kayaking
761 days ago
 

Yes! Time to enjoy the bounty from the technology-led tour and activity sector

NB: This is a guest article by Rod Cuthbert, founder and chairman emeritus at Viator.

The news that European startup GetYourGuide has secured $2m in funding (and from an impressive list of travel-savvy investors) should be welcomed by incumbents in the tours and activities marketplace.

That statement, coming from the founder and former CEO of Viator, the dominant player in the space since 1999, may surprise some readers.

Some explanation, then, is in order, though not before clarifying my vantage point as I write this, which is very much one of the industry observer, not having been active in Viator’s management or board for some time now.

Where we came from

Historically, the tours and activities sector had long been a poor cousin in the travel industry.

It’s been the realm of hotel concierges, specialist inbound operators, cruise companies and last-minute, in-destination bookings by harried travelers clutching their travel guides, wondering if this particular tour would be the best way to see Alcatraz, or the Palace at Versailles, or wherever.

None of those industry players saw any need to crow about the money they were making through their over-the-top commissions, and none were keen to disrupt their cosy market by embracing the internet, even when it began to play a dominant role in the booking of other travel products.

Then Viator stepped into that space – with an approach that ran counter to the advice of industry insiders – and has prospered to the point where its myriad web sites, mobile platforms and affiliate partners have served over three million customers.

More importantly, its business model is the basis for most of the activities specialists that have emerged in the last ten years.

That’s not what I would call a competitive landscape. While Viator will no doubt continue to grow and innovate in its own right, what is lacking in the broader tours and activities space is the same type of spark the sector saw some 13 years ago, but we have not seen anything near that to date.

Where are we all going

There have been, certainly, some high profile entrants with plans to turn the market on its head, but what typically follows is something that looks very familiar.

A decision to follow rather than innovate leaves these entrants playing catch-up, making it hard to gain real traction. It’s perhaps too soon to say whether GetYourGuide will follow that same path.

Let’s hope not: this is a sector with untapped opportunity that will truly benefit from new players with imagination, the courage of their convictions, and the funding to back their plans.

It looks like GetYourGuide has all those things, so it would be sad to see those crucial assets wasted on a “me-too” approach.

PhoCusWright, in its 2011 report on the sector, said:

“US travelers spent $26.8 billion on activities in 2009 … The travel activities market is nearly twice as large as the car rental segment and larger than cruise and packaged travel combined.”

And the report was only talking about US travelers, not the Europeans (who travel more often) or the Chinese (who don’t believe in “free time” on vacation) or the millions of newly-minted middle-class travelers from the sub-continent (who are on their way to the Moulin Rouge, Alcatraz, Stonehenge, Kakadu and Luxor as you read this).

As new entrants become established and grab their own slice of that enormous pie, established players need not fear of their own slices getting smaller.

As more travelers enjoy the benefits of advance bookings the unavoidable laws of supply and demand take hold, decreasing the pool of available tickets available for last-minute, in-destination bookers, leaving more and more frustrated travelers saying “we should have booked that before we left home”.

If you’ve had that experience yourself you’ll know it’s a lesson you only need to learn once.

So good luck to the team at GetYourGuide. This is a big space and it needs new entrants, with new ideas, plenty of money and enough energy to push the market in new directions.

And that’s good for everyone.

NB: This is a guest article by Rod Cuthbert, founder and chairman emeritus at Viator.

NB2: Kayaking image via Shutterstock.

 
 
Special Nodes

About the Writer :: Special Nodes

Special Nodes is the byline under which Tnooz publishes articles by guest authors from around the industry.

 

Comments

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

  1. Deepak Jha

    Thanks to Rod for bringing the spotlight again to the category…and congratulations to GetYourGuide on securing the funding.

    We have had quite a bit of buzz lately with a number of new entrants joining the bandwagon. Most of the points about the large opportunity waiting to be harnessed, reluctance or inability of big travel companies to do so and the role of technology led innovation have been repeated on every occasion.

    While the macro opportunity is exciting, the category is also notoriously hard to make a scale-able business, reflected in the reasonably small sizes of the leading companies in the sector.

    We at isango! have had to challenge a lot of conventions about how things are doing in the sector and innovate our way to deliver sustained triple digit growth over the last 3 years, perhaps, the strongest growth among the companies of any considerable scale.

    Having said that, there is still a lot to be done to make an impact in this $150 bn global market. It will require a game-changing level of investment and innovation to have the scale and impact worth being proud of. We are working hard towards isango! being that game changer. Frankly, the sector is large enough for a handful of players to have significant scale.

    Deepak Jha – VP Commercial – isango!

     
  2. Anonymous

    Nice post Rod but it does sound like Viator has given up on having an impact on the sector and relying on GYG to do so!

     
  3. 'Follow the blooms': GCSC tour includes gardens in Holly Hill, Santee | Travel Community with Digital Store

    [...] and activities marketplace. That statement, coming from the founder and former … Read more on Tnooz No related posts. Posted in Latest News Tags: &#39Follow, blooms&#39, gardens, GCSC, [...]

