Green (a tweeting CEO with a tech background), after bemoaning how the business was insular and fragmented when she took over, wants her strategy to revolve around, well, technology and thinkers from the outside.

She has previously stated she wishes to move online bookings from a current level of 33% to 50% across the overall business.

Ultimately the objective is an “omni-channel distribution strategy” (no, I have no idea what this means either).

Assisting Green is a newly formed Digital Advisory Board. The group (made up of “gurus”, as Thomas Cook call them) is there to help configure and execute this strategic objective.

Although many media pixels were spent last week talking about the new strategy, there seems to be very little public meat on the bone.

But what is clear is that the brand is ready for some risk. Just executing 5% or even 20% better than its nearest competitors will not be sufficient.

Hence instead of being a “better and bigger Expedia” (it’s previous mantra), Thomas Cook should aim to be where Expedia will be in five years time, and get there first. That is how you win.

Now, I haven’t been asked to be on the Thomas Cook Digital Advisory Board, but if I had, here is what I would be suggesting:

A new mindset

I spend a lot of time with travel startups. We know that a very low % ultimately succeed. But this is not through lack of ambition or attitude.

Throughout my years working in hotel chains, airlines and leading tour operators, I have rarely met so many people as passionate and entrepreneurial as people I meet within travel startups.

What Thomas Cook needs is an infusion of these qualities into its regular technology teams.

Travel startups have a corresponding need. Many struggle to get access to data they need to power their businesses. Many struggle because they have limited real industry experience, so are solving problems that don’t really exist, or have already been solved.

They need real time working within real company environments to learn a few core lessons. But they don’t want to be employees.

So how about bringing these two together. Both need it.

Thomas Cook should have a travel startup scheme. Bring in a number of two-person teams; pay them a salary for 12 months; give them access to the Thomas Cook data (product, bookings, customers etc); give them some seed funding perhaps in return for a low portion of equity.

Let these startups innovate on the data. See what they come up with.

They could probably attend internal meetings – brand, marketing, distribution, ecommerce, retail and pricing. Let the internal knowledge rub off on the startups, lets the startups aptitude rub off on the internal staff. Invite the startups onto the Digital Advisory Board.

Ultimately, some of these startups will come up with great ideas and technology solutions. Others may find that they are not really wishing to pursue an entrepreneurial lifestyle, but many of these will probably, having been exposed to the Thomas Cook internal processes, make great new employees.

Either way, Thomas Cook will win.

In-destination

Next, Thomas Cook needs to win “in-destination”. Expedia, Booking.com et al are performing very well nicely on the “where you want to go” element, but Thomas Cook can win with “welcome to destination ABC”.

We know TUI Travel is investing in this area (with its acquisition of Isango), so what could or should Thomas Cook do, beyond just having lots of fun, kerzaee and, obviously, helpful reps kicking about in a destination.

I would first take a look at the person-to-person tour and activity marketplaces for inspiration. SideTour, Vayable, Gidsy, Peek and TripBod are trying to show how you can present a destination, via commission-based products, but in a non-mainstream way.

But most of these are small businesses – they have long tail product in long tail destinations.

Instead, a big brand such as Thomas Cook can invigorate one of these companies. These companies could move to providing long tail product in mainstream destinations…  Thomas Cook can give them the consumer volumes to make their models work at scale.

Thomas Cook, by getting ahead of the in-destination curve, can bring the market towards them rather than try to out-execute competitors in the tired, outbound travel model. Risky, but a risk worth taking.

High street

No strategy is complete without a solution a what do do with the network of offline retail travel agents that Thomas Cook has under its tutelage.

Now, these people are golden. But no doubt they are being used incorrectly.

High Street (or Main Street, for US readers) travel agents have expertise in three areas:

• How to book (and find the best price)
• The product
• The destination

For too long travel agents have traded on their how to book expertise. When you talk to a travel agent and they understand how to comprehend and fix the following…

“…an uneven exchange of two conjunctive tickets, with a ticket time limit problem that an airline was able to override but yet I still got an ADM on the WHOLE ticket…”

…I generally say “WOW!”, that’s great.

But the web arguably makes this knowledge obsolete. Computers solve this particular problem better (or, if computers can’t fix it, efficient human in a centralised support centre should be used rather than humans in expensive high street retail locations).

But what these high street travel agents do have is great product and destination knowledge. So they need to be retained.

However, these travel agents are working the wrong hours in the wrong place. Move them to web-based working. Move them to early evening, ready to have one-to-one web conversations about particular products or destinations.

If, at a national level, Thomas Cook has 50 people who are experts in European families going to Mexico, get them in a marketplace system. When the customer comes online and expresses an interest in going to Mexico with their family, get the best person online there and then.

Technology can do this.

Humans are key to driving conversions (or just reassuring question-laden consumers). But they don’t need to do the actual booking.

For too long travel agents have been rewarded by commission, which comes from entering a booking. Instead, innovate on how to reward travel agents product and destination expertise.

Create human product and destination specialists (rather than booking generalists) and let web technology deliver that expertise to the customer at the right time.

Summary

When everyone thinks you are down and out, you are free to take risks. Thomas Cook is in a great position as risk-taking comes with very little executive downside.

Just executing better what everyone else is doing won’t be sufficient. I look forward to seeing what they come up with…

NB: Guru laptop and Outside box images via Shutterstock, Thomas Cook rep via TripAdvisor.

They tend to have wonderful websites that entice product suppliers to spend multiple hours adding tour descriptions to their system but, frankly, for bookings that will never come.

One outcome of all this is that it poisons the well.

It is harder for the companies that are trading well to convince a supplier to yet again spend 20 hours or more configuring their business with your service, whatever your merits.

In the same vein last week I participated in the OpenTravel Alliance‘s Travel Traction event during ITB Berlin (backed by Travelport). The well-attended event was focused on travel startups and their potential needs from the industry they are attempting to work in.

Senior research director at PhoCusWright, Douglas Quinby, started by presenting some numbers. Of the 528 startups the company is  tracking, taking over 2.6 billion USD of funding, 8% have been acquired (between 2005 and 2012) while 8% have closed.

Many of the rest are just what I call zombies, or are following the tough path to success (or mediocrity).

What followed was a panel with a good discussion around simplified access for startups to GDS airline data. However, simplified access may create unintended consequences.

Startups need to fail

By retaining the somewhat expensive data access approach currently used by GDS companies this creates a barrier for startups as real money has to be changing hands to keep the startup alive. Only the toughest will therefore keep going.

Yes, data access fees should be reduced – they MUST be affordable to a pre-funding individual who wants to innovate – eg. $600 a year. Not free, but not $10,000 a year either.

Additionally this data fee should be payble on a monthly subscription contract with immediate cancellation ($50 a month), acting as a heartbeat and sending a signal to the GDS (and other partners) that the startup is still trading and has an ongoing need for the data.

Annual payments never give sufficient accurate insight whether the startup is still performing well or not. Regular payment will enable the startup to perhaps play for a few months without incurring larger costs.

The outcome to this approach is that the startup stops paying for the data then the site will go down.

Great! No more zombie startups!

Instead we will have fewer, but stronger startups. And this (sorry, Tnooz and for your TLabs Showcases) will be better for everyone.

NB: Zombie image via Shutterstock.

However my instinct is that there are certainly less entrepreneurs with travel startup ambitions than in recent history (2011/2012), let alone those ready for going for Series A.

I can think of several reasons why this may be the case:

1. Joining a big company now more attractive than before

Got a great idea for a new hotel search? Larger companies who already have access to the necessary hotel product data (and associated supplier relationships) are out there looking for new blood who can bring in fresh ideas.

Certainly an attractive proposition for potential entrepreneurs versus the long slog towards profitability that setting up your own business can require.

2. Become a professional travel blogger

Got a passion for travel and being self-employed? Instead of forming a travel startup go and set up a travel blog.

It requires many of the same skills as running a travel startup except you don’t have to disrupt anything, or fix anything, to create a viable income flow.

I am sure some would-be entrepreneurs have taken this route.

3. Barriers to entry are rising

It is becoming increasingly hard for bootstrapped, unfunded travel startups to get to the point of building consumer traction sufficient to take larger investment.

For example, you could have some form an innovation on how consumers search for beach holidays. (eg. Beachscape… TLabs here).

BUT now, in order to expose your innovation, you have to build an entire business – product contracting, customer service, SEO and B2C marketing.

Uh-oh – massive barrier to entry problems. Certainly will put some potential entrepreneurs off.

