GetYourGuide creates industry shake up as Originals moves from speculation to scale-up

December 18th, 2019

Alex Bainbridge

GetYourGuide Originals, where GetYourGuide creates sightseeing tours (mainly in urban areas) has always been a good topic to speculate about as it goes to the heart of what the tours & activities industry is (or sightseeing & experiences as I like to refer to it now).

However upto this point it has been purely speculation. To us insiders it appeared a good idea to run alongside retail of existing tours but it wasn’t clear how serious GetYourGuide were/are to make it a key part of their future trading model. But now we know.

In a series of announcements and interviews last week Johannes Reck, GetYourGuide CEO, said:

WebInTravel

Originals is now being rolled out in Edinburgh. “We needed exclusive unique content to differentiate. If everyone is selling the same thing, that’s not good enough.”

Reck believes that in three to four years’ time, Originals will form 50% of the company’s net revenues.

TechCrunch

GetYourGuide Originals have been working well. “We’ve had tremendous success, we have an average score of 4.8 [out of 5] compared to 4.4 for the other marketplace activities,” Reck said. Originals have a 40% higher repeat rate than other activities.

[The TechCrunch article also includes other scale-up statistics]

End of speculation

We no longer need to speculate about GetYourGuide’s Originals scale-up ambition. We now know that GetYourGuide intend it to be 50% of company net revenues in 3-4 years time.

This will be pretty much ALL their urban sightseeing revenues as Originals can’t apply (as currently designed) to attractions or activities, that will make up the rest. [As a result, this article mainly applies to urban sightseeing rather than the activities / attractions sectors].

Core changes

Fundamentally the widely held assumption (not from me I hasten to add!) is that the industry is made up of products – tours.

Suppliers / tour operators design their tours, set their price and retail via online travel agents such as GetYourGuide. i.e. Suppliers / tour operators provide 3 key parts:

  • The itinerary
  • The price
  • The tour operation

With GetYourGuide Originals we have:

  • GetYourGuide designs the itinerary
  • GetYourGuide sets the price
  • The tour operator delivers the experience

i.e. two of the three previously core supplier / tour operator actions are now handled by the marketplace layer.

This is much like WithLocals, a marketplace that also creates the itinerary, sets the price and finds people to deliver independently. However GetYourGuide has 600 employees so with the greatest of respect to WithLocals, its not quite the same thing at all.

What next?

I now have 5 questions for the industry to answer:

Is this the end of aggregation and back to curation we all go?

GetYourGuide Originals is fundamentally a curation strategy. Instead of listing 5 food tour companies in a single city, each with their own overlapping food tours, you just design & deliver a single set of coherent food tour itineraries. Completely removes proliferation of duplicate tours.

Airbnb has the same problem:

InsideHook

For the locals selling those experiences, however, the platform can be downright cutthroat. “When you’re on a platform [like Airbnb], even if you’re successful, it’s very competitive, because you never know who’s going to come in and sell an experience like yours,” said Danielle Oteri, who hosts food tours in Bronx. “Anyone who does an experience on there is vulnerable to having someone do the exact same experience.”

I am old school – always loved the original Viator curation model. I remember when they had 7,000 well chosen experiences at the time they sold to TripAdvisor……

Why have tour operator technology companies been so poor at improving customer experience (on the tour itself)?

Johannes is clear that GetYourGuide Originals scores better at customer experience than regular tours created by long standing local tour operators.

No surprise here. Tour operator technology companies have completely failed to deliver any technology that digitally optimises existing tour products, instead focussing entirely on retail and distribution. Now when GetYourGuide puts their digital resources onto optimising customer experience (of the tour itself) they don’t have any real competition from incumbents.

What is the most commercially viable economic unit size for tour operators?

Should they be large? (100+ employees) Small (5-10?). Or perhaps individual tour guides?

Now that we have marketplaces covering itinerary design & pricing and the local tour operator focussed on delivery, do these local companies really need to be so large? We will probably go back to companies being 5-10 employees (or smaller) and those people being very happy with that as they will be paid and won’t have to worry about technology, marketing, retail etc etc…

What about existing tour operator retail technology?

Is it obsolete now? It, and the APIs plumbing the industry, are designed around the premise that a product has a price, an itinerary and someone to deliver it. No wonder GetYourGuide has said they are not going to buy any reservation systems. Frankly, they don’t need to.

I expect many will pivot to activities and attractions (that remain as currently) and away from tours…

Do other retailers react?

If GetYourGuide (and it still is an IF) can provide:

  • Better customer experiences (indication is that this is the case)
  • Lower prices (for starters there is no 5% travel technology rent)

… then other retailers will have to react. Every retailer could need their own take on creating a GetYourGuide Original.

Or will retailers be the “anti GetYourGuide” and choose to work with existing tour operators who don’t want to be part of the GetYourGuide powered industry? Can retailers planning to continue as per usual really be viable with a more expensive product and poorer customer experience on the tour? I don’t think so.

Summary

Personally I am a fan of what GetYourGuide are doing, this is the right move for GetYourGuide. Its not necessarily the right move for the industry, but those two things are not the same.

 

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