This post was written by Josh Oakes. Josh grew his local tour company to millions of dollars in annual revenue and sold it for $1m+ in June 2017. He has now founded the The Sunshine Tribe, where he helps tour and activity operators across the globe build amazing businesses and create awesome lives.
In 2007 my wife and I started a Day Tour company in Melbourne, Australia. We had no experience in tourism, no experience in business, no networks, no support, and no cash.
After two years of 60-hour weeks, we were taking home $20,000 a year and had nearly thrown in the towel more times than I could count. Fast forward 7 years and we had grown that business to more than $2 million in revenue annually, before selling in 2017 for 7 figures.
This was achieved without working ourselves into an early grave. With a great lifestyle where we worked remotely, travelled regularly, enjoyed all the things that we love about life, and empowered others to run our business as it grew.
We were able to only work on the parts of our business that we loved.
Now we help tour and activity operators, travel professionals and small tourism businesses across the globe build amazing businesses AND create awesome lives, through our new venture: www.thesunshinetribe.com.
As a Tour Operator, we never worked with Viator, Expedia, or any other of the big Online Travel Agents. We built our business to more than $2million in revenue annually without generating a single dollar in revenue from these guys.
I’m not trashing them, and I’m aware that they are hugely important for many tour operators, it’s just that I’m a bit old school.
I’m a big believer in building a great business by building awesome relationships with partners that really get to know you, your business, your people and your products intimately.
And vice versa.
You can’t build that kind of a relationship with a large OTA. It’s almost impossible for them to get to know you. They know little, if anything, about your company, or your team, your tour guides, or your vehicles. They haven’t experienced your tours and they don’t know really what their customers are saying about you.
Anyway… the purchase of Viator by Trip Advisor got me thinking:
In the ‘travel world’ this has obviously been a big topic of discussion and most tour and activity operators are pretty miffed about it (understandably so).
Tour operators are feeling the effects.
The general consensus is that it will have a negative impact on their business. They are now forced to change their pricing structure to include a commission. Some have even described handing over a 20-30% commission to TA as potentially being the ‘death’ of their business.
Now, for a business like ours that never generated a single dollar in revenue from Viator in over a decade, I get it that many people may have a different perspective to mine (it’s impossible for me to understand everybody’s individual business model).
However, could the purchase of Viator by Trip Advisor be a great opportunity for many tour and activity operators?
I say yes.
Sometimes every small business needs a ‘jolt’ and this could be it.
Every small business needs a “jolt”, and Trip Advisor buying Viator could be yours.
You may be working your tail off – but it’s still very easy to become complacent and neglect many areas of your business. Maybe this is the ‘jolt’ that forces you to take a step back, think outside the box, and put a magnifying glass on every part of your business.
Think deeply about how you could improve your business and about the directions you could take it.
Are the sales that you generate via Trip Advisor an important source of revenue for you, and you are now worried that these sales will start to cost you 20-30% in commission? Here are a few questions that you could ask yourself to see if you can flip this around. Maybe it is a great opportunity to make yours a better business long term.
Can you re-examine the pricing and the inclusions in your tours?
Whether you are at the high-end or at the low-end of tours, I’ve always believed that if you are ‘the best’ and/or ‘the only’ at what you offer, then price becomes a whole lot less important.
Is it so bad to be more expensive than others? Maybe, rather than ‘raising your prices’, it could be seen as a great opportunity to tweak and improve what you offer.
Yes, some international and domestic tourism markets are price sensitive – but many more are focused on value and finding out from you how you justify your prices – how you’re different and what they are getting for their money. Rather than a price increase, perhaps an improved and more unique product at a slightly different price point is the answer.
Can you explore new revenue streams?
Can you put an end to what is possibly an unhealthy reliance on one OTA and spread your eggs across a number of baskets? Explore different revenue streams? Identify specific international markets and target them? Find new partners? Create different divisions to your business? Create a range of upsells and make more off each tour?
Can you increase capacity?
Can you scale up? Can you put the systems in place to ensure you can deliver your tours in greater numbers and ensure you maintain quality and consistency? Can you improve your recruiting and training process? Your operations processes? Can you source a bigger and better supply of quality touring vehicles for those peak times?
Can you dig into your numbers and reduce expenses?
There’s so much to do as a small tour operator. Sometimes the one thing that’s most important to your bottom line is the thing that gets neglected because you’re too busy ‘running your business’.
Sometimes the one thing that’s most important to your bottom line is the thing that gets neglected because you’re too busy ‘running your business’.
Get forensic on your fixed costs and cost of sale. Put a microscope to everything in your financials line by line. Examine every expense that runs through your business. Examine your suppliers. Are you getting the best deals? Are they the right supplier? Examine everything. Utilities, SEO, tech support, motor vehicle expenses, business banking fees, insurance, phones…everything. If you don’t ask, you don’t get.
We did this in 2016 and we were able to reduce expenses across our business by 13%. It made a massive difference to our bottom line.
I’m sure that there are plenty of frustrations out there, but perhaps this could be a blessing in disguise for you and the catalyst for great things for your business.
If you enjoyed this article and found it really helpful, please take a moment to download our ‘Idea’ to ‘7 Figure’ Blueprint HERE.
It’s a look ‘behind the curtain’ at the step by step process we took to turn a vague idea into a multi 7 figure tour business.
Founder of The Sunshine Tribe