So, some alternative approaches

If you still DO want to continue with your own path then various options are open to you.

First you have to think about whether you really want to work within the existing flow of the industry or whether you are looking to disrupt it in some way.

If you want to work within the existing industry constraints then you can go to an incumbent product supplier and take their data feed (with their permission).

Great – except they will only work with you if you are giving them bookings NOT if they think you are going to disrupt them.

If your ambition is to be acquired by your data provider, innovating on their data is probably not such a bad idea.

You may find, as a standalone innovative company, you may be able to circumvent their internal politics and bring something to market several years before they can. Go for it.

Create your own data

Instead of relying on someone else’s data it seems that most “industry changing” entrepreneurs are actually in the data creation business.

This isn’t right for everyone – for example, Hipmunk focused on innovating using someone else’s data.

But for companies like AirBnb, creating its own data (home-owners willing to rent their space) was mandatory to unlock the opportunity it saw.

Data traction

This brings me to the key point. If having your own data is so important to the success of a travel startup, then why are we all so focused on consumer traction?

Ultimately the consumers belong to Google, Bing et al and the online travel agencies/metasearch companies, so unless you are looking to join them, let them worry about consumer traction while you focus on data traction instead.

Going back to the Beachscape example. Perhaps instead of innovating on UI and user experience around consumer facing beach holiday searching (and building the big surrounding business this will require to get traction) they should be providing a data API with a “beach score” for each beach resort hotel.

Would OTAs license that?

They probably would as long as the data was cheaper than what they could create it for, there was a return on investment (ie. it actually does something useful for them or their consumers) AND that they could build competitive advantage on top of the data (so not every data customer got the same benefit).

So is this hypothesis right? Is data traction more important than consumer traction? If so, why do we hear so much in the business media about consumer traction and not data traction?

Hummmm…

NB: Traction people image via Shutterstock.

This adrenalin-fuelled grand tour of long days—and even longer nights—can be a real drain on financial and mental resources.

To let you spend more time schmoozing (or sleeping), here is a quick guide to what is often discussed in travel industry panel debates.

With this little guide you can pretend to your boss (or your colleagues) that you really were paying attention rather than sleeping in the back row. Just hope your boss doesn’t read Tnooz too

The main debates (not necessarily in this order)

1. Innovation vs it works perfectly well now, thank you

You will hear the innovation word a lot. A LOT. No one really knows whether innovation is better or just different. What most of these innovation debates miss is feedback from the part of the industry that the innovation is meant to eliminate or simplify. Simple rule: If the innovation has been created by a twenty-something-year-old and aims to eliminate part of the industry they have never worked in, the innovation will fail.

2. Travel bloggers vs travel writers

Yes, this debate is ENDLESS. According to travel writers, travel writers create well researched, independent articles, while travel bloggers don’t. Travel bloggers don’t share that point of view, obviously. While those two groups fight it out, most of the travel destination content created by companies within the travel industry will continue to be actually written by interns. You won’t see an intern on a panel, though.

3. Data centres vs cloud

Cloud! Cloud! You must be using cloud technology! But turns out that cloud technology is really just a data centre susceptible to all the same problems normal data centres are.

4. Local vs global

You will hear plenty of mention of the L-word on travel panels. Local tours, hiring locals peer-to-peer (P2P), partying with locals, eating with locals, and arranging for local transport. All you need to know is that global is “local that has scaled.”

5. P2P vs businesses

Expect P2P (e.g., peer-to-peer accommodation marketplaces like AirBnB) to receive plenty of airtime. Are hotel chains worried? Maybe, but probably less so than regional tax inspectors. Don’t expect sensible debate from industry insiders as they would often prefer AirBnB and their ilk to just disappear. Instead expect stories like, “When I stayed in AirBnB in Berlin for ITB, my room was plastered with Justin Bieber posters.”

6. Standards vs chaos

Oh travel distribution conferences never pass without a good old ding dong about standards. Standards theoretically make the world a better place. Turns out travel technology companies either want standards (because that can help them catch up market share vs a larger competitor) or don’t want standards (because they want to continue selling expensive systems to suppliers and standards would weaken the value of that market).

7. Agents vs the web

Probably one of the most confusing types of panel debate you can go to. After all, agents are on the web, right? Most debates end up by saying companies should consider what can be automated and what should be made efficient (because the human still adds value) If you go back to your boss and give that clever answer you’ll be fine.

8. Responsible tourism debates

Travel industry executives who spend half their lives jetting to industry conferences all around the world really want to talk about their “green” credentials in supporting low-carbon, environmentally friendly travel. Yes, that makes a lot of sense.

Any other regular debates I have missed?

Hot tip: Do you know about the iPhone app Who’s Where When? as covered in Tnooz Tlabs earlier in the year.  The ideal industry conference companion app. Pretty much a must-install.

NB: Battle image by David Barrie, via Flickr/Creative Commons.

We can talk using academic terms such as idle assets and distressed inventory but ultimately running a successful marketplace comes down to three factors:

1. Price – are the tours/activities selling at the right price?
2. Supply - is there sufficient product available to book?
3. Demand –  is there sufficient consumer exposure to make the product sell?

I am going to analyse each of these factors one by one:

1. Price

a) Entry fees

In some areas of the world licensed tour guides receive free entry to their local visitor attractions.

When a consumer buys a service from a P2P marketplace providing unlicensed guides the consumer has to pay for both their entry to an attraction AND the entry for their tour guide (who has to pay to enter just like anyone else).

This pushes the price up.

b) Commission based tours

The pricing model that we consider common in the West is not the same globally. In the Far East for example it is common for a tour guide to pay to host a tour.

The guide then earns their money from commission from shops that the guide takes the visitors to. (The dreaded carpet shop visit!).

The Hong Kong Travel Industry Council has described this tour pricing model as “a scourge” and the source of most visitor dissatisfaction. China outlawed (in 2009) the practice of selling tours at below the cost of production – but the practice continues.

NB: Do read “Day tour itineraries: Searching for the balance between commercial needs and experiential desires“, an academic paper by Cora Un In Wong and Bob McKercher, for further insight into the impact of commission based tours on local tourism (and source of my details above).

Summary:

• Pretty clear that selling on price “buy P2P because we are less expensive than a commercial tour” is, long term, not going to be a winning strategy. Consumers will believe they are on a tour subsidised by commission.

2. Supply

Individuals don’t want to be over burdened – remember these are people who enjoy showing visitors around their locality – its not necessarily their business.

If they wanted to setup a business they would be a local tour operator (with 5 or so employees) as that size of economic unit works more efficiently (to cover marketing costs, staff organisation, variety of tours & services on offers etc).

Doing a quick back of the envelope calculation – a travel startup needs, say, £250,000/per year to pay for marketing, staff costs, office etc.

Each tour sells for approximately £100, of which they keep about £7. The P2P marketplace therefore needs to handle about 36,000 bookings a year to break even.

IF the individual only wants to run a tour once every couple of weeks (26 times a year) the marketplace now needs 1400 active individuals. If they are only booked monthly the marketplace needs 2,800 active individuals.

Is this number realistic?

Because each active individual is creating their own tour or service you now have hundreds of long tail services in each leading global city. This creates a user interface design challenge (to create differentiation between them all).

Summary:

• Going to be difficult to create sufficient supply to enable a deal with say a leading OTA – who may send hundreds of people to a leading European city on a daily basis. What you really need is bunching of tours around the more mainstream product types rather than hundreds of difficult to differentiate long tail tours.

3. Demand

Most P2P marketplaces are taking 10% off the individual (some go as high as 20%, however).

Around 10% isn’t sufficient to share with travel industry partners upstream who may have the consumer traveller demand. This percentage is also too slim to effectively run a Pay Per Click advertising campaign.

This is because tour keywords are bid up by multi-day tour operators advertising on the same themes – enabled by higher value transactions giving them greater PPC budgets.

Distribution also requires dates (so you can pitch a particular experience to someone who has booked a flight to London arriving on the 1st of August).

Summary:

• Can you convince 2000-3000 individuals to keep their availability calendars accurate? Having run extranet type tools in tours and activities it turns out this is quite a challenge even with professional tour companies who have staff! Not sure individuals will do this. This will lead to over booking and other consumer issues. Painful.

Looking ahead

I think four outcomes are likely in the long term.

a) Tours & experiences offered by professionals

Sites will have a smaller number of tours but each tour will offer a large selection of available dates.

