What's Happening?
Online travel agencies (OTAs) have overtaken traditional operator websites and offline direct bookings to become the leading distribution channel for tours, activities, and attractions in Australia and New Zealand. This shift, highlighted in Arival's
second annual State of Experiences report, marks a significant change in the sector, with digital intermediaries now controlling the largest share of bookings. The report, based on research from over 500 operators, indicates that this development is influencing margins, marketing, and long-term strategies for operators. Despite a profitable year for many operators in 2025, the demand environment remains uneven, with some experiencing declines. The fragmented nature of the sector, with varying sizes of operators, adds complexity to distribution negotiations and technology investments. Technology adoption is uneven, with many operators using multiple unintegrated systems, and AI uptake is increasing, though results are still emerging.
Why It's Important?
The dominance of OTAs in the ANZ market represents a pivotal shift in how travel experiences are marketed and sold, impacting the financial and strategic planning of operators. This change could lead to increased competition and pressure on margins as operators adapt to the new digital landscape. The uneven demand and fragmented market structure suggest that smaller operators may face challenges in negotiating favorable terms and investing in necessary technology. The rise of digital intermediaries also highlights the growing importance of technology and AI in the travel industry, potentially leading to more efficient operations and enhanced customer experiences. However, the uneven adoption of technology indicates that not all operators are equally prepared to leverage these advancements, which could widen the gap between larger and smaller players.
What's Next?
As the industry continues to evolve, operators may need to reassess their distribution strategies and invest in technology to remain competitive. The focus on automation and system integration is likely to increase, with AI playing a more significant role in operations. The upcoming discussions at Arival 360 Brisbane may provide further insights into how the industry plans to address these challenges. Additionally, the ongoing digitization of experiences could lead to new opportunities for innovation and growth, particularly for those who can effectively integrate technology into their operations. The sector's response to these changes will be crucial in determining its future trajectory and the ability of operators to thrive in a digital-first environment.