     
  4. Johannes

    Thank you, Rod, for your kind words. We share your conviction that this is a gigantic market opportunity and great technology will be the key to seize it. Rest assured that we will continue to innovate and push the boundaries of what we think of as the holy grail of online travel.

     
  5. Yulian Patzelt

    Nice article Rod, love the “this is a sector with untapped opportunity that will truly benefit from new players with imagination, the courage of their convictions, and the funding to back their plans.”

    Getyourguide is doing a good job and congratulations on the financing round. However, $2m is just not that much in Euros and I am curious to see how they can deal with multilinguality. So far only one of the new entrants has shown they can do multilinguality. Absolutely agree Daniele, you are totally right adding #4 customer care.

    Exciting times ahead of us and the market is large enough for a few big players.

    Best
    Yulian
    Disclosure: CMO Excursiopedia.com

     
  6. Mike

    I am missing any ethical statements from the tour sites.

    Viator and Getyourguide seriously make money offering tours including bullfighting where people celebrate the slow and senseless killing of an animal calling it a tradition while it’s nothing else than blood hunger.

    Also, instead of promoting Elephant trekking tours you could inform your visitors how the will of these once proud animals is broken to entertain tourists and how they can make in change in not booking such tours. The Elephants in Thailand at a trekking tour that you also offer were one of the saddest things I have ever seen. Inform yourself about phaa jaan, the only reason you can make money off the Elephant trekking tours.

    What about offering tours in the Faroe Islands so people can enjoy taking part in the Grindadrap. I am sure you can earn a dime with it.

    It’s 2012, wake up and start to make a point and stop making money off helpless creatures.

     
    • Lynn

      Amen. The plight of the elephants used for “entertainment” is appalling, and phaa jaan is horrific beyond belief. Do NOT ride them. Please.

       
  7. Daniele Beccari

    Ken – how about factor #4: Customer Service?

    Most startups I’ve seen in this space failed to see this sector needs real humans.

    DB

     
  8. Ken Frohling

    Hello Anonymous –

    You make an interesting point. There have been several companies come and go with several different models – content aggregators, social media travel companies, intelligent search, group travel and trip planning sites to name a few. Viator powered some of them, GetYourGuide powered some of them, some went it alone and, well some of them just had no “power” whatsoever.

    However, it is more than just aggregating content. There are really three factors to tackle here: Supply (getting the content), Display (making that nifty front end you mention) and finally Demand (getting bookings). Most of those flame-outs have done either #1 or #2 or maybe both, but never quite got to #3. Bottom line, if you don’t have customers, it does not matter how many suppliers you aggregate or how flash your site is – you won’t last long. Perhaps that is why the small guys flame out, but the big guys continue to step into the market by partnering with a company that has done all three. Viator has over 2,500 active partners. GetYourGuide has landed some impressive deals in Germany and beyond. Other players have also landed valuable partner deals.

    The bullish message of Rod is correct. The market is large and growing. It is not only innovation and maybe a few fresh ideas that we need to see more of, but also wider distribution and a broader acceptance of the activity market by ‘mainstream’ players as well.

    Ken Frohling – VP Business Development – Viator
    (not Anonymous)

     
    • Anonymous

      Ken, you make a good point about traffic. Phocuswright says the demand is there – Rod quotes the financials in this piece – so it’s kind of chicken-and-egg, isn’t it, but with demand-and-supply instead.

      Good supply (and yes, a decent display) attracts demand. Mostly what I see in this sector is demand only met by nifty display without much supply. There is lots of opportunity in this sector but I wouldn’t say there’s much bounty for the customer just yet.

       
  9. Anonymous

    I’m not nearly as bullish on this segment as Rod is. Viator had first mover advantage and has been smart enough to keep their share up and evolve as the market has evolved, but I’m less than impressed with the rest of the players in this space.

    Lots of “innovation” awards and loads of cash have been thrown at countless B2C start-ups that have made a lot of noise about making shopping for tours and activities better for the consumer, but they haven’t addressed the real challenge of aggregating content. I’ve lost count of the flame-outs and pivots in this sector because companies built a nifty front end but couldn’t manage the heavy lifting of managing supply.

    This segment will remain immature from a distribution standpoint because players in it still hold onto the belief that a great front end will solve the problem, and VCs and other funders (say, celebrities) don’t want to hear about the money needed to do the hard work on the back end.

     
 
 

Email

  • (separate multiple emails with commas)
  • (optional)
  • (optional)
  • This field is for validation purposes and should be left unchanged.

Newsletter Subscription

Please subscribe now to Tnooz’s FREE daily newsletter.

This lively package of news and information from Tnooz’s web site provides a convenient digest of what’s happening in technology that drives the global travel, tourism and hospitality market.

  • Cancel