This reduces the user interface search / suggest issue (by keeping the tour number down), keeps supply up (by having many dates on offer) and ensures that all suppliers are actively engaged (as they are all receiving constant booking flow).

An example of a site following this model is SideTour [New York].

b) P2P marketplaces will go local to local

The 10% revenue model works fine IF you have a high rebook factor (i.e. you have a marketing cost once to acquire a customer, rather than a cost to acquire a booking with no subsequent transactions).

Locals buying from locals tend to have a higher rebook factor than tourists / visitors – who may only book a trip once every 6-12 months. Hence it may be attractive to angle a service towards locals buying from locals.

However locals buy different tours and activities to visitors and tourists (locals want workshops, new unseen experiences – visitors often want to see the main sights).

Hence these P2P marketplaces may end up being considered outside of the travel industry. An example of a marketplace that looks like it is selling local to local is Gidsy.

c) Single experiences with multiple individual suppliers

The marketplaces may follow a model that closer resembles an existing tour guide business. They may have 20 great things to do in a city – and 100 local individuals – all of whom each deliver a subset of the 20 tours.

Now you have a simplified user interface (not too many undifferentiated products), constant availability supply on the tours you are offering and the ability to focus the tours on areas that consumers are buying (ie. the marketplace is now in control of product creation rather than the individual).

No one doing this yet

d) Race to the bottom – more negatively

If P2P marketplaces end up with a reputation for having tours that are sold below market price – as a result of receiving commission from shops – consumers may become wary and stay clear. No sign this is happening yet.

Certainly going to be interesting to watch this all play out over the next few years. I have my popcorn.

NB: Economics lesson image via Shutterstock.

Perhaps.

At least that is what dozens of sites out there are trying to achieve – inspire people to travel, where are the cool places to go to make dreams a reality, etc, etc (to use some marketing-speak).

But back at the end of April I wrote about how hard trip inspiration is. That post kicked off a great debate!

So, perhaps we are all looking at the problem the wrong way? Indeed, do you need a website to suggest that you ought to visit Agra or hike in the Rockies?

Even if such a website were to be useful to a consumer, monetising it would be a challenge as the “inspiration point” is so far ahead of the booking period (could even be measured in years for big ticket trips).

Perhaps then the goal of these websites should be motivation not inspiration. Trip motivation starts just after the inspiration phase and involves getting the traveller to get off their butt and go, rather than sitting around dreaming about it.

Because the site usage point will be during the booking period, product based monetisation may work (eg. selling travel services like flights, hotels, tours etc).

How would I design a website focussed on trip motivation?

The first piece of important functionality will be for the user to upload their so-called “bucket list”. This could be the top ten places to go or the activities they want to experience.

A few websites have already gone down this route – mainly using images (TravelAvenue, Qiito, GetSplash). Google Schemer, which launched in December last year, on the other hand uses text only. This needs to be a fun process, as this will take at least twenty minutes or so.

Now the service knows that one of the trips on my bucket list is to “backpack around the Cape Verde Islands going between the Islands on the old ferries”.

So far so good. But what else?

Social elements

It is 2012. The website needs a social element. Lets see what Google Schemer is doing…

Firstly my Cape Verde ferry trip… Sadly none of my Google+ friends share my desire for this trip. Never mind!

However one friend, who handily runs a travel agency, has provided some web links for some flight prices. Has that motivated me? Not really. But helpful, thanks Stuart!

Google Schemer has a little more success with my desire to “Eat at The Fat Duck restaurant”.

Now I can see that three of my friends want to do it! Great! With a single click I can “rally” these accomplices via a post that will appear on Google+. Will that increase the chance of it happening? Hummm – not convinced.

For a restaurant meal this functionality is perhaps reasonable – I would be happy (indeed delighted) to spend an evening with friends. Does that mean I want to travel with them? Or, probably more importantly, would they want to travel with me!

Quoting Mark Twain:

“I have found out there ain’t no surer way to find out whether you like people or hate them than to travel with them”.

Non-social functionality

With Twain’s quote ringing in my ears, I am not convinced that social-based trip motivation will quite work as planned. Instead motivation needs to be personal.

For example – say I am considering a two-week trip in six months time. What would motivate me might be:

• Regular updates once a week about the destination (eg. something to read while eating lunch at my desk) – including perhaps a weekly quiz (so the trip motivation service can check that I am actually engaging with the content)
• A “Mr Motivator” – who I can chat to on Skype for 30 minutes – and we can dream and plan together…. they don’t necessarily need to know the destination but can just be a good chatter.

Now this is going to require quite an amount of personalised content management. It could well take someone several hours to create all these updates and quizzes for my enjoyment and infotainment.

Would I pay for that time? I think I would, people pay for glossy magazines so people will pay for this. It’s escapism with a purpose.

We can use crowd-sourcing to obtain this content. Just like Stuart added information about flights to my Cape Verde trip on Google Schemer, others will enjoy helping people plan and dream about future trips. Could even gamify this aspect with points and a public ranking system.

Summary

Do you agree that fixing trip motivation is a stronger approach than fixing trip inspiration? Will we see a new category of travel startups based on this?

NB: Inspire travel image via Shutterstock.

If you can only make someone WANT to go somewhere, then you can sell them the flight, the hotel, the tour, etc. So the theory goes anyway.

Historically, trip inspiration was left to travel magazines and photographers. Online players focussed on solving problems once a consumer has decided “how do I get from A to B”, “where shall I sleep” etc.

But now online transaction players are paying more attention to inspiration.

No one has really got a full handle on it yet – maybe because inspiration is so individual (based on the traveller’s culture, type of trip, destination, budget, etc).

Too many variables creating too big a problem to solve.

Who can remember Expedia’s Inspiroscope from five years ago? Most inspiration tools haven’t moved on much more since then.

Maybe also the problem is that content that is inherently inspirational (a great photo, a well told story, a wonderful video) is inappropriate at converting someone to book.

Hence inspiration remains within DMO (Destination marketing organisation) territory as ultimately they don’t mind WHO you book with, just that you choose their region over a competitors.

Cycle tours

Maybe traditional cycle tour company Tour D’Afrique has a solution. Certainly worth a look. They have built a section of their website they call Dreamtours. Helping people dream is closely related to inspiration.

On Dreamtours you firstly create your dream cycle tour, plotted on a Google Map. This tour is then published on their central website. You can then sell spaces on the tour to other cyclists with a dream.

The clever part is that the cycle tour company will commercially help run the tour for you – if you get sufficient people to sign up (ie. by providing tour leadership, logistics support, support vehicles etc).

Making dreams a reality.

A fantastic combination of public dreaming and inspiration, user generated content and REAL commercial revenue to the cycle tour company.

Maybe this is how inspiration should be solved – let people dream, and then deliver the dream.

Could hotels take this approach? How about destinations?

NB: Inspiration sign image via Shutterstock.

Thus the participants in the innovation and investment competition at the annual EyeForTravel Travel Distribution Summit in London will probably be rather pleased to be associated with rather unconventional ways of finding treasure.

Four companies pitched their businesses and answered questions from judges and the audience.

Blink - Same day hotel bookings (mobile app)

Madrid-based. Founded by founded by two Spaniards named Rebeca Minguela & Alex Perez. Daniel Reilly, a former director of travel for Groupon in the UK and Ireland, presented. Undisclosed funding. 30 staff including ten interns. Currently feature 500 hotels. 85,000 consumers have downloaded the app.

Looks a well executed app however there are future challenges:

• Will it be possible to generate sufficient traction as a standalone B2C same day hotel booking service when existing hotel OTAs launch their own same day hotel booking services? (The existing players already have the hotel relationships and consumer traction)
• Blink currently offers lower pricing than available from OTAs. They achieve this because the rate parity contracts hotels are signing with other intermediaries and agents only apply to online distribution and Blink, being mobile based, should be classified as a non-online channel. Can that position be sustained long term though?

HallSt – P2P hotel room trading

Barcelona-based. Founded by Alfredo Ouro. Team of four. Currently has agreements with 100 hotels although the model doesn’t necessarily require a hotels co-operation.

One way of describing HallSt is an after market for hotel bookings. If you no longer need your room booking you can swap it for another hotel on another date, donate it (e.g. to family members of hospital patients) or perhaps resell it….

Their model would also permit you to trade in hotel rooms (Making HallSt the E-Trade of hotels) so if your understanding of a market suggests hotel prices may go up – book now and resell later. Day trading for nights.

One of the judges, on saying he didn’t quite get what HallSt is, was given the memorable reply “because it is new, sir”.

