2025 Tourism Outlook: Online travel experience may become the trend, OTA platforms like Airbnb, Inc. Class A (ABNB.US) usher in new opportunities.

Recently, Wells Fargo & Company released a report on the outlook of the tourism industry by 2025, predicting that deep exploration of the tourism experience market in the coming year will provide lucrative opportunities for online travel agencies (OTA). However, the bank added that although the opportunities are significant, the basic expectation is that experiential services such as Airbnb, Inc. Class A (ABNB.US) will only experience moderate growth in their products based on large accommodation services by 2025. The optimistic expectation is to drive a 3% increase in booking volume and a 5% increase in EBITDA. The report indicates that following a slowdown in accommodation growth after the COVID-19 pandemic, Airbnb, Inc. Class A reintroducing services in this category, investors will once again focus on the $235 billion travel experience market. While the potential market size of the tourism experience market reaches $235 billion, the online penetration rate is only about 30%, compared to a penetration rate of about 60% in the accommodation market. Therefore, the bank believes that from 2024 to 2027, the online travel experience market will grow at a compound annual growth rate of 23%, while the growth rate of the online accommodation market will be 12%. With Airbnb, Inc. Class A reintroducing focus on this category, it is expected that investor interest in experiences will increase. Compared to accommodation OTA, the online travel experience market is clearly more fragmented, leaving opportunities for new entrants. Wells Fargo & Company estimates that by 2024, the largest platforms in the online experience sector are Viator (approximately $4.1 billion), Klook (approximately $3.8 billion), and GetYourGuide (approximately $2 billion), with these three platforms accounting for about 15% of the online experience market, while Booking Holdings(BKNG.US), Expedia (EXPE.US), and Airbnb, Inc. Class A account for about 80% of the online accommodation market. The bank believes that a fragmented market means there is an opportunity for new challengers to emerge. The report mentions that the size of the accommodation market is three times that of the experience industry, but the leading OTA (Booking, $163 billion) is 40 times larger than the leading experience platform (Viator, $4 billion). The reason why online travel experience platforms cannot further expand is due to three key challenges: 1) a challenging supply-side economy; 2) the demand for "high value-for-money" products makes cross-selling difficult compared to airline ticket booking services; 3) many experiences are "unstructured," and it is difficult to monetize them in the online market. Wells Fargo & Company believes that Airbnb, Inc. Class A is fully capable of addressing the key challenges in the online experience industry. The bank states that for the challenging supply-side economy, the solution is to acquire organic supply through a self-service platform; Airbnb, Inc. Class A's strong brand can bring strong traffic to the self-service platform for suppliers. Regarding the challenge of cross-selling high value-for-money products, the bank believes that Airbnb, Inc. Class A can create a powerful "post-accommodation purchase" experience in the application. However, although the bank believes that Airbnb, Inc. Class A is capable of addressing key challenges in the experience market, it is expected that by 2027, this will contribute little to NEB or GBV growth.