Taking destination management into the 21st century
Airbnb and Uber are two hugely successful travel platform businesses but is the timing now right for a global, mobile, fully customisable trip-planning platform with instant booking? Pamela Whitby speaks to the CEO of Rough Guides
When René Frey first acquired Insight Guides in 2014 it was on the verge of collapse.
“We had to live with the fact that the market for travel book publishing was declining year on year, consumer behaviour was changing and travellers were moving online in droves to plan and book their journey,” says Frey, who will be speaking at the upcoming EyeforTravel Digital Summit in London (May 21-22).
However, although the competition was about as fierce as it could get, Frey remained convinced that the book business had potential. To prove his commitment, in 2017 he acquired Rough Guides from Dorling Kindersley (DK), a household name in Europe since the 1980s, for an undisclosed sum.
“We will never give up on publishing books because they are a hugely important acquisition channel,” stresses Frey. And, of course, customer acquisition is a top priority for many travel executives. According to EyeforTravel’s State of the Industry Survey, 28% of the 1,600 respondents from across the travel spectrum rank securing new customers as a top priority.
We will never give up on publishing books, because they are a hugely important acquisition channel
However, despite his background in traditional media, and being a huge fan of books, Frey acknowledges that today they must be secondary to the digital business, an unpopular view in some circles. In fact, since 2014, the ongoing question, he says, has been how to release the assets of two respected travel brands and transform them into a sustainable business model for a different market, while not losing sight of the existing unique audience of book buyers.
In the traditional travel publishing world this has not been easy. Lonely Planet, one of the world’s biggest travel brands, as just one example, has had mixed success in its efforts to go digital.
In redefining the core business for a digital world, Frey says he quickly discovered that 50% of people buy books to plan a trip. Importantly though, these are people who want to do more than spend a week sitting on a beach. “So, the natural next step for us was to extend the trip-planning element, and our conclusion was that we had to move from an advertising to a transaction-based business model,” he says.
Back in 2014, the possibility of Instant Booking was a hot topic and, at the time, Insight Guides joined forces with a large destination management company to reach the world. But it was too early.
“We were too optimistic. The problem we faced was pay-per-availability because for instant booking you need price and room availability live and in 2014, when we launched our tool, this wasn’t the case. We still had to maintain our databases manually,” Frey explains.
…instant booking is the missing link in destination management.
Over four years on, the acquisition of Rough Guides complete, and lessons learnt, Frey still believes that instant booking is the missing link in destination management. In most cases, processes today are still manual and trust and payment is often an issue for customers looking to transfer large sums online to what are very often small mom-and-pop outfits.
Frey explains that usually these destination management companies (DMCs) still work in a simple old school way, and not much technology is involved. The process goes something like this: they receive a booking request, plan the trip, and once the customer gives the go-ahead they confirm, usually via email. In most cases, these companies are not connected to any large systems because they are small businesses. Although some DMCs may have connections with accommodation providers in their area, this is becoming increasingly difficult because hotels tend to share inventory with big aggregators, which have more influence on pricing. “This is not really 21st century, and our goal is to launch a service that will allow planning and booking instantly,” Frey says.
Back to the drawing board
After the group’s first failed attempt at instant booking, the team had to go back to the drawing board. The first step was to create a simple back-and-forth messaging system similar to Airbnb, but one that connected users with destination managers. The idea was to enable a customer sitting in, say, damp and chilly London to get directly in touch with a local expert in sunny Sri Lanka. That worked but, of course, the firm was not the only one doing it, and they needed to find a way to differentiate from the countless trip-planners out there such as Evaneos, KimKim, Travellocal and TripMe.
The business has pivoted to focus on small boutique, owner-based DMCs that deliver a medium to high-end personal service
While Frey understands that brand kudos is certainly not everything, he believes one advantage that Rough Guides has over other players in this arena is trust. “It comes down to whether a customer is willing to make a payment of a few thousand pounds to a DMC in an unknown location,” he says, and if a recognised brand like Rough Guides is guaranteeing the payment, the road to success might be less bumpy.
The business has also pivoted to focus on small boutique, owner-based DMCs that deliver a medium to high-end personal service. Since the group shifted into this corner, Frey says they have seen growth of 370%, and believes 300% is possible going forward.
Technology is undoubtedly at the heart of the Rough Guides’ plan, and Frey says the challenge for this year is “to automate this process, to go back to where we started [in 2014] and facilitate instant booking”.
The group is currently in the process of combining the existing audiences of Rough Guides, which is strong in Europe, and Insight Guides, a brand better known in the US and Asia. The first step is to educate and inform its existing audience, which delivers 1.5 million unique visitors a month.
Although it’s “still a gamble,” he believes that they have found the right technology partner and are 60 to 70% there. “We are edging closer,” he says, “to fulfilling a six-to-eight year strategy to become a global mobile, fully customisable trip-planning platform with instant booking that helps people plan and book trips with local experts on a global scale”.
René Frey, CEO of Rough Guides, will be speaking at EyeforTravel’s Digital Summit (May 21-22) along with other leading executives from brands like AccorHotels, Ryanair, Best Western and more