Their largest challenges look to be around:

• Marketplace traction requiring two sided growth at equal pace – for a traveller to be able to resell their room – someone has to want to buy it (via HallSt). The business will have to address how to get through the slow first few years ensuring that buyers and sellers of rooms both see benefits before the marketplace has sufficient depth and maturity on both sides.
• Working with hotels – do hotels have to permit HallSt to run a secondary market on their hotel? Or can HallSt work OK without the hotels explicit permission. What happens if hotels put up barriers (e.g. cancellation fees) as a result of Tingo from TripAdvisor? Will HallSt’s nascent model be collateral damage?

CityBot – Personal travel itinerary creation engine (mobile app)

San Francisco-based. Founded by Greg Solovyev. Team of four. Self funded but currently raising.

The primary purpose of CityBot is to suggest to a traveller what they may like to do that day. It does this by creating a sample itinerary. Travellers can then swap out individual components (eg. a restaurant meal) with other components – either from a similar category or from a new category. (e.g. change one proposed restaurant with another).

Ultimately the traveller is then able to have all the commercially provided components booked via the app. CityBot expect to receive about 15% commission on tours and activities equating to approximately $24  per booking.

Looks a great user interface execution. Challenges will be around:

• The user interface will have to become much more complex to handle booking capability (the proposed monetisation method). It is hard to keep totally elegant design when complexity is introduced. At this point the traveller may wish to book outside of the app reducing a potential revenue source for CityBot.
• Cities have different structures – for example a city with a big magnetic attraction such as Cairo (the pyramids) may have a different template for a day itinerary than one that is compact (such as New York). City specific itinerary templates are going to be interesting to research (and therefore scale)

The judges applied four criteria to their decision:

• Investment potential
• Product usefulness
• Excitement around the product
• Problem areas

And the winner?

CityBot! Well done to founder Solovyev and his team.

NB: Disclosure – my company TourCMS also pitched. We are based in the UK, have a team of 2.5 and provide a Software as a Service (SaaS) reservation system to 250 suppliers in 40 countries. As a result of running a multi-channel reservation sytem TourCMS has the data that is necessary for mobile sourced (last-minute) tour and activity bookings from mobile apps like CityBot. TourCMS secured second in the competition.

NB2: Pirate image via Shutterstock.

Or so the marketing spiel says…

More and more travel brands and DMOs are running competitions to win a dream job. Here is a recent selection:

Active now:

Viator – global tours and activities OTA

• “Your dream travel job”
• Looking for four people to shoot video in top cities across Europe and North America
• Videographers will travel in teams of two. Each team will visit roughly 20 cities in 60 days
• Winners will be provided with equipment, the cost of travel to/from the destination and upto 15,000 USD travel expenses.
• Videos will be uploaded (to Viator’s Facebook page) and users will vote. Winning team (pair) will win 10,000 USD.
• Full information

2. EnjoyEngland - national DMO

• “Fan in a van”
• 70 day all expenses paid trip, in a camper van, around England
• Full information

4. Urban Adventures – day tour operator

• “London Gold”
• Run their London day tour operation for the rest of 2012 and keep the profits you earn (!)
• You will be managing tour guides, running tours, co-ordinating the business side of things, managing the schedule and running your own tour
• Full information

Are there alternatives for brands to consider?

What about employing the services of a travel blogger – these are people who have an audience, have technical skills (audience engagement, photography, video, seo optimisation*).

Travel bloggers are crying out for opportunities to travel, write and engage on someone else’s dime. This should be right up their street so why are brands going for regular folk over travel bloggers?

Perhaps it comes down to ownership of IP – for example Viator states in its competition terms:

“Viator will own all intellectual property in reports, diaries, blogs, photos, videos and other material created, produced or authored by you during the course of the Travel Stage.”

Maybe existing travel bloggers can’t stomach that particular condition and regular folk can.

[NB: * Don't mention to travel bloggers that you hope their work will improve your SEO rankings - that is Omerta].

Or what about travel writers?

In 2010 travel writer Lara Dunston and partner Terence Carter worked with HomeAwayUK for a grand tour of the world, under the brand GranTourismo.

One objective was to promote holiday rentals as an alternative to hotels. They stayed in 36 holiday rentals over the course of the year. Lara wrote about her experiences with this new model for Tnooz.

Will we see more “win a job” competitions or will employing travel bloggers become the dominant solution for low cost, social media friendly, coverage and media production?

Or will quality count – and travel writers make a come back?

Not everyone gets it (some companies still run Hummer tours through various jungles), but still – at least in this sector – most get it.

But there are three approaches to the marketing element of what these companies do that , frankly, are just not particularly helpful in the grand scheme of things. Or, some might say, could even could be described as unhelpful.

Sadly, these three approaches are popular choices for a number of travel startups, some of whom even trade on their responsible tourism credentials.

This isn’t quite a name-and-shame exercise, but here are three tactics that the industry (and the world) could do without:

1. Not disclosing the supplier name on an intermediary website

There a couple of well known responsible travel websites that will not tell customers who they are booking or enquiring with.

This is wrong because it turns the supplier into a commodity and they can be traded off against each other (or threatened with replacement by another local competitor).

Take a Kilimanjaro expedition, for example – as inbound tour operators, there are 200+ companies in Tanzania who will sell that particular climb.

Some will invest part of the money spent with them back into the community, while others will not. It will be easier for companies that don’t invest back into their community to appear initially attractive to intermediaries as they may have more resources (time, money) to spend on their website, going to conferences, replying to email etc.

Intermediaries that are concerned that this will mean consumers will book direct (rather than via the intermediary) need to focus more on their own proposition. Most intermediaries in this position are just very dull listing websites and need to up their game to ensure that the consumer sees value by going via the intermediary versus direct.

In addition, most suppliers in this area are creating distinct experiences, and in this urge to dominate the consumer with the intermediary’s brand it damages the overall value proposition.

2. Taking advantage of lack of web-savviness of local suppliers

One problem in tours and activities is that there is a massive disconnect between the web literacy of local suppliers and web entrepreneur-created intermediaries.

In the hotel and flight sectors, if you are an intermediary and you pitch to a hotel chain, hotel manager or airline, they will invariably ask you some tricky questions which you had best be ready for.

Sadly, too many tours and activities startup entrepreneurs are taking advantage of local suppliers by wowing them with an amazing web proposition…. often sold on an upfront advertising basis.

Local suppliers buy into this because they are impressed with the sales presentation but ultimately the advertising never produces any bookings.

What a completely irresponsible way to create a new industry.

Instead, I want to see travel startup entrepreneurs solve problems that suppliers (and their customers) have. Stop selling dreams to locals in countries who don’t know better. I don’t want to see suppliers being taken advantage of.

Two practical steps that would help here:

• Intermediaries should charge on success only (this could be PPC, pay-per-lead or affiliate/agent commission). This will cut out upfront advertising based intermediaries who take the money but don’t deliver bookings.
• Intermediaries should not create environments that require massive time investment by the supplier to get started (eg. loading 50 tours complete with descriptions, dates, prices, images etc). One can argue that this ultimately is helping the small supplier BUT what has actually happened is that now many suppliers feel that intermediaries are taking advantage of them and a general level of distrust is growing that is unhelpful for everyone. Intermediaries good and bad are being tarred by the same brush. If you want a supplier’s product, you invest your own resources in configuring it.

3. Helping local individuals sell activities without understanding the risks

It is irresponsible to put a local individual into a position that exposes them (not the P2P marketplace) to uncovered risk. You can’t, just for fun, go and run a kayak trip (at least in the western world) without all sorts of insurance cover.

Suggesting to individuals that anyone can run any kind of tour is irresponsible.

This is a product specific problem rather than with P2P marketplaces in general. These marketplaces can create a positive livelihood solution for a local individual - and the risks of providing a local cultural tour are the same risks inherent in everyday life.

The diving industry provides a good example of where local individuals who guide and teach need to be trained and certified and dive business insurance to be in place. We need more of this within P2P marketplaces.

There will be a terrible legal case around this at some point soon – sadly as a result of an accident.

Summary

There you are – three approaches that the tour and activity industry could do without, at least from those suggesting they are coming from a responsible tourism perspective.

Am I right?

NB: Hand globe image via Shutterstock.

Next came $7 million funding over the course of a few months and a new focus on day tour deals. Shortly after saw it strike a deal with Google Offers and another with Foursquare.

Now it has announced Zozi Gurus, a new platform to connect travellers with top celebrity athletes and adventure-types, for once-in-a-lifetime experiences.

