Why Does Marketplace Model Work So Well With Tourism Industry?
Oct 155 min read
Co-founder and CEO of Ideamotive. Entrepreneur, mentor and startup advisor.
Do you think about starting a business in tourism? Or maybe you already have one and wonder how to make it more profitable? Here is the solid set of arguments that you should seriously consider launching own tourism marketplace.
Tourism industry is not only one of the fastest developing sectors of the economy. It also has a bright future in front of it. According toWorld & Travel Tourism Council, in 2018 tourism recorded 3,9% year-to-year growth. As a result, it is the second-fastest-growing sector in the world, leaving behind healthcare (+3.1%); Information Technology (+1.7%) and financial services (+1.7%). Manufacturing, which grew by 4%, is the only sector ahead of tourism. Currently, travel & tourism accounts for one in five of all new jobs created worldwide. Forecasts are more than optimistic, suggesting that this sector could contribute 100 million new jobs globally over the next ten years, accounting for 421 million jobs by 2029.
Such solid and long-lasting growth is possible, among the many other reasons, due to the opportunities offered by the marketplace business model, which happens to be one of the most important travel industry trends.
How Do Digital Marketplaces Work in Tourism?
In general, the marketplace model in all its simplicity and clarity is based on the Internet platform. It is accessed by users or end-customers from around the world who use it for browsing offers from a variety of providers. After finding the most interesting one, the user chooses it and the share of payment that the client has to charge is sent to owners and/or managers of the marketplace.
Both of sides which deal with such model – tourism services providers and end-users – are benefiters. Providers reach hundreds of thousands of customers and the latter can freely browse through the great number of bids. Such a scheme is very easy to be understood and equally simple to deploy. Even if you have never before used technology in the travel and tourism industry.
It can be shown with the examples of huge and undeniable successes achieved by already existing marketplaces. Their founders, as well as managers, did a great job: thanks to their longtime activities, the tracks for marketplace business model have been well-explored. They helped to make tourism marketplaces become leading travel industry trends. It means that you do not need to be worried if your potential customers could recognize how your tourism marketplace work. Such knowledge, as well as its operating principles, have been widely disseminated while all unclear issues have been thoroughly explained. Internet platforms on which marketplaces base have been also successfully promoted among millions of people, both for tourist service providers, operators and final users who are tourists looking for the most interesting, most unique and the cheapest ways for spending their leisure time.
The most popular tourism marketplaces are:
Airbnb– this available since 2008 platform promotes sharing economy travel marketplace and offers marketplace houses for rent. People accessing Airbnb can choose from more than five million places to stay in more than 81,000 cities and 191 countries. One of the most crucial effects of this traveling marketplace is emerging a peer-to-peer model which successfully reduced potential risks and was fundamental for creating a good relationship between the seller and the customer.
Bookingis without any hesitation one of thebest recognizable internet tourism marketplacesand role model for a multi-vendor marketplace platform. This is the place where every day dozens if not hundreds of thousands of decisions are made where to spend holidays. Tourists can browse through almost unlimited offer of tourist destinations such as hotels, pensions or guesthouses.
Musementis an Italian-based marketplace created as a simple and convenient platform for tour and activity operators all over the world tosell their products to travellers from anywhere, at any time. Musement states that it has one goal which is to make travellers feel like a local in any place they go to.
Viatorcan be called a successful travel activities marketplace as it is widely recognized as a platform that facilitates travellers tofind exactly what they are looking for. Viators users can easily access and then book amazing experiences in more than 100,000 bookable activities.
Still a Lot to Discover
It could be said that just the aforementioned giants have already done everything that could be done in the area of tourism marketplace. Their business positions look so strong that any competition should be instantly regarded as effortless.
Nothing could be further from the truth.
There is a reason why in the first section of our text we mentioned the constant growth of the tourism sector and the increasing number of jobs. It means that every day – and we mean it literally – there are new companies created that wish to profit from tourists.
They are ready to invest in marketing as well as seek for effective and innovative ways of reaching customers. Tourism marketplace which allows them to be easily tracked by a person from any corner of the world must appear to them as almost a perfect tool for painless and smooth presenting their offer. Everybody in this sector wishes to use as many travel technology trends as only possible.
Plus, technological development and travelling that gets more convenient and safer every season are chances for inviting tourist operators from any latitude. Nothing stops you from expanding your database with new companies. Therefore, there are no worries if there could be problems with adding interesting and valuable tourism offers.
What strategy should be favoured to make your tourism marketplace successful and easily recognizable platform? Firstly, its operating area should be carefully analysed. And again, some of you could argue that after such initiatives as Airbnb or Booking have been already launched, nothing more interesting could be brought to market. However, the great number of tourism stakeholders makes it still possible to introduce new and unique offer that would attract customers to our platform. Key to success is to define our target group which using our internet marketplace would find its location for the desired destination.
Nowadays you could visit platforms offering such niche activities as discovering location usingMTB bikeculinary tripsor following history events called heritage tourism. Why not launch a platform that would focus on similar rare attractions? What you need is only deep research and careful trend analysis allowing you to identify tendency which generates interest and attracts people.
It would be recommended to thoroughly evaluate the offers of tour operators – not only in our country but also foreign ones. It can be discovered that in many corners of the world or in the selected region there are companies which specialize in some intriguing or unusual tourism niche. Then creating a web platform that would allow for fast and convenient browsing suchoffers guarantees business success.
Within a Reach
Another thing that makes marketplace business model work so well with the tourism industry is a heavily trans-national character of latter. People from all countries dream about discovering new places, crossing the borders and experiencing thrills caused by getting to exotic locations. Web platform offering access to such places – no matter how far situated – would surely attract attention and soon gather a solid base of loyal users.
The same trans-national rule applies to hotel owners and the whole tourism industry. They are interested in inviting guests from all around the world. Up to now, there is no such thing as location-filter or selection based on where do guests come from.
Using the marketplace business model is so convenient as tourism is service-based and local based. It means that there is absolutely no need for shipping any goods, which surely would create additional duties and would cost precious time. Instead, providing your end-users with satisfaction is much simpler.
Unceasing growth of tourism sector means that it is also a verycompetitive market. Every hotel owner or tour operator tries his best to get ahead of his rivals and be the first in reaching customers. The passive approach is the shortest way to business failure. Tourism grows fast, but equally, fast one can be defeated in this race. Unless you wisely use travel technology trends.
It means that your business marketplace would be seen by the tourism sector as an important and valuable chance for pushing one’s brand forward. Companies would like to join your platform as these solutions became one of the most crucial tools for acknowledging customers with tourism offer.
As you may see, it is not difficult to prove that the marketplace is not only a perfect solution for the tourism sector but also the future of the travel industry. It is much harder to stop this line of reasoning or put it in frames and not to get a reader bored. Hence, right now is a perfect time to finish our text and wish you good luck with launching your own tourism marketplace.
If you wish to seize the opportunity, then do not hesitate. Our digital marketplace development experts will be delighted to tell you more about the marketplace for the tourism industry.Contact usand schedule a free consultation session.
Robert is a co-founder and CEO of Ideamotive. Entrepreneur, who with passion spreads digital revolution all around the internet. Mentor and advisor at startup accelerators. Loves to learn and discover new business models.