STARTUP STAGE: TourOpp offers both distribution and communication services for tour and activity operators

TourOpp

TourOpp launched in 2018 as an online travel agency for the tours and activities sector and now lists operators in more than 120 destinations around the world.

In 2019, the founders created TourOpp Go!, a communication system for operators that runs on WhatsApp and through text and automates responses to customers' inquiries. 

What is your 30-second pitch to investors?

TourOpp GO! is an automated messaging system and smart chatbot for tour and activity operators that runs on WhatsApp and SMS. We connect to the operators' reservation systems to retrieve new booking information and act as "concierge" for the operators' clients, thus reducing the time these companies spend on customer service while bringing new bookings, reviews and referrals to their business.

Describe both the business and technology aspects of your startup.

TourOpp has two lines of business: TourOpp.com, which launched in 2018 is the first OTA to introduce revenue management in the tours and activities industry. By allowing tour operators to use dynamic pricing, you can now find more than 1,500 tours in 120 destinations around the world with significant discounts compared to other - more popular - sites.

In 2019, and after working with hundreds of suppliers around the world, the team realized that there was another difficulty that tour and activity operators had that neither the OTAs or the reservation technology companies were solving: reducing the amount of time tour and activity operators spend on communication and customer service with their clients.

To solve this, we developed TourOpp GO!, a communication tool that runs on WhatsApp and SMS and connects to the operators' reservation system to automate a few things on that customer communication end. For example, our system can automate the responses to about 74% of customers questions. It can also recommend to the operators' customers other tours available in-destination or places where they can eat, all the way to requesting reviews from the customer at the end of the tour or asking for contactless payment tips for the tour guide - all within customers' preferred messaging apps.

Give us your SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis of the company.

• Strengths: The biggest strength we have is on our founding team. Every startup will say this, but we really stand for this as our team was founded by tour operators with more than 50 years of combined experience in this industry. We really know what are the main difficulties that tour and activity operators face, and we have the technological background to solve this. Plus, our team has been working together for the past five years and built three other companies that are already generating more than $2.8 million in revenue every year.
• Weaknesses: Although our company is based in the U.S., most of the team is originally from Latin America and that puts as in disadvantage to other companies in the U.S. and Europe with large amounts of funding behind them. We've had to bootstrap for the past four years and personally invest most of our assets into this company.
• Opportunities: There are hundreds of opportunities in the tours and activities space, but you have to know the industry to see them and how to take advantage of them. We are in the communication space, and there's still a lot of work to do there as most operators spend at least half of their time on a regular day doing things like responding to customers' questions, asking them for reviews and solving their requests (like changes of dates or cancellations). For the bigger operators, this usually means spending thousands of dollars per month on "customer reps.” 
• Threats: The most obvious one is the pandemic crisis, which no one knows how long it's going to last. Some people have called us crazy to be investing on a travel startup these days, but we see this situation as a double-edged sword. The lower volume of travelers has forced many operators to think about ways to automate their business more, which has benefited us as that's where we provide value. On the other side, if it lasts too long (two more years?), our clients will close down, and then, so will we.

What are the travel pain points you are trying to alleviate from both the customer and the industry perspective?

Let's start from the customer's journey of booking and going to a tour: Studies show that most travelers will choose to wait to book their in-destination activities - most bookings happen around 72 hours before their trip. So, unlike flights and hotels, most people will do this in a hurry, some people might even do this while they are at the airport, on their airport transfer or when they get to their hotel.

As a consequence, you will find that most travelers don't even read the description of the tour they have booked that carefully. So, if the information is not easily available, around 48 hours before the tour they will start asking questions like "Where am I meeting this tour?" "How long will it last?" "Are meals included?" and many others. If answers aren't provided immediately, customers start to panic and their experience starts to degrade.

Tours and activities are just more complex and diverse products than hotels or flights, so the OTAs look to the other side when it comes to customer service. Who has to respond to these questions? The operators. This example is just one of the many pain points we've found that both customers and operators have in this time lapse between the time when a tour or an activity is booked until it happens. Others include the lack of good pictures that tour and activity operators have, the amount of time spent asking for reviews, the challenge operators face when trying to do any cross-selling or upselling and the list goes on.

So you've got the product, now how will you get lots of customers?

