The Content Crunch
The folks at Crunch Fitness probably didn’t realise how perfectly their logo would describe the content crunch that’s about to engulf the Experiences sector. Image © Crunch Fitness.
Let’s be clear — I wouldn’t be writing this if I wasn’t an investor in Magpie Travel. But the reasons I got involved with Magpie are compelling enough for our industry that I don’t think my role matters. Let’s see if I can convince readers of that.
Really Rapid Growth
The Experiences space — I’ll use that term because it’s less of a mouthful than Tours & Activities — is growing fast. So fast that nobody really knows how many operators are out there right now. Certainly more than 100,000 but definitely nowhere near saturation point. What’s become clear over the last year or two is that for people who are looking to start their own business, an Experience startup often makes a lot more sense than yet another coffee shop, accountancy practise or software consultancy. And a lot more fun. So we’re probably not going to see a slowdown anytime soon.
A number of factors have driven this rapid growth, but I reckon four stand out. The first is TripAdvisor’s decision, soon after acquiring Viator, to move to the full-blown marketplace model that now features over 100,000 individual products. That was a big shift away from the former model, which relied on a curated selection of 20,000 products with an implied message of “We’ve chosen the best operators and products for you.” Trip’s decision to “go big” made sense and has been rewarded with spectacular growth in booking volumes. It also opened the way for tens of thousands of new operators to gain access to Trip’s ecosystem, driven by its 350 million monthly visitors. That number gets a lot of people excited.
Viator’s move to a marketplace model has attracted many more operators to digital distribution.
The second factor is Airbnb’s entry into the market. Their message is simple: you’ve seen how easy it is to create a lodging business based on your spare room or holiday house; now see how easy it is to become an Experience provider. You can do it based on your skills as a photographer, sculptor or graffiti artist; or maybe just because you know your city really well and you’d like to share that knowledge with others. While the jury may still be out on how successful Airbnb’s peer to peer model will become, one thing is certain: its existence has caused many talented individuals to give it a try, often with innovative ideas and fresh approaches.
Third, the emergence of well-funded Asian distributors is putting a rocket under the market. Key players are Klook, who have raised almost $300m in VC funding; Veltra, whose December IPO on the Tokyo Stock Exchange was a resounding success; and BeMyGuest, who have built a formidable wholesale distribution platform from their Singapore base. This trio are giving Asian operators the confidence to grow their businesses, secure in the knowledge that distribution is not going to be a problem.
Finally, the emergence of an industry ecosystem that is focused solely on the Experiences sector has underpinned a degree of confidence amongst operators: confidence that the market is going to continue growing quite rapidly; confidence that as an operator you are not alone, and that your peers will help you grow; and confidence that this is an industry where you can truly enjoy your work, something that simply can’t be said of so many other jobs.
The key element of this nascent support network is the Arival Conference, already grown to three events around the globe each year, and already a must-do event for anyone who’s anyone in the sector. The growth in media coverage focused on Experiences from online travel media players Phocuswire and Skift, new entrants like Shane Whaley’s Tourpreneur, and the well-established DigiTourShow from Chris Torres is also proving important. And moves to establish a Trade Association for Experience operators — said to be nearing fruition — also make complete sense. Seen together, these elements all appear to underpin the rapid growth we’ve seen over the last two years.
The Crucial Role of Tech
Booking Group’s acquisition of Fareharbor shone a very bright light on the importance of tech to the Experiences sector. Trip’s follow-up with Bokun and the continued successes of established reservation systems players like Rezdy, Rezgo, Peek, BookingKit, Ventrata and others demonstrate that operators have plenty of choice, and that the intense competition in this sector will continue to drive further innovation, efficiency gains and cost savings.
The Content Crunch
Operators need to worry about more than their rez system, though. Before a customer hits the Book button, they make a purchase decision based on product descriptions and images — content, in other words — that requires writing, translation, distribution and then on-boarding by distribution partners. With 100,000 operators on one side and hundreds of distributors on the other, that’s a lot of content moving around the industry. There’s an enormous amount of replicated effort as operator staff prepare and distribute content to their various resellers, while reseller product managers wrestle the content into the format required by their system.
In my Viator days I’d often ask the product team about such and such a product that we’d signed at WTM a few months prior, wondering when it would be online. Typically, the answer was “When we get to it”, demonstrating clearly that nobody in Product really cared what the CEO’s favourite products were, and that even companies with large product teams face challenges getting product loaded, formatted and ready to book. Some — Expedia, GetYourGuide and Viator — have extranets to help automate the process, but those tools only benefit those resellers. Operators are becoming understandably tired of the effort they must allocate to a task — providing and managing content in the format resellers require — that must be repeated each time they add a new reseller partner.
That content crunch — resellers racing to load tens of thousands of new products from operators with content of wildly varying quality and format, while operators struggle to meet the specific yet disparate needs of each new distribution partner — is a potential brake on the industry’s growth, and a problem worth solving. It’s also the reason the Experiences marketplace needs a specialised PIM solution.
It should be no surprise that other sectors of the e-commerce world have already faced this challenge. Product Information Management (PIM) systems — here’s the Wikipedia entry for a solid drill-down into what PIMs do — are crucial to the operation of marketplaces such as Amazon, eBay, Walmart, Google Shopping, Rakuten, Shopify and others; and to the tens of thousands of consumer goods suppliers who distribute via those networks. So Magpie — the PIM system for Experiences that’s launched this month — is not exactly breaking new ground here; instead it’s taking lessons already learned in other e-commerce sectors and applying them to the Experiences market.
PIM systems play a key role in the consumer goods market.
Where To From Here?
Magpie’s immediate goal is to help content flow around the industry in a more streamlined manner, by taking the burden of understanding each reseller’s exact requirements away from operators. Magpie understands each reseller’s data mapping — the exact data they require, which is a mix of fields covering product descriptions, pick-up locations, inclusions and so on, and the different names they give those fields — and maps operator content to the individual needs of each reseller.
Magpie also offers an integrated translation service — human, not machine-based — to allow operators to create, at low cost, high quality local language content for distribution to resellers in new markets. That’s a far cry from the existing situation, where those resellers manage and pay for translations themselves, and operators must wait until a reseller is prepared to pick them up in a foreign market.
In the coming months the Magpie team will be working with both operators and resellers to understand what content management issues cause the greatest pain, and where the system can do most to ease the content crunch. Getting that right offers the promise of a more efficient distribution channel; that’s a goal we should all be looking to attain.