Through what channels can you attract European tourists?
The European outbound tourism market is highly segmented. Key segments are adventure, nature, cultural, pleasure, health, recreational and business tourism. The trade structure has become a mix of traditional and relatively new distribution channels. Your best bet is to use multiple channels. Focus on direct sales, specialised outbound tour operators and inbound tour operators. Independent travel agents and major outbound tour operators may also offer opportunities.
Figure 1: European outbound tourism segments and their main niche markets
Tourism is a segmented industry. There is no standardised model for segmentation. For example, it can be based on socio-demographic characteristics like age, lifestyle and education. Combined with socio-economic data like disposable income this creates specific segments.
We segment the European outbound tourism market based on the mindsets of travellers (Figure 1). This approach is best suited to small and medium-sized tourism businesses. Within these main segments, there are several niche markets. There can be some overlap between segments, with niche markets belonging to multiple segments. Our model includes the most interesting niche markets for you, but is by no means an exhaustive list.
- Specialise in one or a few segments, preferably those you have experience with. Perform a market analysis to discover where your opportunities lie.
- Assess your competitiveness within your focus segments. Who are your main competitors? Where are they from? What is their added value? How can you distinguish yourself from them?
- Use promotional tools that match your focus segments. For example, if you offer adventure tourism products you should attend adventure tourism trade events. If you focus on nature tourism, advertise in nature tourism magazines or on related platforms.
Europe is the leading source market for adventure tourism. Adventure tourism combines physical activity with interaction with nature and/or cultural learning. It includes a wide range of activities like backpacking, canoeing, climbing, cycling, diving, hiking, horseback riding, kayaking, mountain biking, rafting, sailing, surfing, trekking and walking.
The intensity of adventure tourism varies from soft to hard adventure. In our studies soft adventure refers to adventure tourism activities as part of a holiday, often undertaken by beginners. Hard adventure refers to holidays that mainly focus on these activities, mainly suitable for advanced adventure travellers. The largest share of the European adventure tourism market consists of soft adventure tourism.
Some adventure tourism activities are regarded as separate, established niche markets. For example cycling, diving, trekking and surfing. Adventurous niche markets like birdwatching, wildlife tourism and volcano tourism are strongly connected to the nature tourism segment as well.
Nature tourism relies on experiences directly related to nature. Enjoying nature is the primary motive for these trips. Nature tourism focuses on natural landscapes, flora and fauna, as well as the lifestyles of people living in natural environments. It includes a wide range of ‘soft’ activities, like camping, staying in a rainforest lodge, boat trips on the Amazon, walking, hiking, visiting national parks or observing wildlife.
Nature-based tourism accounts for about a fifth of international travel, according to Rainforest Alliance. Nature travellers care about the impact of tourism on the environment, making sustainability particularly relevant in this segment. Especially when it comes to eco tourism, a niche market that aims to conserve the environment and improve the wellbeing of local people.
Other important niche markets are community-based tourism (CBT) and rural tourism. These types of nature tourism are closely related to cultural tourism. Common activities include visits to heritage sites and local markets, as well as cooking or handicrafts workshops. Local forms of accommodation like community lodges and family-run guesthouses are also popular.
Cultural tourism lets travellers experience the arts, heritage, landscapes, traditions and lifestyles of other cultures and countries. This is a broad market, with many special interests. For example architecture, archaeology, history, (music) festivals, museums, exhibitions and language. European travellers also like to include cultural experiences in other types of holidays, like adventure tourism.
Exploring cultural heritage is the most common form of cultural tourism among European travellers. This means UNESCO Cultural World Heritage Sites can give your destination a competitive edge. However, the current trend towards unique experiences also offers opportunities for lesser-known cultural attractions.
Some key niche markets within cultural tourism are culinary tourism and religious tourism. In culinary tourism, the destination’s local cuisine plays a main role. Religious tourism is strongly or exclusively motivated by religion or spirituality.
Pleasure tourism aims to improve physical and emotional wellbeing through wellness and inner wellness tourism. Wellness tourism offers authentic or location-based experiences, treatments or therapies. It includes facilities such as spas and resorts offering for example beauty treatments, massages, detoxification, Ayurveda treatments and Thalasso therapy. Inner wellness focuses on activities like yoga, meditation and mindfulness. Medical treatments like facelifts are not included.
Interest in wellness tourism continues to increase. As an added bonus, international wellness travellers spend considerably more than average per trip. European travellers also add wellness elements to other types of holidays.
