The market for software to tour merchants is fragmented without a single clear leader. Yet Peek now has an advantageous position, thanks to the acquisition of the assets of one of its chief rivals.
Two of the most heavily funded, venture-backed reservation services and marketplaces for tours and activities are essentially merging, as the healthier Peek acquires the assets and employees of Zozi.
Peek, which has raised $16 million in publicly disclosed funding, is acquiring the assets of Zozi, which has raised more than $44 million.
That said, Peek disputes the notion that the deal is a merger or acquisition, preferring to say that Peek is partnering with Zozi or that the companies are “coming together.” Peek wouldn’t detail the terms or nature of the deal. Essentially Peek is hiring Zozi employees and onboarding its customers while the Zozi brand, software, and marketplace will be phased out this year.
The sensitivity about the merger characterization could have to do with the pending litigation against Zozi, first reported by TechCrunch.
Ruzwana Bashir, the chief executive of Peek, claims that “this deal will make Peek the largest platform for tours and activities in the world,” although Skift couldn’t verify that.
Bashir is referring to the backend technology part and not the consumer-facing element. TripAdvisor’s Viator and GetYourGuide, both of which were heavily funded, do not sell backend reservation software.
Over time the Zozi brand will be phased out. Customers of Zozi’s enterprise software platform, Advance, will be moved to Peek’s Pro platform. “There will be no changes in cost, but there will be exciting enhancements in service,” says Bashir.
Peek, founded in 2012, will also move merchants using Zozi’s direct to consumer marketplace to Peek’s site, Peek.com, and will phase out Zozi’s consumer offering.
Documents recently filed say that Zozi in the past year raised more than $10 million. Is that money going to be rolled over into Peek’s hands? Bashir said she couldn’t disclose the structure of the deal.
In March, Zozi had to lay off 38 percent of its employees.
Tours platform startup Zozi, which, as noted, had raised more than $44 million in publicly disclosed investment since its creation in 2007, became mired in trouble as its founder, TJ Sassani, and its investors increasingly disagreed on both the company’s direction and his performance.
Last month he filed a lawsuit against Zozi’s investors. Peek wouldn’t comment on the state of that suit. But in response to a question, Bashir says, “We don’t believe Peek is exposed to any legal risk.”
Consolidation has picked up in the software sector for tour merchants. In July, Zerve, another well-funded tours platform, shut down, due to a cash flow crunch. It accepted an approximately $100,000 payment from FareHarbor, which claims it has since on-boarded “up to 90 percent” of Zerve’s clients to its system.
As of today, FareHarbor says it has more than 4,200 merchants using its system and that it has been adding 100 to 150 new accounts per week.
In 2015, Swiss-based Palisis, which provides software solutions for ticket operators, acquired TourCMS, a reservation system and distribution service. The combined entity processes more than $1 billion in transactions a year.
Palisis/TourCMS mostly depends on its work for large players, such as Gray Line, one of the largest tour providers worldwide (though that operator in particular accounts for less than ten percent of its business). It is not interested in the long-tail of smaller operators, as Peek, Zozi, and the rest have generally been.
Bashir says Peek grew “10x in the last 2 years” although the company didn’t reveal from what base.
Peek and Zozi have been adept at receiving venture capital. But there are other players in the software market for tours merchants. That’s because the $100 billion tours-and-activities market is still fragmented when it comes to enterprise software. Other companies that offer B2B tours and activities tech systems for suppliers and marketplaces, in addition to the ones noted above, include Bookeo, BookingBoss, Checkfront, Coras, Reservation Genie, Rezgo, TrekkSoft, Varitrip, Xola, and Zaui.
There is a lot of turmoil — openings, closings, lawsuits — in this sector. Explanations vary. Perhaps it is mainly because most of the companies find it hard to stay in the black due the low barrier to entry of players and the fragmented market of merchants. In a sector where margins are hard to come by, the player with the least funding may have an advantage.
If so, that’s the opposite of the assumption several venture capital investors made years ago, who thought that tours tech was a winner-take-all-market and that spending faster than earning would pay off in the long run — and thus the best-funded companies would win.
The consolidation will assist the drive by tours and activities to finally come into their own, one of the megatrends that Skift is watching this year. Until now, tour merchants have been reluctant to embrace online reservations, as noted in the Skift Research Report on the State of Tours and Activities Tech 2017.
Due to the deal, “many” of Zozi employees will join Peek’s team, the company states. “We’re excited to bring in Zozi’s team members who have incredible expertise.” The companies will be deciding which features of the combined software tools might be merged into the final product, such as the ability of Zozi’s iOS mobile app to allow merchants to reduce fraud risk by accepting mobile payments with an EMV-compatible chip reader.
Although Peek is not keeping all Zozi employees, it says that it is hiring or has recently hired top talent in sales, product, and engineering.
Bashir says she sees Peek as primarily a technology company and that it will continue to prioritize technology investment this year.
For more, see Bashir talk on stage with Skift founder Rafat Ali at November 2016’s Skift Global Forum New York: Video: Why Peek Still Sees Opportunity in the Tours and Activities Market
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Tags: enterprise, mergers and acquisitions, peek, tours, tours and activities, zozi
Photo credit: Peek and Zozi offer software to tours-and-activities merchants, whose market is estimated at more than $100 billion a year in sales to travelers and locals although it is a very fragmented market. Peek