August 16, 2023

Airlines, Hotels Branch Out with Experiences to Lure Travelers

Casino operator MGM Resorts International is finding Formula One's inaugural stop in Las Vegas is as much of a draw as its slot machines this year, and it is not the only company realizing that travelers are increasingly seeking out experiences beyond the traditional draws for tourists.

Global travel has rebounded in a big way in the post-pandemic period, but travelers are no longer plunking down as much cash on souvenirs, and instead splurging on sporting events or concert tickets in new destinations.

Airlines, hotels and travel operators are increasingly capitalizing on that, venturing beyond their usual services to arrange bookings for special experiences to keep customers.

"Our gaming revenues are up but relatively flat," MGM Chief Executive Officer Bill Hornbuckle told Reuters, saying revenue growth was being driven by entertainment, and luxury food and drink experiences. "There's just this appetite for experience at a higher level that people seem to be prepared to pay for."

Tourist spending on experiences like restaurants, amusement parks and nightclubs globally was up 65% in March 2023, the most recent month for which data is available, from March 2019, before the pandemic, according to Mastercard's Travel Industry Trends 2023 report. But spending by travelers on goods like cosmetics, jewelry and electronics is up just 12%, the report said.

"People love experiences," Airbnb's CEO Brian Chesky told investors on a post-earnings call in early August. On the Airbnb website, 95% of reviews for experiences receive a 5-star review while 84% of home stays get that rating, he said.

"That means that people on a statistical basis like experiences even more than homes," he said.

Chesky said Airbnb, a website that allows travelers to book short-term room or home rentals, plans to expand its experience offerings in coming years.

Other companies have also found revenues from experiences are growing.

Online travel company Tripadvisor's experiences platform Viator posted a 59% rise in second-quarter revenue to $216 million. The platform accounted for about 44% of the company's revenue in the quarter, up from 33% a year ago, according to company figures.

"2023 is on track to be another record-breaking year for our category. We’re outpacing last year’s and pre-pandemic bookings," said a Viator spokesperson.

Around two-thirds of total travel globally is now booked online but just about 30% of things to do while on vacation are booked online, said Dan Wasiolek, Morningstar equity analyst.


Traditional hotel and flight operators are trying to tap into that business. American Airlines in June started giving loyalty members the ability to earn flight miles and points on entertainment purchases when they book through the airline's website. The company said it has seen a significant increase in members using the site to purchase event tickets.

Hotel operator Marriott International in February named its first-ever "chief customer officer" to develop and execute the company's global consumer strategy.

"We've been showcasing our experiences, which to me is about giving people access to things that they either couldn't necessarily plan or organize themselves," the new executive, Peggy Roe, said in an interview.

She cited examples like an auction for members to learn tricks on the field as well as get manicures with a professional U.S. women's soccer player in Washington.

Hornbuckle said MGM's occupancy level for November, when the Las Vegas F1 Grand Prix is scheduled, is double that in the same period a year ago, despite a higher price rate. He also said the biggest booking day of the year for the company in Las Vegas was the day the National Football League's Las Vegas Raiders released their yearly schedule for games.

Hilton Worldwide saw a record number of points redeemed for experiences in 2022, and points redeemed for experiences so far this year have doubled from a year ago, said Brad Anderson, vice president of Hilton Honors Program Strategy.

Competitor Hyatt Hotels launched an experience program in November 2022 with over 200 experiences like foraging in a Hungarian forest for truffles with expert hunters and their dogs or taking a spritz cocktail masterclass in Venice. The company said it has since increased its offerings by about 25%.

Reporting by Doyinsola Oladipo in New York; editing by Deepa Babington

Copyright 2023 Reuters. All rights reserved. From By Doyinsola Oladipo.

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