GetYourGuide is betting that travelers will prefer to book GetYourGuide-branded tours over locally branded ones. This diagonal integration echoes marketing moves made by Oyo in hotels and RedAwning in lodging rentals. But will it work?
GetYourGuide, a tours-and-activities booking platform, will begin in August selling tours under its own brand name.
The Berlin-based startup, which has raised $175.5 million in funding, will rely on marketing partnerships with local activity operators.
The company will mine its data on customer preferences from having sold 15 million tours since its founding nearly a decade ago. It intends to use the lessons it has learned to set standardized criteria for how tours should be run.
To be labeled a GetYourGuide tour, an operator must agree to follow its best practices regarding meeting points, check-in processes, starting times, duration, and other factors. In return, the retailer will send more customers the operator’s way.
This summer, five GetYourGuide-branded tours will debut in western European cities, which haven’t been revealed. Next year, the company plans to boost that number to 100 branded tours in 15 global destinations. More details can be found at a promotional microsite that debuted Monday.
CLARIFICATION: This article originally took GetYourGuide’s word and described its move as “an apparent first for the sector.” But TripAdvisor-backed Viator has pointed out it has offered a white-labeled branded private tours product for a while.
Musement, an Italian-based activities retailer, said it has been producing its own tours for about a year by running a platform where a few hundred licensed tour guides in Italy, France, and Spain can be matched at select destinations along with tickets to an attraction — thanks to the startup’s technical integration to the software provider of the attraction itself. Musement said its branded tours account for about a fifth of its business today.
A Branded Future?
Co-founder and CEO Johannes Reck said his goal in several years time is for a majority of his company’s revenue to come from selling its private label inventory — at least for tour inventory in the most popular destinations. “But for special experiences away from the top attractions, we’ll continue to see local suppliers dominate our platform,” Reck predicted.
It’s too early to say if the just-debuted branding effort will make some tour operators feel muscled out by a large online player.
Consumers book a majority of activities in-destination. GetYourGuide is betting that having its brand on display on the ground will help with its overall marketing as a more cost-effective way to acquire customers than competing with online giants in digital marketing for less common advance bookings. But the 400-employee company said it doesn’t plan to compete with Expedia and others by opening offline sales kiosks.
Reck said the average traveler thinks of activities booked through GetYourGuide as being GetYourGuide experiences — unlike when they book a flight or hotel through an online travel agency and recognize the operator as being different from a retailer.
If true, other activity retailers may face the same problem and may be inclined to copy GetYourGuide’s branding effort. It stands to reason that tours branded by Expedia, Viator, TripAdvisor, Booking.com, Klook, and others could follow. Rather than fight consumer perceptions, the retailers could accommodate them.
Last November, in one possible hint of changes to come, China’s largest online travel agency, Ctrip, signed an exclusive partnership deal with Big Bus Tours, an activity operator that serves more than 4 million customers a year, where the two companies would work more in tandem on marketing and product development.
When asked about that, Reck said, “Ctrip is definitely a role model company, though it primarily focuses on the Chinese market for demand.”
Many industry observers expect more marketing integrations like this, but professionals outside of the tours-and-activities industry are often skeptical about how such loose branding arrangements might work in reality.
Hotels and restaurants have long had a franchise model which involves more investment by the brands and more cooperation by the operators than marketing partnerships do.
It’s an open question whether a less defined marketing partnership can hold up well when problems arise. In an extreme example, if a consumer is unhappy with something that happens, who would get blamed — or sued?
Reck calls the branding effort as “vertical integration.” But that term usually refers to when distributors actually own the makers of a product or service.
Diagonal integration might be a more apt term.
A relevant example of diagonal integration might be how in India companies like Oyo first offered branding and distribution to small hotels in exchange for minimum guarantees of consistent service. In the U.S., companies like RedAwning have attempted the a similar branding model for vacation rentals.
Yet the verdict is still out on the success of this model. Oyo has since moved to directly leasing the properties it rents as a more reliable way to assure quality and consistency.
Meanwhile Airbnb, through its Trips product, has hesitated to either tell operators how to run their businesses or to request that all marketing be done under its own name.
A negative analogy to GetYourGuide’s private label effort would be with Amazon, which uses customer data to design products that it pays manufacturers to build under its Amazon Basics private label. Some suppliers feel pressured by the giant retailer’s demands or by its competitive force in the market.
Reck disliked that analogy and said that its participating tour operators will like GetYourGuide branding because they will earn more money from activities because they will receive more promotion and more customers.
A positive analogy, Reck said, would be video streaming giant Netflix, whose creation of original programming for its Netflix original division has helped match niche content to relevant audiences more efficiently than blockbuster-driven movie houses and TV networks had. But that analogy stumbles in that GetYourGuide isn’t directly controlling the production the way Netflix does.
Some say technological trends point to more diagonal and vertical integration being inevitable. In a white paper presented at World Travel Market 2017, industry veteran Alex Bainbridge speculated that many big bus tours would be converted to autonomous vehicles and that the online travel giants like Ctrip would have the most resources to invest in that technological switch.
New Branding, But Sticking With Same-Day
On Monday, GetYourGuide previewed its rebranding with a hipper logo and other details. The company hired DesignStudio for the rebrand, which was the same company Airbnb hired for its own rebrand a couple of years ago.
The company is not planning to change its name, despite some internal debate, Reck said. It is also not planning to add multi-day tours, except for a couple of current exceptions, despite internal debate.
GetYourGuide room believes room for growth is vast. In an interview on-stage at Skift Forum Europe in April, GetYourGuide Co-Founder and Chief Operating Officer Tao Tao said, “TripAdvisor, Expedia, GetYourGuide, Airbnb, all the startups, everybody together comprises maybe 2 percent market share of the global market, in terms of what is actually transacted.”
“None of us should be worrying about taking some market share from each other, but rather how to grow the 2 percent to 20 percent.”
Photo credit: Travelers on a guided tour admire the Burj Al Arab landmark in Dubai in the United Arab Emirates. GetYourGuide, an activities retailer, wants to put its brand on tours similar to this one. GetYourGuide