This is quite an evolution, but one that makes a great deal of sense.

Multi-day tours and activities remains the unconquered Mount Everest, where margins are high but intermediary-delivered conversions are minimal.

Deals have too many similar companies chasing the same suppliers and customers – so differentiation via expert-delivered experiences could be the answer.

It doesn’t come particularly cheap for the consumer, but let’s face it, so-called once-in-a-lifetime experiences rarely do. For example, $2,700 will buy you a ski experience with US Olympic gold medal winning Jonny Mosely.

From a business perspective, this latest move puts Zozi up against other VC-backed person-2-person (P2P) tours, activities and experiences marketplaces.

Why this is an interesting play

The key element here is that it that Zozi’s product is not just a ski experience, but a ski experience delivered by someone that the public would respect as a subject matter expert – an experience money could probably not otherwise buy.

One of the only other examples of a similar strategy is Sidetour – there you can also book local experiences with experts, such as a Silver medal Luge winner. Most other P2P marketplaces just have regular folk – mainly destination locals – offering tours.

One problem with celebrity-fronted experiences is the lack of supply. Zozi has its ski expert ONLY available on a forthcoming weekend in March. For Sidetour the same problem – the luge trip is only available the same weekend in March.

One-off events and experiences also cause quite a number of issues from a PR perspective.

Journalists won’t cover trips where their readers, often reading some months later, can’t buy or recreate the same experience themselves.

However, Zozi with its $2,700 experience will at least be making more money from selling the experience versus Sidetour with its $150 offering.

Differentiation and marketplaces

An ongoing challenge that faces these P2P tour and activity marketplaces is that the product does not exist independent of the marketplaces.

This is unlike a hotel intermediary where the property itself will be attracting bookings on a regular basis, so will have a highly tuned product proposition – if the intermediary can’t sell it then the problem is likely with the intermediary rather than the hotel.

Where the product doesn’t exist except for within the marketplace the product never gets the tuning required to make it a standout experience.

It could be priced wrong (either too high or too low) or just not be sufficiently wonderful to want to book, or may suffer from lack of incorporated feedback due to the low volume of real world sales.

It is also challenging to distinguish between tuning of the product description/marketplace UI/marketplace marketing and the product itself.

This problem is reinforced by the marketplaces aiming to be the anthesis of popular, mainstream, tours and activities, hence many are trying to create highly bookable popular experiences BUT without going mainstream.

Ultimately for most of these VC-backed marketplaces, going mainstream WILL be necessary in order to attain the valuation the VC investments suggest, so it will be interesting to watch how this this all turns out.

Better suited systems exist that solve mainstream tour and activity distribution challenges - Zozi might well dodge this conundrum by selling high-value, high-margin experiences rather than being low-value, low-margin like competing P2P marketplaces.

This could work.

2012 and the tours and activities sector is already hotting up nicely… lots more to come no doubt!

NB: Here is a Gurus clip:

There is always plenty of discussion (and a plea to stop) about commercialising the craft, but in order to make money there are two ways these bloggers can evolve:

• Solve consumer problems.
• Solve travel industry problems.

People pay to have their problems addressed and problems are a solid basis to form a business or maintain employment.

As a distant cousin of travel bloggers, travel startup entrepreneurs constantly strive to understand problems and so-called pain-points (with ideas and innovation being the by-product of understanding the problem with sufficient skill that they spot a commercially viable solution).

For travel bloggers it should be no different.

Here are two travel industry problems that travel bloggers could address in order to earn their keep:

1. Destination data

The future of travel websites (and services) revolves around data and building tools to understand this data and present appropriate versions of it to consumers.

Product data tends to be openly available in API form. Even review and other data is nicely standardised and able to built into a global travel system at scale without too much fuss.

But destination articles and data is hard to source that matches the brand criteria of the travel website (a luxury tour operator would have quite different demands to a backpacker website).

At this point travel bloggers and writers are often brought in, sub-contract, to research and write a handul of freetext articles about that destination.

So far so good. But with personalisation coming (increasing demands on data) and global websites wanting to give equal prominence to all destinations (requiring content from everywhere, globally, within a short timeframe) this can’t be serviced by just a few travel writers.

I want to see a marketplace system where, as a content consumer (a travel website), I say I want to know the top five spas in 100 destinations….. and 100 travel bloggers, each knowledgeable about their own specialist region, can answer that question for a small fee.

Quickly, I have sourced a unique database of 500 spas that I own the IP to, written up in my brand style specification, based around what I need for my new service.

Travel bloggers and writers will need to become masters of destination information, not masters of prose (or link-building). There is money to be made there, but only if they collaborate via a central marketplace such as my idea above.

2. Multi-day itinerary based tours

Specialist tour operators are crying out for help promoting their products (and tailor-made tour booking services). Many of these tours are booked at 100-130 days prior to travel.

My hypothesis is that travel blogs are often read during the consumer research phase, which happens to correspond to the same time-frame that specialist tours are booked (versus, say, hotels or flights, which tend to be booked at a month or so prior to travel).

When you have travel bloggers writing inspiration oriented content and failing to monetise it, and you have specialist tour operators crying out for more help promoting their services, and both active in same 100-130 days prior to travel phase, then someone has to be able to create a business out of this to the benefit of both sides.

Any more?

There you go, travel bloggers, two clear opportunities for new startups to focus on monetising the skills and experience of the new travel blogging industry by providing solutions to the travel industry (rather than consumers).

Any other ideas I have missed?

NB: Image via Shutterstock.

• Those with grand ideas and execution to match
• Those with the ideas but where execution is not quite there
• Those who you wonder what they were smoking when they thought that idea was going to work.

The fourth category is the one that goes unnoticed

• The humble new business selling just a little bit better than their nearest competitors, but not setting the world on fire.

I feel for those entrepreneurs chasing the big dream with the hope of being backed by venture capital money.

VCs tempt entrepreneurs into the ultimate land-grab based on a new idea. This is generally in the hope that a new area has value that can be realised at a later date, rather than backing new businesses in existing sectors where VC level returns are harder to achieve, but perfectly good job-creating businesses can be created.

The incumbents may have left a few angel funding-sized holes in the big cheese of the travel industry – but $100 million plus valuation holes -where VCs can play – no – those holes are rare (or quickly closed by incumbents once they hear about a new startup with a great idea in their area).

So when someone comes to Tnooz and says “we are going to do this and it is going to be game changing” what are we meant to do?

For example, look at TripFab, which uses “The travel industry is going to crap its pants” as its tag line.

Now are we meant to say “thank goodness, this is what we have been waiting for and therefore they should lead the Tnooz news with every single functionality tweak they make”, or are we meant to double check that our subscription to our laundry service is up to date.

Shooting for the moon doesn’t mean you will reach the stars. Using this approach as a startup in the travel industry may mean you never leave the launch pad.

Then you also hear about the airline KLM, which has announced its intention to launch a social seating service. Passengers will be able to link their social media profile to their check-in information, and subsequently choose a seating partner based on the social media profiles of other passengers.

Now there is an intention/aspiration. But why should this intention be given any more likelihood of reality than a startup’s publicly stated aspiration?

Of course, being an incumbent and large scale supplier makes their statement more interesting – but what if KLM is just moving to using the Ryanair school of PR and announcing all sorts or ideas or nonsense for publicity’s sake (such as paying to pee on a plane – did that ever happen?) [NB: Ed - No, it did not]

For those who dream of being the next big thing in travel, the vast majority will fail to do so. But without that mindset, the confidence and the determination to succeed, you will fail, for sure.

So perhaps making big, aspirational, future-looking statements is simply the key that gets you entry to the top club – but it doesn’t make them succeed in their own right.

Perhaps we should learn to accept and love these statements as an outward sign of the dedication required to deliver on the dream. Doesn’t mean we should cover them on Tnooz though.

Here is to 2012, where Tnooz becomes more widely read than The New York Times. It’s an aspiration, right?

NB: Image via Shutterstock.

These services have all been good, but they are much like getting travel advice from a white-shirted accountant. Good, solid, reliable information but very flat and uninspiring.

What makes you want to go to a place to begin with? When you have chosen a place – what makes you want to explore further? The inspiration phase of leisure trip planning research has been by far the hardest for tech-based services to master.

Google has announced (and started sending out Beta invites to) a new service, known as Schemer, which attempts to compete in this gap.

Effectively it is local destination ideas based on tips from your (Google+) friends, celebrities (oh yes!) and professional destination content producers (ie. travel writers).

