Lots of small travel companies get relatively small amounts of fundings. By that measure, news that Context Travel, a provider of walking tours and activities based in Philadelphia, took in a $5 million in investment from a private equity firm isn’t that remarkable.

But the deal becomes more notable when it is seen as being representative of something a bit larger: Many travel companies are wrestling with how to meet the demand for a curated selection of experience-heavy travel at scale.

It is easy for travel industry types to quote surveys suggesting that more people — especially luxury travelers and millennials — prefer experiential travel over checklist or package tourism. There’s a similarity to how to these middle- and upper-income people tend to buy travel instead of physical goods.

It’s also easy to point to a growing demand for educational experiences, from the doubling of museums in the past couple of decades to the explosion of niche, skill-oriented workshops like cooking classes.

But it is harder for travel companies to figure out how to build a business addressing this perceived market with significant volumes.

Context Travel, which is a tour operator and not an aggregator, has faced a similar challenge of getting much bigger with its selective approach to tours, which emphasize very small groups “for the intellectually curious traveler.” It’s a problem that several of its tour operator rivals also face.

Context’s differentiation is in hiring scholars, professionals, journalists, chefs, and other specialist professionals to lead its tours, which are typically limited in size to no more than six people.

If you broaden the category from more than just afternoon walking tours to educationally themed package tours and multi-day trips, this is a significant sector that includes names like Abercrombie & Kent, ACE Cultural Tours, Cazenove+Loyd, G Adventures, Martin Randall, National Geographic / Lindblad Expeditions, Intrepid, Remote Lands, and Smithsonian Journeys, among many others.

Founded in 2003, Context Travel only grossed about $8 million last year, an amount the company will need to ramp up for Active Partners, a London-based firm, to earn a multiple on its investment one day.

Just Add Cash?

Active Partners has experience in finding so-called product-market fits for consumer brands, and then adding the jet fuel of equity to help replicate the model in a broader market quickly.

Over a decade, Active Partners helped the clothing maker Rapha become a market leader for high-end bicycling gear via direct-to-consumer sales, and Evans cycles to become a popular brand among cycling enthusiasts. In the past few years, the firm has similarly helped rapidly spread the opening of Leon and Honest Burger franchises in London.

But can travel follow the same model? Nick Evans and Alex Gilmore of Active Partners hope so. They will join Context co-founder Paul Bennett on the company’s board.

Active Partners said that its thesis is that “Context has primarily drawn customers from the U.S. traveling to Europe, but we are building a team that can rapidly scale the number of cities in which Context operates and attract new customers from around the world.”

How viable is the strategy? Airbnb, for one, is investing large amounts of money in its Trips product,  which was launched late last year,  and aims to cash in on a growing interest in “authentic” tours and activities.

Airbnb’s gains appear to be meager, to date. Skift looked in depth at Airbnb’s experiences product, talking to operators/hosts who participate in Trips.

One issue: Airbnb has had to be high-touch in its involvement, and it has probably not been making a profit. One expert estimated at the time that Airbnb only made about $10,000 in the Bay Area since launching Trips in November 2016.

Bennett, who cofounded Context Travel with his wife Lani Bevacqua, said that the competitive set broadly breaks down into two groups.

“We have local tour suppliers in each market who are competitors,” said Bennett. “These include large companies like City Wonders as well as myriad small, mom and pop operators all over the world. This group is local or, at most, have five to six regional destinations.”

“The other group are global aggregators like Viator or franchises like Urban Adventures. These guys have large budgets and compete well on paid and organic search and digital marketing. They’re also global. While we have an advantage regarding quality control — we own the product — and differentiation, we still go head-to-head on customer acquisition.”

CEO IS MIA

At the beginning of the year, Context had 15 full-time staff. It added four people, including a sales director. With the funding, the plan is to add about 10 more positions in technology and marketing. The company has a presence in 42 destinations, up from 13 destinations in 2011. It has about 1,500 English-speaking tour guides who lead about 700 tours.

Context plans on hiring a new CEO based in Philadelphia or New York City to execute the business plan and help take the company to the next level, with the co-founders stepping into a more consultative role.

Scaling involves challenges on both the demand and supply sides of the equation.

On the demand side, the company will need to invest in digital marketing — an effort that it has largely avoided until this year.

It has work cut out for it. A year ago, on a trip to Rio de Janeiro during the Summer Olympics, this reporter took several Context tours with friends, and the tour guides said that there had been few customers coming in during the past year.

Most of its business appears to come in Italy and France, with travelers giving the company high satisfaction ratings but only associating it with that specific country as opposed to being a multi-destination brand.

Active Partners is betting that issues like that are a function of poor marketing and that shoppers are out there and can be reached cost-effectively. “This was the first year we ever paid for customer acquisition online and more sophisticated and automated email marketing, and we grew 50 percent in our sales,” said Bennett.

That suggests that, at least for a couple of years, the company has some “low-hanging fruit” that it could claim through applying best practices in marketing. Yet is there an upper limit to growth?

On the supply side, Context needs to produce tour guides, which it calls “docents,” that meet its quality standards. On a recent look of tour availability in Japan in November, there is a dovetailing in the availability of tours in places like Kyoto and Tokyo that have higher-than-usual numbers of English-speaking masters and Ph.D. students than elsewhere in Japan.

Bennett pushes back on the idea that there’s much of a supply problem. “No, we can’t mint Ph.D’s, per se, but the real problem is taking knowledgable specialists and turning them into people who can make points conversationally and vividly to people who are on vacation. We’ve gotten quite good at replicating the process of training people up to standard.”

Photo Credit: The Sagrada Família. the emblematic Barcelona church of the late Catalan architect Antoni Gaudí, is the kind of engineering and cultural work that Context Travel tries to unravel for its guests. Context Travel