How are tour operators adapting, and what strategies are helping them thrive in this dynamic environment?
Last month we released a report in the Skift Trends series, Future of Tours and Activities Tech and Marketing.
Below is an extract. Get the full report here to get ahead of this trend.
T.J. Sassani is CEO, Chairman and Founder of Zozi, a company that offers a backend reservation management and payments platform for tour operators, plus a consumer-facing tour marketplace. Below are the highlights of Sassani’s conversation with Skift about key challenges faced by the tours sector, how his company is addressing some of the challenges, and how tour operators should think about effective mobile experiences for consumers.
Skift: Where does Zozi’s business fit in the tours and activities ecosystem?
T.J. Sassani: Our model has evolved quite a bit over the years. What we’re focusing on now, and what’s really catching a lot of steam, is a two part model similar to OpenTable. We focus first on getting businesses on our SaaS (Software as a Service) platform, and we call that “Advance.” Online bookings, payments, reservations, mobile payments, etc. … We’ve got several thousand businesses using the system now across about 90 countries. [There’s] about a billion dollars going through [our] platform. So we’re the largest in market and we’ve raised about $45 million in funding so far.
We also have Zozi.com, which is our consumer marketplace. We started there, and then put that on autopilot while we were focusing on the reservations platform. We’re now putting a lot more attention back on the consumer piece. So we have both the [consumer] side and the supplier, software side, and we plug that into some of the good distribution channels in the market. We have a partnership with Viator that we’re now integrating and we’re looking at one or two other places that may be able to do some volume for our merchants.
Skift: When does the tours and activities industry look like today, at the end of 2015?
Sassani: If you look back 10 or even just five years ago, the market was really challenged. The reason it was challenged was that merchants were not coming online. They were very slow to adapt technology. You think about the adoption curve across other small business segments that use software. Restaurants adopted software, mind and body [businesses] adopted it and then the fitness market came online.
Now the tours and activities market is really ramping up as well. Interestingly enough, when a lot of the distribution channels started to open up–Viator started getting more steam, TripAdvisor coming into the market–what merchants saw is they now started to have more distribution points, and it went from being a “nice to have” to [needing] a centralized reservations platform to connect to the channels. Otherwise it really made it hard to provide a good customer experience. As of today, only 35 percent of operators have a booking capability on their website and only around 15-20 percent have a sophisticated reservation platform in place.
The second challenge is that because there’s no real centralized reservation system, becoming a marketplace that is truly bookable in real time with on-demand activities is something that’s quite challenging. Viator solved some of that by providing inventory and plugging into some of the systems [already] in the market, but even so, the market is still very fragmented. There’s still a lot of work to do there, but that’s being solved as well.
The third challenge is from the consumer perspective. If you went and polled a hundred people on the street, I don’t think anybody could give you an answer about where they go to book activities. People like Viator do a really fantastic job in their segment focusing on tourists. That’s a fine business to focus on the top five to 10 attractions in any given market, but as a result they’re only focusing on those customers that buy the product once a year. By the time the next occasion comes up, they don’t remember the brand.
Skift: How important is mobile for tour operators as an engagement and distribution tool?
Sassani: It’s incredibly important. We think about mobile through two lenses. One is the merchant lens, where we built a mobile app for them to manage their whole business and access our product through the mobile devices. The reason that was the first thing we did is it helps get more of the merchants online and keeps track of inventory availability in real time and encourages more compliance to adopt a system.
I see a lot of companies in the tours and activities sector launching mobile apps, but we don’t pay any attention because it’s just noise. You can’t just launch a mobile app for activities and have it function like the website and say ‘maybe this stuff is available, maybe it’s not.’
I think the mobile strategy for consumers needs to be entirely different and match with mobile research behaviors. Now that we have tens of thousands of activities that we have availability on, as we launch our consumer mobile web strategy next year, we will be able to very specifically target consumers with product that we know is available. We’ll also be able to allow merchants to do yield management and say ‘Hey, I’ve got a couple products available this weekend with some extra spots. I want to publish some discounts, I want to drive more volume fill that perishable inventory.’ They can do that through our platform.
There’s a unique value proposition for the mobile strategy, and it’s something people have been going after for a long time. But they’re coming at it from the wrong direction, saying they want to do in-destination marketing and last-minute mobile bookings, but they don’t know the availability and it never ends up getting steam with consumers. You have to build the infrastructure first.
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Photo credit: Zozi's consumer product. Frame