travel

The concert travel business, once a reliably modest slice of the estimated global $25 billion concert industry, is being primed as a potential growth category as promoters of all sizes look for new revenue sources to offset rising costs.

As the pandemic has receded and the demand for live entertainment has blossomed, inflation and scarcity have driven up expenses across the board, and the resulting rise in ticket prices is unlikely to cool soon — a recent report from the American Bus Association cited a driver shortage as part of the reason for higher costs and concluded another 7,300 drivers would need to be added to the 28,000 tour bus drivers now working just to meet current demand.

With already tight margins squeezed further, concert promoters are looking for new revenue streams. “Many are seeing the economic impact their events create within their community and realize they’re not participating in that upside, despite taking on the bulk of the risk with their event,” explains Daren Libonati, co-founder of Las Vegas-based Fuse Technologies, which partners with concert promoters to source and sell accommodations and VIP upgrades for their events.

Libonati, a longtime Vegas event veteran who has served as an executive at both MGM and the University of Nevada Las Vegas, wants to help music event organizers unlock “travel per caps,” a twist on the phrase “per caps,” the concert business measurement of the spending on food and beverage per patron at an event. Tapping into travel spending could unlock major value. A March study commissioned by Live Nation found that its marquee Lollapalooza festival generated $270 million for Chicago last year, with fans spending $48.5 million on hotels and over $80 million on food and beverage.

Libonati is just one of a half dozen entrepreneurs who believe that event producers who draw fans from around the world to festivals and concerts should share in the hotel and hospitality revenue those fans generate. These entrepreneurs include Live Nation CEO Michael Rapino, whose company announced a new travel and hospitality firm, Vibee, in April, which is producing a premium cruise based on Electric Daisy Carnival called EDSea and was behind a Resorts World hotel takeover during the flagship dance festival in May. They’re bringing new ideas to market just as two of the biggest players in concert travel have either gone bankrupt or pulled out of the music travel industry.

Pre-pandemic, three types of businesses were involved in concert travel: destination festivals, mostly in Mexico and the Caribbean; high-end packaging as an add-on for domestic events; and music-driven cruises.

Demand for music-driven cruises has been stronger than prior to the pandemic, but those packages are difficult for promoters to make substantial margins on because of the high fixed costs of chartering vessels and hiring crews, as well as the pressure to keep prices low against competing cruise lines.Hotels have lower fixed costs than cruises and come with different expectations: Customers are used to paying a premium for hotel inventory during periods of high demand. That was what helped drive the success of two of the biggest concert travel companies during much of the last two decades, CID Entertainment and Pollen.

CID focused on creating destination events like Luke Bryan’s long-running Crash My Playa at Riviera Cancun in Mexico, as well as travel packages similar to those it put together for the Grateful Dead’s 2015 Fare Thee Well concerts in San Francisco and Chicago. Pollen helped expand hospitality and VIP offerings for events like Bestival, a four-day event held in the south of England.

Pollen, founded in 2014, raised over $200 million from venture capital investors. But the pandemic stalled business, and a series of last-minute cancellations — including a January 2022 J Balvin event in Cancun — cost the company dearly. By October 2022 Pollen had collapsed, owing nearly $100 million in debt.CID Entertainment, launched by Dan Berkowitz in 2007 and purchased by a private equity group in 2016, was merged with a number of sports travel companies in 2020 and eventually sold to entertainment conglomerate Endeavor, where it operates as OnLocation and focuses mainly on big-ticket sporting events like the Super Bowl.

With CID Entertainment and Pollen out, companies like 100x, which Berkowitz launched earlier this year, and Fuse see a gap in the market they can fill. Fuse has been racing to expand its white-label software systems, which make it easy to tack partner hotels and add-on VIP events to a festival’s website for sale, divide revenue and handle credential management and verification through an integration with the ticketing company. The revenue lift from packaging and bundling these items with ticket purchases would then be split with promoters.

Live Nation has made the fastest inroads into the space with Vibee. It launched as both a facilitator of high-end destination events, like the Nov. 9-12 Chasing Sunsets festival in Cabo San Lucas, Mexico, headlined by Tiësto with prices (tickets and hotel included) ranging from $999 to $3,259, and an entrant into the hospitality business for Live Nation’s traditional headline concerts, offering hotel packages paired with VIP upgrades for U2’s U2:UV Achtung Baby shows at the MSG Sphere in Las Vegas. Those packages have already yielded a $20 million boost to revenue from ticket sales for Live Nation and its partners at the Sphere and the Venetian hotel, Rapino explained during a recent investor earnings call.“Vibee is a product where we looked at OnLocation and CID and others that were doing it,” Rapino said. “The challenge these other companies have is the expensive part: the rights. We don’t have that problem.” He added, “These are our rights. We can do it in-house. We don’t have to outsource it and split any of that upside with anyone else but our own businesses.”

That leaves the rest of the sector competing for non-Live Nation events, which by some estimates equals 40% to 50% of the business and billions of dollars in potential revenue. Berkowitz has not yet revealed his plans or business strategy for 100x, while Libonati says that for now, Fuse plans to focus on creating add-on packages for existing events.

Can either firm make enough money to survive without also operating as an event promoter? It will take the right combination of scale and volume, but given the rebound in travel spending across the board — and engagement of dedicated fans — it seems possible.

Danny Robson, co-founder of management firm Leisurely, believes the answer is yes if the artist controls the event. Robson’s client Rüfüs Du Sol sold an impressive 8,000 tickets for the Australian EDM trio’s Sundream festival — a four-day event in San Jose Del Cabo, Mexico, where prices ranged from $700 to $2,000 per person — without a promoter or any outside help.

“The same changes in the business that make destination events lucrative for promoters,” Robson says, “also make these types of events profitable for artists interested in cutting out the middleman.”