It uses content with the likes of Zagat, the review service it purchased in September this year.

From first look there doesn’t seem to be any commercialising of these experiences (nothing has an obvious price or is bookable) but it is as yet unlaunched and booking would be easy enough to add on later.

The travel industry companies most at risk from this move by Google are the 30 or so nascent person to person (P2P) tour guide marketplaces (that I reviewed back in September).

Many of these P2P services are based on individuals providing and consuming interesting destination experiences together.

With Google already having a Google+ social profile acting as the central glue, Schemer could move into this P2P tour guide area as the user could essentially see who it is booking from (and build trust).

Tie that in with Google Checkout and you have a powerful combination which most existing P2P tour guide marketplaces would struggle to compete with.

The second group of companies at risk from this move by Google is, well, everyone else.

If destination research moves to starting at Google Schemer rather than Google Search, then Google will be able to pitch flights, hotels and other travel services, without having to necessarily work within the confines of their existing web properties.

We are a long way from this though, of course – the service is yet to fully launch

Here is a walk-through by a writer from TheNextWeb:

And Google’s own, rather peculiar introduction to the service:

Until now much of the efforts of travel technologists has been in removing the leisure travel agent from the marketing and booking process.

Who needs brochures when you have video? Who needs staff when you can invest in a whizzy user interface and conversion funnel analysis?

This probably makes the remaining agents quite rightly wary of technology and travel technologists. Beware of geeks bearing gifts.

But can travel technologists help travel agents rather than just try to further obsolesce them?

Do we have an alternative proposal that might simultaneously solve the “selling the destination experience” problem (hard to do on a 2D computer screen) whilst retaining valuable front line human travel agents within the travel industry.

Inspired by the over consumption of alcohol and food I have an idea.

What do people do when they go out in the evening? At least in the UK they tend to go to a restaurant and that restaurant tends to present as an overseas experience. We all love Indian, Thai or Mexican restaurants in the UK.

But how do you go from someone being interested in a Mexican evening out to using that experience to promote booking a holiday to Mexico next year? If you do a deal with a Mexican restaurant, doesn’t this limit you to promoting Mexico – how are you going to sell Egypt?

Restaurant technology has the answer.

Imagine a restaurant that using digital projectors and other props could easily convert from presenting one country to another. Run an Egypt theme night one night and Mexican the next.

Use Inamo restaurant style interactive tables (E-Table Interactive) to present holiday options to the customers as they dine.

Have a button to call a destination expert to your table to talk more about what you could do on holiday. Or let the customer shortlist holiday options for further review later (at home).

Effectively a high street travel agent shop open during the day will now be a destination brandable evening experience. Not a brochure rack in sight. Importantly because the customer is also being entertained for the evening they are likely to pay to be marketed to…..

Perhaps travel agents can learn to love travel technologists after all.

As you might expect me to say, it’s not where the cool kids are – we all hang out in T&A… or tours and activities (before you ask)

Now, I have listed many of the T&A players previously in this HUGE list (with over 70 companies mentioned, including my own, TourCMS).

Within this niche the action at the moment is in the person-to-person (P2P) tour and experience marketplaces. These are where individuals offer services direct to consumers. A bit like AirBnB/Wimdu et al, but for tours.

Here are the 29 companies currently making moves in the sector (with a description in their own words). Our analysis follows…

• BeWelcome – “Meet locals worldwide”

• Gidsy (not yet launched) – “Gidsy is a community marketplace for authentic experiences. Besides booking fun stuff to do, anyone can host activities. Think unique walking tours guided by locals, nature hikes with wild cavemen and exclusive pop-up restaurants hosted by top chefs.”

• GuidedByALocal – “An online community of locals guides and travelers around the world”

• GuideMyTour (not yet launched) – “The site connects enthusiastic guides from all backgrounds with visitors who want an interactive exchange when they walk or visit.”

• Indie Tour Guide – “With the help from a certified local guide, travelers can gain insider access to their destination with one of kind, customized tours that address their interests and provide a richer travel experience”

• IGottaGuide – “Connecting you to professional and amateur tour guides for an authentic local experience” [TLabs Showcase - IGottaGuide]

• GuideHop (not yet launched) – “A place where professional guides, instructors, and locals can share their passions, find new ones, and make a few extra bucks along the way.”

• LeapLocal – “Putting travellers in touch with recommended local travel guides”

• LocalGuiding – “The place for booking unique travel tours and activities directly from local tour guides” [TLabs Showcase - LocalGuiding]

• Localyte – “Connects travelers with Localytes: local people and services in travel destinations”

• MyCreativeTours – “Don’t feel like a tourist, experience like a local”

• Omoly – “Represents a group of passionate guides who love to share his or her hobbies, interests, and life style with willing participants”

• Rent-a-Guide (German) – “Find Guides, Tours & Excursions”

• Shiroube – “Explore untapped local scenes with local guides”

• Skyara – “A marketplace to offer fun things to do, meet new people, and share experiences”

• Tourbie – “Personalizes your trip by connecting you with locals so you can have real, memorable experiences”

• ToursByLocals – “Take a private tour with a knowledgeable local person as your tour guide”

• Trav.ly – “A marketplace where savvy travelers and friendly guides connect via local experiences” [TLabs Showcase - Trave.ly]

• Tripbod (additional service, soon to be launched)  - “Connecting people who want to go on trips with local experts”

• TripColony – “What is the best way to travel? To have connections in the places you are visiting”

• TripFlock – “A planning and collaboration platform for travelers, travel people and travel businesses. TripFlock is not a web site. It’s part operating system, ecosystem, apps marketplace and desktop rolled into one very cool travel platform”

• Tripping – “Want to step off the beaten tourist path and step into local culture? You can use Tripping to meet friendly local people, all over the planet” [TLabs Showcase - Tripping]

• TripTrotting – “Meet up with locals to get a real taste of your travel destination or host like-minded travelers visiting your city” [TLabs Showcase - TripTrotting]

• Sidetour – “Authentic Experiences. Real People”

• Synotrip – “Whether you want to travel yourself, choose your own tour guide, or get a tailor-made tour, Synotrip is here to make it easier for you to plan your tour”

• Vayable – “Connects explorers with great people who want to share the things they love to do” – [TLabs Showcase - Vayable]

• Viator Tour Guides – “Book a private guide and customize your own sightseeing tour”

• WhosMyGuide – “Search, compare and connect with guides all around the world” [TLabs Showcase - WhosMyGuide]

• Yowtrip – “A network of city ambassadors. We connect you with locals at your next destination!”

Right. In other words: lots!

Now, six months ago I could count the number of companies in this sector on one hand. Now we have 29. Umm – big change, wouldn’t you say?

Okay, this is fresh, new, interesting and, at least to begin with, quite innovative. But before we get excited about things that are new and shiny, lets try some analysis.

How do they work?

Some target professional freelance tour guides, some recruit individuals off the street and some run a mixture. Some also feature individuals who, actually are “fronts” for established local specialist tour operators/experience providers. Not really individuals at all.

Another way to categorise these companies is whether they focus on just one region (eg New York) or have launched on a global basis.

Although interesting, it is not the most important part

What is critical is the model.

None take responsibility for the transaction. All pass through the transaction through to the ultimate supplier (the individual).

Money tends to flow via the central website (taking 10-20% or a “deposit” is paid to the website and the balance is paid to the supplier, the individual, on the ground).

But will this model work?

On the surface the model looks OK. However there are challenges that need to be overcome.

One such example is the narrowness of the seam of suppliers that these websites are fishing in. If you don’t have any suppliers, you won’t have anything to sell. (Reminder: I am planning a webinar on sucking eggs, all welcome)

At the high volume end, these P2P websites are not working with the traditional five-10 employee, local specialist experience/tour operators.

These operators can handle scale on days where demand is high. Individuals can probably sell two groups maximum a day. Selling as much as you can on the peak days helps balance those days when you sell nothing.

At the lower volume end, P2P websites are constrained by working with individuals who are prepared to pay for their own public liability insurance.

What, I hear you say? Yes, public liability insurance.

As per the New Orleans Tour Guides Association [good background reading], tour guides often need insurance for scenarios such as:

“You are leading a walking tour of the French Quarter. When leading the group across a street, a passing vehicle runs down and injures one of your guests”.

Insurance isn’t too expensive (I have seen a quote for £100 GBP ($160) per-year per-tour guide), but this certainly creates an overhead for the occasional, amateur, tour guide.

