Update 1 – Using digital to create cashflow in local tourism

March 25th, 2020

Alex Bainbridge

This is an update to my efforts to create tech for local tour operators to create immediate cashflow to help with the current crisis. TLDR: We are not going ahead. Instead we are moving to building tech that will be useful in a few months time.

Even though we are not going ahead, I know other companies ARE, so here are some further notes beyond what I wrote on March 20th. Hopefully they will assist any company that gives this a go. Thank you to all the start up founders, tour operators and others who helped me refine the ideas.

The content idea (tour guides creating digital experiences)

I really liked this idea but we hit a couple of major stumbling blocks:

  • At the larger tour operators (where tour guides are employees / contractors rather than the owner) – tour guides have already been released where possible. To use tour guides to create content would therefore require rehiring tour guides, something that is not going to happen
  • The consumer demand issue was large – this is an inferior experience to a physical world tour (vs restaurant gift vouchers which is the same experience, just later) – this reduced service level creates pricing issues. Ultimately, it was not going to sufficiently help anyone in the short term

We thought we could get around the consumer demand issue by going down a more specific path where demand right now is massive – home schooling kids. Thank you Nina Dietrich for leading us down this path.

e.g. tour guides could teach kids virtually, or at least keep them distracted for a little while. Tour guides are often educators ANYWAY, so this is not too far of a stretch. The name of this idea was Tutourism – tutor and tourism……..

If you are going to do the content idea, I do suggest being specific rather than generic. This was the best specific idea we had. Take it.

The gift certificate idea

Because we were struggling on the content idea, I went back to looking at the gift certificate idea.

The key problem remains that as a retailer I can’t release funds to a tour operator until the service is delivered. This doesn’t help cashflow for tour operators at all. [Although there was the perspective that perhaps tour operators could borrow against these future earnings somehow].

So we concocted a plan where something like this could work:

  • 20% commission – if the voucher is paid out to the tour operator when service is finally delivered (e.g. in 12 months time)
  • 50% commission – if the tour operator wants their funds NOW, when gift certificate sold, rather than later

This is quite a modelling challenge. Arival has 43% of tour operators at risk of failure within 3 months. We, as the retailer, would either have to refund the customer if the tour operator fails prior to voucher delivery, or we would have to find an alternative service. Pushing up to 50% commission MAY cover that, it may not. Would take a company the size of one of the leading online travel agents to underwrite this…… not me sadly.

Like the content idea, I looked at being more specific. This tweet set me down a different path:

A working name for this idea is ToursForCures. I like it. But cashflow liability is beyond my means.

Alternatively something is built that makes the gift certificate tour operator direct……  BUT speaking for ourselves, our base platform that we need to build on would need a lot more work to change to that model, something that can’t be done in a few days.

Summary

I tried. Sorry, I couldn’t get it to work.

Now focussed on Tourmageddon – adding new resources and insights every day. ALSO going to work on some tech for socially distanced sightseeing and also sightseeing for locals (as opposed to sightseeing for tourists). Will talk more about this next week at Tour Business Virtual Summit.

Image: Flickr: Daniel Lamb

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Comments

3 responses to “Update 1 – Using digital to create cashflow in local tourism”

  1. You might want to develop a social distancing app (called GAFM-Get away from me) that activates an alarm when you are within the prescribed 6′ radius of another person.

  2. Alex, plz share with tour guides; See Opportunities on http://www.Tours4Mobile.com. We create a digital tour and post it (free) on Amazon, app stores and other sites, when you send us photos, audio (or text) and map….and pay you royalties and commissions for all downloads. See our News page for more info. Thanks and be well! Marie

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