The main focus of health (or medical) tourism is to improve travellers’ health, physical appearance or fitness. They travel abroad to receive medical, dental or surgical care at the destination. Cost savings drive health tourism, as treatments can be 30-70% cheaper in developing countries than in Europe.
Light medical tourism involves non-invasive and light invasive medical treatments. For example dental treatments or facelifts. This is the most interesting type of health tourism for you. Especially because European light medical tourists often combine their treatment with a holiday. This allows them to recover sufficiently and come in for check-ups before travelling back home.
- For more information, see our study on light medical tourism.
The aim of recreational tourism is to engage in recreational activities to relax and have fun. For example theme park visits, cruises or golf trips. Some of the most popular types of recreational tourism, like sun and beach holidays, are predominantly mass-tourism. This market is difficult to tackle, as products are highly standardised and sold in large volumes. This results in intense, largely price-based competition.
The main purpose of business tourism is, as the term implies, doing business. However, business travellers increasingly combine their trips with leisure. Either by attaching a holiday to their business trip, or by adding leisure components like wellness arrangements to their business itinerary.
A key market within business tourism is MICE, or the meetings/events industry. MICE accounts for more than half of the business tourism market. It consists of meetings, incentives, conferences and exhibitions, bringing together large groups of people.
The European business tourism market is growing strongly again after the recession. However, this market is heavily influenced by geopolitical incidents that may lead to rerouting or (temporary) cancelling travel links. Measures like in-flight bans on laptops could also temper growth. Aside from the lost in-flight productivity, most companies don’t allow their employees to store devices with sensitive information in checked luggage.
- For more information, see our study on MICE tourism.
Figure 2: Trade structure for outbound tourism from Europe
You can enter the European outbound tourism market through several distribution channels. Distribution through tour operators still dominates the trade structure. However, online intermediaries like travel portals and online travel agents are becoming increasingly popular. The market for direct sales also continues to increase, partially driven by peer-to-peer travel. Independent travel agents form another relatively new channel.
Using multiple distribution channels increases your chances of success. Your ideal combination depends on your capabilities, products, resources and target markets. As a local tourism provider your best opportunities are in direct sales, as well as partnering with specialised tour operators and inbound tour operators. Independent travel agents may also prove worthwhile. If you offer a highly competitive product, you might be able to work directly with major outbound tour operators.
Tour operators continue to be a main trade channel
Tour operators are particularly dominant in Southern and Eastern Europe, where the tourism market still has a traditional structure. When it comes to holidays in developing countries, European travellers often prefer tour operators as well. Especially when they are visiting relatively unknown emerging tourism destinations. Even adventurous clients want some sort of security and safety. This makes tour operators a consistently important distribution channel for you.
Local inbound tour operators are key to your distribution strategy, especially if you are a smaller company. They assemble the various local elements of trips and offer them to outbound tour operators, travel agencies or directly to travellers. Some large inbound tour operators operate their own fleets of vehicles. European tour operators generally prefer to work with a few inbound tour operators, instead of with multiple local tourism providers separately.
According to industry experts, traditionally most of Europe’s outbound tour operators were major tour operators. In recent years, specialised tour operators focused on a specific tourism segment or destination have become much more common. Major outbound tour operators handle large volumes, selling mainly standardised, mass-marketed products. A few players dominate this market, mainly based in the United Kingdom and Germany like TUI and Thomas Cook.
Table 1: Examples of large outbound tour operators in key European source markets
Their high volumes can make major tour operators an interesting trade channel. However, such partnerships can be difficult as they compete primarily and heavily on price.
Specialised tour operators offer you particularly good opportunities. They focus primarily on less common tourist destinations, offering high-quality customised products in specific segments or niche markets. These complex products make them more dependent on local suppliers, hence more loyal. In the coming five years, specialised tour operators are expected to continue handling large volumes of trips to developing countries from all European markets. Examples are Better Places (social responsibility), Exodus (adventure) and Sawadee (sustainable), or destination specialists like Dim Sum (Asia) and Mystic India.
A key development is the new Package Travel Directive, which came into effect on 1 July 2018. This expands the definition of package travel to include customised packages and linked travel arrangements. Tours and activities are legally included in a package if they account for over 25% of the value of the combination, or if they are advertised as or otherwise represent an essential feature of the trip or holiday. As a result, European tour operators will impose stricter demands onto you.
