings remain offline. Small providers struggle with visibility, while platforms face scaling challenges. Travelers seek seamless, curated booking options, and hotels and airlines can enhance offerings by integrating experiences. The industry is at a turning point for improving discovery and booking processes.
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McKinsey & Company.McKinsey & Co on the evolving role of experiences in travel. Read full article here.
Key takeaways:
Travelers increasingly plan their trips around activities rather than just destinations, with experiences becoming key decision drivers. The travel industry is still seeking ways to streamline how these experiences are discovered, booked, and integrated into larger travel packages. There is a massive opportunity, with the travel experience market valued at over $1 trillion, driven especially by younger generations who prioritize unique activities over other trip aspects like transport and accommodation.
Despite the potential, nearly half of all experience bookings are still done offline, signaling a gap in digital integration. Both small experience providers and large distribution platforms face challenges—providers struggle with visibility and accurately conveying their unique offerings, while platforms find it difficult to scale profitably while maintaining quality and seamless booking.
To capitalize on this growing trend, the travel industry could focus on improving online discovery and booking systems, creating better-curated platforms, and integrating experiences with core products like flights and hotels. Experiences such as tours, concerts, and local cultural activities can shape a traveler’s journey, and the industry is at a pivotal point where collaboration and innovation can enhance the magic of these experiences while boosting profitability.
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Experiences drive travel decisions – Travelers are increasingly planning trips around activities and experiences, not just destinations.
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$1 trillion market opportunity – The global travel experience market is worth over $1 trillion, with younger generations showing a strong preference for spending on experiences.
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Offline bookings dominate – Despite the digital age, nearly half of experience bookings still occur offline, creating opportunities for online platforms.
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Challenges for experience providers – Small operators struggle with visibility and accurately conveying their unique offerings through booking platforms.
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Platforms face scaling difficulties – Online booking platforms find it hard to scale profitably while maintaining high-quality listings and a seamless customer experience.
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Desire for curated platforms – Travelers want well-curated, easy-to-navigate platforms that simplify the discovery and booking of experiences.
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Integration with travel products – Hotels, airlines, and other travel stakeholders can benefit by integrating experiences into their offerings, such as flight packages or on-premises activities.
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Demand from younger travelers – Gen Z travelers are especially focused on spending more on experiences, often saving on other trip elements to do so.
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Growth potential in structured experiences – Paid, structured activities, like guided tours or ticketed events, represent around 25% of global experience spending and are growing at over 14% per year.
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Innovation at an inflection point – The travel industry is poised for transformation, with potential to improve digital booking systems, enhance customer experiences, and scale profitably while preserving the “magic” of travel experiences.
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Source: McKinsey & Co.
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