In an industry marked by thousands of suppliers and an ever-increasing number of sales channels, is there a place for a collaborative concept that can transform fragmentation into a cohesive concept in which everybody wins?
Hjalti Baldursson thinks so and, as CEO of Reykjavík-based Bókun, he believes the platform he and his team have created provides it.
Founded in 2012, the privately-held company offers a cloud-based software solution that enables tourism suppliers and resellers to connect, cross-sell their offerings, and manage inventory in real-time.
It has shot up like a new geyser (or Geysir, in the local language.)
According to Baldursson, more than 300 Icelandic companies (more than 500, including affiliates) signed up within 18 months of the platform going live in late 2013, all without the company hiring a sales person:
“The fast adoption provided the proof of concept. It showed us that the need in the marketplace for a system like this was very, very high.”
The average gross transaction volume (GTV), meaning transactions going through the system, is currently about $8 million a month, based on the last half-year. The CEO forecasts that his company will process at least $200 million in GTV next year.
"Co-opetition" lifts an industry
Bókun has built a proprietary business-to-business (B2B) marketplace in which suppliers — hotels, transportation providers, tour-and-activities companies, and resellers — have access to a shared database of travel products and a widget that allows them to sell them via their own websites.
The system also incorporates bookings, payments, and a variety of logistical and reporting functions.
The real key to the system, though, is a feature that allows companies to propose contracts to other companies in the system to cross-sell products, collaborate on packages, set commissions, etc.
Proposals can be accepted, rejected, or countered within the system (i.e., online), removing the need for meetings, emails, and other follow-up communications.
For example, a company that specializes in whale-watching tours can propose a contract to a horseback-riding company. If accepted, either one or both can then market a horses and whales tour product.
They’re still competitors, says, Baldursson, but now they’re also working together:
“If they have a better product offering, they get more attraction to their website; they get more business, and they get more commissions.”
It appears to be working. According to the Baldursson, 89% of Iceland’s tour and activity companies participate in the system, along with many hotels, travel agents, and other resellers. Avis, Grayline, and Icelandair’s DMO also use the system. (Customers pay a monthly subscription fee of $100 per user.)
Along the way, participants have implemented 3,600 contracts, with another 1,300 pending. More to the point, perhaps, 45% of suppliers in the system have active reselling agreements with other suppliers and 22% of all bookings in the system involve one company reselling another company’s products.
That cooperation stands in stark contrast to the historic makeup of the Icelandic tourism industry, in which services have been typically provided by small, disjointed suppliers who lacked the technology to connect with each other.
The company's rise coincides with a period in which Iceland is experiencing a tourism boom, thanks to its unique offerings, increased media coverage, and Reykjavik’s rise as an international hub. Together, they’ve helped the country’s tourism industry post a 20% compound annual growth rate (CAGR) during the last five years.
Not surprisingly, Baldursson believes Bókun has been playing a role in helping his country sustain that momentum.
Perhaps he's right. Last May, in recognition of its achievement thus far, Bókun was named 2015 Icelandic Startup of the Year in the Nordic Startup Awards.
Looking ahead, Bókun is expanding internationally by integrating with the supplier API, or data feed, of TripAdvisor's Viator -- in a partnership announced earlier this month.
It plans to build local marketplaces in several new markets in Northern Europe and North America. The Icelandic experience will set the bar for everything that follows:
“I think Iceland has a better product offering than many other places — and the reason it does is that the tourism community is cooperating to make the product more visible through more sales channels.”