Industry experts expect European tour operators to gain a stronger position due to the new Directive. This adds to the importance of partnerships with such players. European tour operators need their local suppliers to be flexible and able to adapt to unexpected changes, now that travellers can demand a solution or reimbursement if there are changes to their package. Good communication is key.
- Focus on both local inbound tour operators and specialised tour operators in your European target markets.
- Attend relevant tourism trade events in your European target markets, as that is the traditional place to meet tour operators. Repeatedly attend a limited number of events, rather than attending a wide range of events only once or twice. Focus particularly on specialised events that match your products. Finding suitable partners and building long-term relationships takes time, so you must be persistent.
- Organise road shows to visit selected tour operators in your European target markets in person. This is an intensive but rewarding way to approach tour operators. Try to cooperate with your own country’s national tourism organisations and/or national carriers.
- For more information about the Package Travel Directive, see our study about what requirements you must comply with to attract European tour operators.
Online tourism drives direct sales
Europeans are becoming increasingly experienced travellers. Online tourism has made it easier for them to contact and book with local tourism companies directly. Younger travellers (between the ages of 18 and 45 years) are particularly likely to book directly with local providers. They may also use travel guides like Lonely Planet to make travel arrangements on the spot.
Most direct bookings are for well-known developing country destinations like Thailand or South Africa. To attract online customers, a professional online presence is key. It increases awareness, builds your professional image and enhances your chances of direct sales.
Peer-to-peer travel platforms are a rapidly growing channel for direct online sales between peers. This market is expanding from accommodation and dining experiences into tours and activities. To benefit from this trend, you need to collaborate with local peer-to-peer providers.
Table 2: Examples of peer-to-peer travel platforms per travel product
Tours & activities
- Focus on direct sales by targeting European countries with a high share of online travel sales and experienced travellers. Northern and Western European countries like Scandinavia, the United Kingdom, Germany and the Netherlands offer you the best opportunities.
- Invest in a professional online presence with a good website, online payment options and active social media channels.
- For more information, see our 10 tips for online success and online payment methods in Europe.
Additional online trade channels can prove to be interesting
An online travel portal functions as a link between travellers and suppliers. Most of them are marketing platforms for information and promotion. Bookings and payment are arranged directly through the tourism provider. Their business model varies from membership fees, to commissions on transactions and/or sales, to a combination of those. Other portals like Evaneos and kimkim do offer bookings through their own payment system.
Using portals can increase visibility, enhance trust and provide marketing opportunities. Entry costs and risks are generally low. However, competition is strong and the conversion rate is generally low. Replying to all requests generated through portals can also be time-consuming. This means portals can be a useful addition to your strategy, but they shouldn’t be your sole distribution channel.
Online travel agents (OTAs) do offer planning resources and booking capabilities for a variety of tourism products, mainly in the mass-tourism market. Customers can directly book flights, accommodations, car rentals, local excursions or various combinations. However, OTAs offer limited information about your product and usually charge a commission of 10–20%. By far the largest OTA companies in Europe are Booking (formerly Priceline) and Expedia. Other key players include lastminute/Bravofly and eDreams.
If you offer highly standardised products that can be easily booked online, OTAs can be interesting partners. As packagers, they might play a role taking over the liability from individual suppliers under the new Package Travel Directive.
- Study the business models and requirements of the leading online travel portals in your European target markets. Use this to decide if it would be feasible and attractive to join.
- Consider developing your own national or regional tourism portal with local stakeholders.
- For more information on the advantages and disadvantages of OTAs, see our chapter on OTAs in our study about being a successful tourism company online.
Independent travel agents serve specific markets
Independent travel agents, or counsellors, are one-person businesses (often women) that organise highly customised holidays for individual customers. They have a limited but distinct clientele, which often makes repeated bookings. Independent travel agents are becoming increasingly organised in umbrella organisations, making them easier to find. They are especially active in the United Kingdom, Germany and the Netherlands.
If you offer highly specialised and/or customised products with a personal touch, independent travel agents are a good option. They can become valuable ambassadors for your company. However, be aware that building trust takes time.
- Approach independent travel counsellors, especially if you are targeting the United Kingdom, Germany or the Netherlands.
- Contact national umbrella organisations to locate independent travel agents in your target market. For example Amondo in Germany, The Travel Club in the Netherlands or travel counsellors in various European countries. Identify those agents responsible for your destination or segment.
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