Viator comes of age, but will hop-on for global expansion

Formed in 1995 in Sydney, Viator, with its Paris Chocolate and Pastry Food Tours, as well as the traditional Moulin Rouge gawking fests, is all grown up.

Headquartered in San Francisco, with regional offices in Las Vegas, London and Sydney, the privately held global tour and activities provider is expected to do about $87 million in sales in 2009.

And, that’s not peanuts for a company that acts as an intermediary for suppliers ranging from big guys like Paris Vision, but more commonly for a disparate legion of mom-and-pop ground operators around the world.

I caught up with Viator CEO and president Barrie Seidenberg, and founder and chairman Rod Cuthbert, to see where this whole thing is headed.

First, here’s some hard news.

• Viator, like everyone else who knows what’s what, is catching the mobile bug and hopes to debut an app in the fourth quarter.
• On the heels of launching native-language websites in Germany, France and Spain this summer, Viator is mulling – and probably already working on – the launch of a pan-Asian website in 2010.
• The pan-Asian website most likely would focus on travelers from Japan, Hong Kong, Taiwan and Singapore. Today, Viator’s core business comes from Americans traveling to Europe, but Viator is hoping to further diversify its customer mix.
• The company believes a next step in its evolution may be to build out its websites to incorporate more general travel information beyond activities. This might include content that isn’t always “actionable,” Seidenberg says, including information about suggested itineraries and other “things to do” at global destinations.

And, Viator, hoping that trip-planning sites like TravelMuse and post-trip management solutions like TripIt and Traxo get up-to-speed, could partner with these sorts of players and others, and provide them with such content.

Seidenberg sees a “hole” in this travel-information arena, and she points out that TripAdvisor’s compilation of things to do in San Francisco, for example, “is a little bit of a hodge-podge.” She wasn’t taking a shot at TripAdvisor, explaining that the hotel-review site probably hasn’t focused on this destination-information niche.

So, with more than 1,000 affiliates, including Priceline, Opodo, Zuji, British Airways, Fairmont Hotels, Wyndham Hotels and city websites like sydney.com.au and newyork.com, and its offerings of tour content in some 75 countries, the 14-year-long journey for the Sydney start-up has been full of surprises and erroneous assumptions.

Cuthbert says Viator was “completely wrong” 10 years ago when it thought that the bulk of its bookings would occur within the booking path of online travel agency websites.

Today, as it turns out, Viator gets about 20 percent of its business from third-parties.

Part of the reason may be because, as Viator learned, many consumers prefer to kick back and book activities in a separate Web session, well after the “stress involved” in booking flights and hotels, Cuthbert says.

The travel agency and GDS channel, too, didn’t bring the anticipated up-tick, and years ago Cuthbert berated the GDSs for the shortcomings in their UIs for Viator inventory.

On the competitive front, Amazon has its Barnes and Noble, and Expedia has its Priceline, Travelocity and Orbitz, but no strong global rival has emerged to take on Viator, Cuthbert argues.

Which doesn’t mean that Viator lacks for a fight. It has plenty of competitors and potential interlopers, including Expedia, Isango and American Holidays, but most of Viators’ rivals are regional or niche players. And, suppliers themselves may also emerge as foes.

And, of course, Viator took care of at least one regional competitor, namely LookTours in Las Vegas, by acquiring it in 2006.

Cuthbert adds that Viator has been aided in its rise by the immense fragmentation of activities’ and tour suppliers, adding that these partners generally prefer one strong manager of their relationships than having to deal with a bunch of intermediaries.

The latter statement, of course, has a tinge of marketing spin to it since activities’ suppliers are apt to appreciate the presence of a few viable distribution partners to dilute the power of a sole major player. Does anyone recall Expedia’s and hotels.com’s dominance of U.S. online hotel distribution a few years back? And, it’s nice to have both a Priceline and a Hotwire.

And, in our unofficial trend-watch here, Seidenberg says organic traffic is heading upwards, with more than half of Viator’s business coming through unpaid means. Still, the paid traffic is profitable, she adds.

Cuthbert points out that the paid-search arena is a whole different phenomenon for Viator than it is for hotels, for instance. “There are not a lot of people bidding against us and there are not a lot of fluctuations” in keyword pricing for destination activities and tours, Cuthbert says.

Back to an earlier point, I was thinking about the lack of traction Viator found in the traditional travel agency community years back, and I was wondering, too, about how the wholesale/tour operator industry views Viator these days.

So, I phoned Bob Whitley, the president of the US Tour Operators Association (USTOA), to get his take on Viator’s place in the competitive landscape.

Sadly, Whitley said he had never heard of Viator.

This assessment should not be viewed as a knock on Viator’s role as the leading online player in destination activities. It is more a reflection of a head-in-the-sand approach by some sectors of the traditional wholesaler and agency communities. [I said some sectors: There are plenty of travel agencies on Twitter etc that are modern-thinking and aware, and Mark Travel, to name a wholesaler, is doing some interesting things online and in cable TV.]

About Viator’s market position, Henry Harteveldt, Forrester Research’s principal analyst in travel, concurs with Cuthbert’s and Seidenberg’s view. Harteveldt says Viator is “clearly in the forefront” in terms of market stature, but he warns that Viator must stay focused.

“Viator is the leader of the pack but I think it will become an increasingly crowded pack,” Harteveldt says.

Harteveldt says the advent of cheaper technologies and advances in payment systems may propel competitors who can expand more rapidly than Viator did in its climb.

And, Harteveldt believes that Viator should not short-change that so-far disappointing OTA booking path. Viator should ensure that it doesn’t disrupt the hotel and flight booking path on OTA sites, but it should keep potential customers informed that tours and attractions await them further upstream.

Says Harteveldt of the OTAs and Viator: “You don’t want to get between the dog and the supper dish, but you want to let the dog know what’s available for dessert.”

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