As per this report via the Telegraph (UK), one amateur tour guide was even quoted £600 ($1,000) for public liability insurance.

This is model-busting, especially for the occasional amateur tour guide wishing to sell an experience once a month where they may only make a few hundred dollars a year.

The P2P marketplaces themselves may not be liable for this, but these liabilities exist in the ecosystems they are creating and hence need to be covered by someone. Creating an ecosystem where your suppliers are not covered for their liabilities will, frankly, not be sustainable in the long term.

These public liability challenges also introduce issues with working with the existing (and new) tour and activity distribution players. I know of at least one which, until the public liability insurance issues are resolved, will not distribute this kind of product, ignoring the generally positive feelings towards the actual products themselves.

The majority of the amateur-focussed P2P marketplaces listed above fail to mention public liability insurance on their tour guide sign-up pages. They make it sound like anyone can offer a tour in their local city when actually this is not the case at all, at least not until they pay for insurance.

Wrap-up

So let’s take one step back. These marketplaces may have got the wrong SOLUTION but are absolutely addressing an existing consumer PROBLEM.

Consumers want in-destination experiences rather than generic bus tours. They want memories. They want stories they can share with friends and family on their return. They want something a little out of the ordinary.

Frankly, traditional in-destination tour operators don’t achieve this particularly well, although they do comply with local legislation and insurance requirements.

There are, on the whole, very competent, fresh thinking, web entrepreneurs behind these new P2P marketplaces, having correctly spotted this consumer problem, but have come up with an inappropriate solution that just can’t be sustained over the long term.

I believe ultimately this sector will end up with professionally delivered experiences rather than the focus being on the P2P aspect.

A few of the marketplaces listed above are already working with professionals hence will move to this quite naturally. The focus on experiences rather than tours is quite right.

P2P will probably be here to stay for accommodation, but for tours and experiences, things are not so clear.

Interesting times ahead.

Who and what are you (including personnel and backgrounds)?

We are David Cummins and Manyu Lui.

David was previously a venture capitalist at the Draper Fisher Jurvetson Growth Fund.  Prior to that, he lived in China (Beijing, Shanghai, Shenzhen) for four years and worked for two start-ups.  David speaks English, Mandarin, and a smattering of Shanghainese.

Manyu was previously a senior software engineer at IMVU, a leading 3D chat-based virtual world with more than 25 million registered users.  He originally hails from Hong Kong and speaks English, Cantonese, and Mandarin.

What financial support did you have to launch the business?

We raised some seed capital.

What problem are you trying to solve?

Trave.ly helps travellers to international destinations go beyond the guide books by enabling them to discover and book unique tours, activities, and experiences offered by real people.

Our initial geographic focus is on China, specifically Beijing and Shanghai.

We’re excited about China due to its growing popularity as a travel destination (58+ million people visited China in 2010), language and navigation challenges for Westerners, and our familiarity with the market.  We expect to roll out to additional cities in China and more countries around the world over time.

Describe the business, core products and services?

Trave.ly is a marketplace that connects travellers with local and expat guides offering unique tours, activities, and experiences.

Our guides are a collection of locals and expats who are living in and familiar with the destination city. We encourage guides to create tours around their interests and passions.

We have cooking, eating, shopping, photography, running, painting, art, Mahjong, Chinese language, and many other types of tours, activities, and experiences on the site today.

One of the most interesting tours we have on the site is a Soy Sauce Factory Tour, which enables travellers to visit a fully functioning soy sauce factory and learn how soy sauce is made the traditional way in China.

Travellers can browse tours, read reviews, communicate with tour guides, and book tours, activities, and experiences directly on our site in advance of their trip.  After booking their tour, travellers simply print out their tour voucher and give it to their tour guide.

This way, they don’t have to worry about cash or exchange rates on the day of the tour.  After the tour, travellers can leave reviews for future travellers to read.  Our tours start at $25.

Who are your key customers and users at launch?

Our target customers are non-Chinese speaking travellers to China who want unique different travel experiences. Our customers tend to be professional 25-45 year people that fall between budget and premium tour package travellers.

They are able to see the usual tourist sites on their own but are interested in going beyond the guide books to gain more unique local experiences in the cities they visit.

Did you have customers validate your idea before investors?

Having been to more than 30 countries and lived abroad ourselves, we’ve been both the traveller and the guide for family, friends, and friends of friends.  Tours and activities are the third largest segment in the travel industry, after hotel rooms and airline tickets, so it’s clear the market is there.

What is the business AND revenue model, strategy for profitability?

Travellers book their tours directly on our site using a credit card or PayPal.  After the tour occurs, we take a 15% commission and pay the rest of the money to the guide using PayPal.  As with any marketplace business, they key to profitability is scale.

SWOT analysis – strengths, weaknesses, opportunities and threats?

Strengths:

• We are initially geographically focused on China.  This focus enables us to build up a large concentrated selection of tours for travellers to choose from, build close relationships with people powering tours listed on our site, and curate the tours, activities, and experiences on the site to ensure quality.

Weaknesses:

• Marketplaces are inherently difficult to build, but we’ve had good initial success building up the supply side of the marketplace.  As with any young company, we always want to move faster than our resources will allow.

Opportunities:

• We think that the future of travel is social and more personalized.  The tours and activities space on the Internet today is extremely fragmented and dominated by commodity style tours and activities.  The guide book industry has been around for decades and offers travellers little personalization.  We’re excited about the opportunity to help travellers who would have never considered themselves the “tour type” find fun unique things to do on their trips.

Threats:

• As a small company, the deck is always stacked against you.  The biggest challenge for us is finding efficient channels to consistently reach more travellers.

Who advised you your idea isn’t going to be successful and why didn’t you listen to them?

Many people have told us our idea won’t be successful due to the competitive nature of the travel space and inherent challenges in scaling marketplace businesses, while other people tell us they’ve been waiting a long time for a solution like Trave.ly.

Ultimately, we’ll let the broader market determine whether or not we’ll be successful.

What is your success metric 12 months from now?

We hope that more guides continue to list tours and more travellers are able to use Trave.ly to discover and book unique experiences that make their trips memorable.

We intend to roll-out our product to additional cities within China and countries around the world over the coming months.

NB: TLabs Showcase is part of the wider TLabs project from Tnooz.

The problem, unfortunately, is that so many of the errors mentioned in the follow-up Reprise articles are so preventable.

For example, why do travel startup entrepreneurs think they have the golden key to unlock a significant consumer problem that travellers have, when so many have failed when addressing the same problem before?

However wrong an entrepreneur subsequently realises they are, it is perhaps worth asking why did they start down the road in the first place? Why did they start a process that for many ultimately ends in pure pain and failure.

There are several drivers. Do any of these match your mindset?

1. Innovation

Oh for goodness sake, can travel industry conferences stop judging everything by how innovative something is. Really, entrepreneurs tend not to be wired to think about innovation.

Innovation as a term seems to be something a big corporate board says to a developer: “Oh go and build something that makes our brand look cool and innovative.”

Rubbish. Sooner we stop thinking about innovation the better. New/Untried/Different != Better for consumers.

2.  Disruption

Personally, I am a fan of disruption. But disruption means exactly that: creating chaos to the existing travel industry business models.

Perhaps that is why we do not hear much about disruptive travel companies in the travel business press as they take their advertising from, you guessed it, existing companies. Disruption can mean being seen as a travel industry outsider.

As an entrepreneur, disruption is an unlikely driver. You tend not to think about disruption – you think about problems. You don’t go out of your way to be disruptive but to deliver a solution in the way you think best. It that doesn’t match with how the existing industry works, so be it.

Me. I am not driven by disruption. It’s not a very positive thought. Lets discount this as a key entrepreneur driver.

3. Enjoyable

Yes, running a travel startup is enjoyable.  Your inbox is crammed with invites to speaking slots at global travel industry conferences and people follow you on Twitter because you are a travel industry celebrity. Who wouldn’t enjoy that?

Complete fallacy of course.

I have spent many Saturday nights at 10 pm when coding a solution to some edge case or replying to an email for someone who is upset with the service offered. If you think that is fun and enjoyable you really need to get out more.

Trust me, for most, running a travel startup is not enjoyable. Let’s discount this one!

4. Profit

There are some entrepreneurs who are quite happy just making money (yes, just that!)

Many of my clients are entrepreneurs and they setup perfectly sensible businesses selling travel services. Absolutely nothing wrong with that and, frankly, if you didn’t have people investing into independent hotels, new airline startups, setting up as tour operators, the industry would be a much greyer place.