We are currently building a sales team (most of the sales have historically been handled by ourselves personally up until now) and a few interesting marketing strategies to reach out to as many operators as possible. However, as said before, TourOpp GO! is an independent line of business from the OTA, so there's obviously a synergy here. We know many operators as many of them are our suppliers, so now they are also our suppliers as well. Others aren't our suppliers but have become our clients on TourOpp GO! as we've kept a relationship with them after meeting them in trade shows or conferences like Arival, WTM or ITB. 

In the past four months we've also received many referrals as TourOpp GO! has already shown useful to operators who've had to reduce their staff after the COVID crisis and are looking for ways to automate some of their manual processes. 

We've also gotten a lot of attention from operators who, after seeing the reduction in passenger volume, are looking for other ways to monetize and increase the revenue they get per booking. Finally, some operators have decided to start using tools to communicate some of the health and safety protocols they have implemented and to provide contactless payment options to customers when it comes to tipping or booking additional products. This referral process is the type of marketing we like the most because it means we're doing something that provides value.

Tell us what process you've gone through to establish a genuine need for your company and the size of the addressable market.

As an OTA we saw customers' behavior after booking. We used to process 5,000 bookings per year, which is still a low number for an OTA, but big enough to see how many questions customers had and how operators handled these. We also realized that operators lacked good pictures to upload on OTAs, their own website or social media, despite of the fact that customers were doing taking pictures every day. Finally, we also realized that if we didn't ask for a customer review, the operator wouldn't do it because they would have to do it manually. 

These are difficulties that all tour and activity operators face daily, and Arival estimates that there are close to one million operators around the world, with at least 300,000 of those already selling online (according to Tripadvisor's numbers).

How and when will you make money?

TourOpp GO! works on a monthly subscription basis where operators pay according to the number of messages they want to send per month (which will depend a lot on the number of bookings they get as well). We also have a free plan for small, new and recovering operators where they can send automatic booking confirmations and reminders and choose to send review requests and tour suggestions on a pay-per-booking model. We have close to 100 clients right now, but we expect to be working with at least 500 by the end of the year. 

What are the backgrounds and previous achievements of the founding team?

TourOpp is a company that was founded by two tour operators and two "techies." Jossueth and Paulo Irigoyen are owners of the Gray Line license for Ecuador and Colombia, and they have been running a family company that is now 35 years old. This is the largest operator of day tours in Ecuador and the biggest supplier to OTAs in this country. When they saw the need to bring dynamic pricing to the industry, they called Daniel Pino.

In 2016, Daniel had left his job at Southwest Airlines to replicate the "City Pass" model in Latin America. He founded another business, which he partially sold to work on TourOpp.

After raising some angel investment, the OTA was launched in 2018 offering more than 1,500 tours in 120 destinations around the world. It were selected that year as one of Latin America's Top 40 startups and then in 2019 it was accepted by LATAM's most important accelerator, Start-Up Chile, for their Seed Program. In 2019, a new CTO joined the team who has more than 10 years of experience developing communication software. 

What's been the most difficult part of founding the business so far?

Although this is changing rapidly, the tours and activities segment within the broader travel industry has historically been one of the slowest adopters of technology. After working with suppliers for the past four years, it is only now that we see res-tech companies really penetrating the market and API connections really becoming a standard for OTAs. And yet, there are still hundreds of thousands of operators that don't even know this technology exists.

Our product depends on how developed this technology is and how fast tour operators accept it. 

Generally, travel startups face a fairly tough time making an impact - so why are you going to be one of lucky ones?

It's true and even more so now, being a startup in the travel industry is more challenging than venturing into more well-funded industries like fintech or health tech. However, we truly love and know this industry and that really makes us unique as most startups in this space really go into it without talking to the real actors first.

We also think that in the travel industry things can change very fast. New players, new technology and new rules can change the panorama from one day to another, so you have to be quick to adapt. We believe going from on OTA to a communication software shows how fast and aggressively we've been able to adapt.

A year from now, what state do you think your startup will be in?

The next year will be about growth. We're hoping to build a very solid team and a good base of customers in the next 12 months in order to build more features and get connected to even more booking systems. If we achieve that, we will be ready for true expansion in 2022.

What is your end-game? (Going public, acquisition, growing and staying private, etc.)

I think most startups have an exit strategy in mind and that's okay. However, we're here for the long run. We can't rule out an acquisition in the future, but we really like this space and we want to really make a difference in the businesses and lives of tour and activity operators, while also improving the travelers' booking experience through great technology and software.