Today it's all about innovative business in tourism and this is why I researched 5 companies with special business models. In order to explain what they do, and why they are good at it, I will use a business model canvas, like the one below. A business model canvas analyzes a company taking into account its: key partners, key activities, key resources, value proposition, customer relationships, distribution channels, customer segments, cost structure and of course, the revenue streams.
The 5 companies that I have chosen are hot on the market and belong to different branches of the tourism industry. And here they are: representing the transportation corner meet BlaBlaCar from France; in the C2C corner of accommodation, enter AirBnB, coming directly from Berlin, eat-the-world is with us; make room for the company with the most experience on the market of them all, Expedia and finally, arriving with the S-bahn from Düsseldorf, trivago is here. Let the games begin.
BlaBlaCar brings value to the drivers by offering the possibility to rent the free seats in the car and in this way cover their cost and also meet new people on the way. Secure online payments and a review and matching platform completes the offer for both stakeholders. On the other side, the passengers, which usually don't own a car, but want to travel comfortably and flexible at a lower price, they can book at the last minute and travel cashless. The distribution channels include a website, which is mobile friendly and also apps with geo-location. This system is supported by a strong customer service and social media involvement.
How does the income summary look like? The revenue streams flow from commission taken from both drivers and passengers, calculated depending on the booking date, plus a flat rate for every reservation. The cost structure involves the technological set up and running cost, the salaries of the employees and for new markets, such as Germany, which has not yet reached a critical users mass, the operational costs.
BlaBlaCar has already been awarded over 50 prizes and honors since its inception, so the business is on the right track. However threats and problems must not be overseen by the management team. These include legislation changes (including the ban of carpooling in some countries and taxation procedures), securing the safety of the drivers and passengers and of course competition from other similar companies such as Tripda and Uber.
AirBnB brings value to the hosts by offering the possibility to rent their available spaces and in this way earn an extra income and also meet new people on the way. To market their spaces, free photo shoots are included, as well as insurance to the home owners. Secure online payments and a review and matching platform completes the offer for both stakeholders. On the other side, the guests can book accommodation at lower prices and integrate into the local culture at the same time. The distribution channels include a website, which is mobile friendly and also apps with geo-location. This system is supported by a strong customer service, social media involvement, promotional offers and referral marketing.
Income summary? Revenues come via commission from both sides for every booking, 3% for the hosts and between 6-12% for the guests. Cost blocks include the technological set up and running costs, salaries of the employees and payments to freelance photographers plus acquisition costs.
Among other prizes, AirBnB won the breakout app award at the 2011 South by Southwest conference and The New York Times listed the company among the next generation of profitable start-ups. Nevertheless threats and problems also lurk around AirBnB. Legislation is a problem, including financial, tax and legal liabilities, which must be solved. Moreover, the guest and host security is paramount and the threats and bans from competitors have to be resolved.
eat-the-world brings value to the partners by offering awareness, PR, emancipate a new target group and also paying for the culinary tastings. To market their spaces, free photo shoots are taken, as well as the appearance in the city's guide. Secure online payments and a review platform completes the offer for both stakeholders. On the other side, the guests can have a culinary experience and (re)discover a city. The distribution channels include a website, which is mobile friendly and prints. This system is supported by a strong customer service, social media involvement, promotional offers and referral marketing.
Income summary for dessert? The tour costs 33 Euro/person within a group of maximum 16 people. Private tours for corporate clients means a negotiation of the price. Which are the cost blocks? The salaries of the employees and freelancers are on the first place followed by the technological set up and running costs as well as the costs of prints and other media.
In 2009 eat-the-world won the Springboard innovation competition and received funding for the implementation of the idea. One year later, in 2010 the company won another competition: Kreuzberg Handelt - Wirtschaften im Quartier. The threats for the company come from the possible future competitors, changes in the economic climate of the travel neighborhoods and reduced scalability. The franchising systems offers growth but not on exponential rates.
The guests are offered one adaptable online platform for all travel needs with an intuitive Scratchpad to chose the perfect trip, with secure and flexible payments and a quick booking process (in under 3 steps). On the other side partners receive global access to the international market though a multi-brand, multi-currency, multi-channel platform. Moreover they gain valuable access to market data in order to make informed decisions, are able to sell excess inventory and receive high quality feedback directly from the guests. Above that Expedia offers consulting and easy to use tools. The company has a strong customer service, a review, rating and feedback integrated platform, is active on the social media and offers high-quality Lodging Partner Services. Offers are accessible online and mobile though apps, but also offline through the Expedia Affiliate Network.
Since 2012 Expedia uses its own ETP Payment Model to drive revenue streams. This model offers flexibility to the guests, they can choose between two payment methods: online before the trip, or offline at the hotel after the stay. Moreover advertising and media bring in extra revenue streams. On the other side, technology has its set-up and running costs. The salaries to the employees take another chunk of the expense block. Important funds are budgeted to the Sales & Marketing teams across the world as well as for acquisitions. Finally the cost of revenue is also on the list.
Expedia is one of the most successfully companies in the world, yet it also faces threats. Along its main competitor, the Priceline Group, they make a global duopoly. But smaller competitors take parts of the market share, based on specialization. In order to stay on top, innovation must continue, as well as intelligent acquisitions and expanding into new markets. Moreover decision in such a big company are not so easy to implement due to high number of levels.
The guests, which range from young tourists looking for an affordable accommodation to business travelers, are offered a hotel comparison tool in order to choose the best experience, secure and flexible payments and also quick booking processes. The content is available via Website and mobile apps, completed by a sturdy customer service, review and rating platform, social media appearance and also a tool for partners: Trivago Hotel Manager. Alongside this, trivago releases the monthly hotel price index (tHPI) available for different destinations and analyzing different room types.
The cost structure is split between the technology costs, salaries to employees, sales and marketing departments. As a revenue model, trivago uses the cost per click (CPC) for forwarding to partner OTA and also cost per acquisition (CPA). Moreover advertising and media bring in extra revenues.
In 2009 trivago was nominated for many awards including the most innovative start-up in NRW and Best Practice Award. Among the threats are the competitors such as Kayak, but also the inability to book a whole package via the website.
Have a great day and start planning your trips! :P