Sadly though, most of these entrepreneurs are overlooked by ego-fuellers (trade press/travel industry conferences), hence building a business that makes money but doesn’t change the world is not seen as a valuable exercise.

Yes, making money is a sensible outcome for most entrepreneurs. Can everyone stop ignoring entrepreneurs who create valuable businesses just because they are not interesting enough.

5. This friggin sucks – fix it

I care very little about what other direct competitor companies are doing. The biggest challenge is solving a problem in the best way possible for the clients we currently have.

Simple.

These are the entrepreneurs we should value. These are the entrepreneurs who are looking to leave the world in a better place than before their input.

This is one reason when someone pitches a travel startup to me I don’t care too much about their solution but I get very interested in the problem they are looking to solve.

Focus on the problem.

Conclusion

Running a travel startup is an all embracing, immersive experience. If you are just striving for greed, profit or ego you are less likely to pull those 10pm evenings on a Saturday evening to solve your clients problems.

Would be great if the leading travel industry conferences would move away from innovation to a focus on what improves the industry or what makes a consumers life easier.

That would be a much more sustainable and healthy future for all entrepreneurs.

As I wrote recently, these new business models are certainly disrupting the conventional travel industry. But just because something is new, does it make it better? Was anything actually broken with the previous way of working?

So, lets compare a P2P approach versus how the conventional travel industry would approach the same problem:

1. Can you list a property that you don’t actually own?

With P2P it seems this is quite possible (See this story on Hacker News).

In the conventional travel industry the company that is principal would visit the supplier (yearly), even if overseas, and check that the property actually still exists.

At the same time, a basic heath and safety audit would be carried out as well as a check that the supplier is operating to best industry practice.

The traditional approach wins this one.

2. Who ensures that the product descriptions / images are correct?

With P2P the central website hasn’t any idea regarding the accuracy of the descriptions – well, not until a first customer reports back and comments via a review that all was not as described, by which time they will have had a poor customer experience.

In the traditional travel industry, descriptions/images are challenging to get right, too – however hotels/guest houses know they have to get this right and there are industry systems in place to distribute this content. It’s a fixed problem.

3. Will conventional travel websites wish to partner with P2P players?

Metasearch probably will want to work with P2P (as consumers tend to end up booking direct with suppliers anyway), but online travel agencies are probably less likely to integrate with P2P, primarily due to not wishing to mix an individual-provided service with a business-provided one.

This puts P2P at a disadvantage when working with the existing travel industry. At the moment the P2P players like to be seen as outside of the travel industry, so integration probably isn’t really a problem they are bothered about today.

However at the scale that some of these companies will need to work at in order to break even/attain scale suggested by their funding rounds, they will likely need to work with the conventional travel industry at some point because the industry has the necessary flow of travellers.

4. What are the protections against third party money laundering?

If anyone can list a property, does this introduce a money laundering risk?

The first defence against money laundering is “know your customer”. As a P2P marketplace you can have a situation where you neither know your customer nor your supplier.

In the conventional travel industry if you are transferring the money to a supplier that tends to be a business not an individual. Also tends to be a business you have regular contact with.

You might be money laundering (!) but at least you are not being used by a third party for money laundering without your knowledge…

5. Will P2P tour marketplaces lose their best performing suppliers?

There are 20+ tour guide P2P marketplaces. An individual selling via one of these marketplaces tends only to be bookable once on a particular day.

This approach is fine, but if that individual is in a popular destination they may be able to organise themselves to handle more than one booking a day.

Effectively they then become a tour operator rather than a tour guide. Tour operators (businesses) will have a different set of requirements both from a marketing and an operational perspective.

It actually could actually end up with a situation where a P2P tour marketplace loses their best performing suppliers as these suppliers “outgrow” the P2P platform.

Or perhaps an individual just doesn’t want to be running a tour every weekend but are happy to run a tour every couple of months.

Oddly, this builds a situation where the more successful the P2P tour marketplace is, the harder it will be to retain the individual nature of the suppliers (rather than working with specialist tour operators).

6. Do customers understand that they are buying from a person?

Some of these marketplaces take 100% of the booking revenue up front. In the customers mind this payment to the marketplace makes them believe they are booking with the marketplace.

When something goes wrong (eg. a customer turns up for a tour or accommodation and it isn’t ready, organised etc) the customer may as a result contact the marketplace for immediate resolution.

There will be little the marketplace can do as they don’t have any more knowledge or staff on the ground to fix the problem.

This can only end in a PR debacle as the customer will blame the marketplace yet the marketplace won’t have any capability to resolve it.

Interestingly, at least on eBay if a customer has a bad experience with an individual supplier, people are “trained” to know that it is an individual supplier they should be agitated with rather than eBay.

Also eBay does not have people turning up in the middle of the night at a distant destination and finding they don’t have any accommodation booked, so customer service does not need to handled in real time, 24 hours a day.

7. Are individuals permitted to rent their home/sell a tour?

In most countries the travel industry is a highly regulated industry. The regulation does tend to lock in existing industry structures and leave little room for business model innovation.

However, the rules are there and, until changed, they are the rules we all have to abide by.

For example, with accommodation rental, does the supplier have the right to rent their home? Does their home insurance cover sub-rental?

8. Will people providing accommodation/tours need to be insured?

If paying insurance becomes “necessary”, will that remove the fun, individualistic, accommodation? Will it remove all properties that are not permitted to be listed due to regulations/law, as they will be uninsurable etc?

Will individuals think twice about listing their property if they are prompted with a question about insurance (perhaps built into the listing side of the marketplace), as that will make them think about the downside?

9. Are the P2P marketplaces taking enough revenue share?

Take Airbnb – it takes about 10% or so. Is that sufficient to handle all the customer service questions that will be incoming? Is that sufficient for big customer facing marketing campaigns?

I expect there was a working assumption built into the business model that customer service would be handled directly by the individual property supplier, rather than the central marketplace. Not quite sure that that assumption will turn out to be correct.

Businesses on the other hand don’t mind paying a good % of revenue share, but only if it is a booking they would not otherwise have received.

10. What proportion of “bad” customer experiences are acceptable?

P2P is a high risk, high reward booking for a traveller. The products are mainly great – indeed much more attractive than those provided by the traditional travel industry. However with the great comes the occasional experience failure.

In the traditional travel industry products and services are carefully tuned. This means they are neither brilliant but equally they are never terrible either.

Will P2P marketplaces be able to handle the negative PR from a few poor customer experiences or will a few bad stories kill the concept?

Final question

P2P looks a really fun area to be innovating in within the travel industry. But will we still be talking about P2P in two years time?

For example, the recently loaded AirBnB has individuals with a room or property which it then promotes and sells to individual travellers.

One accusation aimed at these P2P sites is that individuals (on the supply side), generally, are not so great at keeping availability calendars correct.

The challenge is magnified when the same property is on multiple listing sites. When one booking is received, this requires the individual to log in to multiple websites and block the corresponding dates. Too much work!

A few years back a similar process was common in hotel distribution – that model failed as hoteliers did not log in to multiple extranets sufficiently regularly to keep data correct.

So, if it tends not to work with hotels with full time staff, then relying on the same approach when working with individuals is bound to be model-busting, or so was perceived as conventional wisdom.

Turns out conventional wisdom was wrong.

Step forward KeepMeBooked, a UK-based cloud hosted B&B/guesthouse booking platform. The company noticed that AirBnB use the iCal event format to import simple availability calendars.

Although iCal is designed to show events/calendar entries, Airbnb assume that any date not booked remains available. A neat hack.

Now an individual property owner can use a system like KeepMeBooked as their central booking diary and multiple listing sites can be automatically updated when any booking comes in. No more manual extranet updating work!

Is this groundbreaking? No. Innovative? No. But it is another piece of the jigsaw falling into place.

The important learning from this isn’t actually about calendar integrations at all (although that is rather neat) but about the nature of launching a large scale travel startup.

Airbnb has built a brand and consumer traction. It has built a supplier listing (with a few raised eyebrows as to quite how they did that). However, they never built any obvious foundations.

Conventional wisdom was to build system infrastructure/foundations first and go consumer-facing later. Airbnb has turned that on its head – it has gone with traction first, deal with problems of scale later.

Certainly worth reflecting next time you see a travel startup and you ask the dreaded question:

“How will you make that work at scale”?

NB: TLabs Showcase – KeepMeBooked and TLabs Reprise – KeepMeBooked 12 months on

NB2: Technical details of the functionality.