GetYourGuide betting the haus on attractive unit economics

Along with GetYourGuide‘s recent funding announcements came some interesting leadership quotes that I just have to memorialise for future reference as their statements about unit economics and strategy are significant.

Before we cover that, a clarification, GetYourGuide are not THE largest funded in our sector, the autonomous vehicle mobility platforms are funded far in excess of GetYourGuide’s 1 billion USD investment, and are also addressing the in-destination experiences opportunity. For the market winning game that GetYourGuide is playing, GetYourGuide is underfunded vs their peers. Really.

First, the full quotes about unit economics via Phocuswire interviewing GetYourGuide CFO Nils Chrestin:

We are digitizing a traditionally offline category: travel experiences. It is an incredibly complex business, but one filled with opportunity. Our investors understand that there is a fundamental cultural shift in consumption in progress: consumers are spending less on retail and day-to-day expenses but are increasingly prioritizing experiences. Making memories. However, realizing our $300 billion market opportunity will take time. Our best partners are able to take a long-term view, have a deep understanding of what it takes operationally to grow a global marketplace and the associated upfront investment and the attractive unit economics we are unlocking.

The fundraising and general capital market environment have significantly shifted over the last 12-18 months. There is a lot of caution in the market – which I think is healthy. But if you can combine and showcase highly attractive growth in a large addressable market and, importantly, can show this is done with very attractive unit economics, doors can and will remain open.

… while over on TechCrunch they interviewed GetYourGuide CEO Johannes Reck:

Reck said that GYG remains very committed to the idea of selling human-led group tours. That means no self-guided tours, no virtual tours, and no generative-AI created tours are on its roadmap today.

Reck calls the group tour, devised and led by an actual person, “the core product” of GYG. “Our mission just doesn’t happen if you are glued to your smartphone,” he said. He speaks not just from opinion but experience: “We’ve tested so many alternative formats, including virtual experiences,” Reck said. “They all flopped.”

But that’s not to say that there aren’t some big opportunities for using AI in the business. Reck said.

To summarise:

• Long term attractive unit economics (that requires “upfront investment” – PR code for they don’t have the attractive unit economics yet)
• Human delivered tours. AI will be used (by GetYourGuide) for retail not for operating experiences

Do these mythical attractive unit economics exist?

Lets throw in a Bill Gates quote about AI agents:

Whoever wins the personal agent, that’s the big thing, because you will never go to a search site again, you will never go to a productivity site, you’ll never go to Amazon again

(If you are new to the idea of AI agents, read this from VC Vivek Goyal)

Now, say this AI agent transition happens and someone (external to tourism) delivers this at scale by 2030, what will happen to unit economics for human tour guide lead sightseeing?

• Consumer prices will go down for directly competitive experiences (hybrid or 100% AI tour guide)
• There will be an increase in supply of AI operated substitute experiences (i.e. what a tourist consumer might choose to do instead) which will also be at the lower price point (or even zero priced if 100% AI operated)

So even if GetYourGuide can maintain margin in an AI agent era, they will be doing so at a lower price point.

Is there an increased margin opportunity that can balance the reduced price impact on GetYourGuide’s unit economics?

Yes – the current industry structure is OTA > Rez tech > Tour operator. My proposed industry model (that I have built and am scaling up) is Digital Experience Platform > Mobility platform / Tour guide. My model has two technology layers, the GetYourGuide model has three.

You can increase margin by removing one technology layer, but that is specifically what Johannes Reck said they would NOT do, when talking with TechCrunch. Instead they are sticking with the low(er) margin, low(er) scale business they are currently in.

Why is GetYourGuide’s AI focus restricted to limited use cases?

I think Johannes Reck really wants to pivot to full stack AI (that includes using AI to operate experiences), but timing is the problem:

• They can’t transition to full stack AI before IPO as there is no guarantee they will complete that work by the time the IPO market reopens. Besides it might be a multiyear campaign and they need to build the IPO story now
• They can’t plan to transition to full stack AI after IPO as they would have to put this in their IPO prospectus documents

So they are stuck talking about attractive unit economics on the current industry model and using AI in retail, while dismissing AI operated experiences as “flopps”.

On this I do partially agree with Johannes, AI operated experiences are a bit crappy today. But that is the point, that is what we have to solve! Luckily we have the best people from Google (Waymo), Microsoft (Cruise), Baidu (Apollo), Amazon (Zoox), Apple (Vision Pro) etc all working on helping solve it…

What have I missed? Where are GetYourGuides’s attractive unit economics going to come from?

p.s. I still love the previous GetYourGuide Originals, I also love the new GetYourGuide Originals that are more unique & memorable although appear significantly less scalable than what they replaced.

Image: Bing Image Creator