The adventure travel trade has seen new startups come along over the past year, from Inspired Challenge to Embark.org. The latest entry into adventure travel is called Faralong.
The adventure travel startup is taking a page from the Groupon book by making adventure tours cheaper as more people join. This mechanic is clever for two clear reasons: the consumer is incentivized to share and do some legwork on behalf of the tour company to enjoy cost savings, while the tour operator is happy to pass along marketing savings to the customer, who is out evangelizing the product independently. Tour operators are also able to offer tours at smaller sizes, offering more opportunities for revenue.
Certainly some tour operators will be reluctant to cede the narrative to a random traveller; however, with a solid investment in describing the product and understanding the traveler, many tour operators could see some serious lift from a service that motivates already-passionate travelers to gather bookings from like-minded friends.
Read on for the Vine and a through Q&A with the founding team.
Tell us how you founded the company, why and what made you decide to jump in and create the business.
2008 – After getting more involved in travel companies, tech start-ups, adventure events and producing tours as well as guiding around the world, Finnish based Mandala Travel was founded to promote our passion in practice. Reaching 1 million euros in revenue after just 18 months, Mandala has been the leading adventure company in Finland ever since.
2014 – The revolution begins, as we try to figure out how we could use modern technology to make things better for our industry. Getting back to the passengers seat, we list all things we dislike in our business from the customer’s and from the provider’s point of view. How we could make things better for the local operators and great travelling available for more people. We figure out that it can all be sorted with a simple solution, providing the operators pricing to the client with fixed margins.
2015 – Faralong is founded. We launched a open beta on 1st June and official launch is set to be on June 25.
What is the size of the team, names of founders, management roles and key personnel?
The team behind Faralong has decades of experience as travellers, tour guides and running a growing travel company before deciding to launch Faralong.
Juha Viitala, CEO, Co-Founder: Juha is a long time IT and start-up entrepreneur from Finland, with his first e-company founded in 1997. Juha has been an active traveller and mountaineer since the late 1990s and running an adventure travel company Mandala Travel in Finland for the past six years. His start-up experience ranges from apps to media, HR and social media.
Kalle Viira, CMO, Co-Founder: Kalle has been a travel professional with creative focus for the past 15 years, and produced, marketed and guided tours to dozens of countries, including mountain regions, jungles, deserts and other remote destinations and produced respective amount of content that can be witnessed in many forms.
The concept has attracted a wealth of Finnish talent, including the former CEO of Finland’s biggest tour operator Aurinkomatkat (Finnair Group), Tuomo Meretniemi. Next to have stepped onboard were Rovio’s senior ecommerce manager Edvard Groundstroem, and the founder of Proxy Ventures, Aapo Bovellan, who was behind the Supercell brand.
Please share your funding arrangements.
We announced a $500,000 seed round on March 3rd, lead by London-based Proxy Ventures and Finland-based Vision+. There are also key investors from within the travel industry in Asia and South America.
Collecting the first funding round was surprisingly easy. We pitched our idea to five preferred investors and all were in. I don’t know many startups with a 100% success rate. I guess that says a lot about the value we create.
What is your estimation of market size?
The total value of the adventure travel industry is worth $270B (based on Adventure Travel Trade Association).
Please analyze your competition.
Competition is little bit difficult to define as we are not touching the product itself but offering a better way to buy it. But straight competitors are especially at the first stages the global tour operators who offers guided tours in small groups such as GAdventure and Intrepid Travel.
What is your revenue model and strategy for profitability?
We simply take a flat commission and invest it into digital marketing and development. I guess the easiest comparison would be that it’s like AirBnB for Adventure Travels.
We are renewing the business model on just taking a small flat fee from each tour instead of tens of percents of commission. With fully automated process we cut the margins and give most of it to customers while still earning enough ourself. Sure we need quite bit of traffic — but through our own platform.
What problem does the business solve?
Being travellers and adventurers ourselves, with decades of experience in the industry, we decided to fix everything we disliked in the traditional model from the client’s and provider’s perspective.
The simple idea of transparent pricing ended up solving all the problems we are so familiar with, such as cancelled tours, minimum group sizes, marketing prices you never get, tons of emails sorting private bookings and ruining our partners hard work before it reached the client.
Benchmarking great success stories from different service industries, the timing seems also great to bring ‘the last frontier of travel business’ to the modern age.
How did the initial idea evolve and were there changes/any pivots along the way in the early stages?
At the beginning we were aiming to build a tour company for global market with simple and sleek booking website.
During the process we figured out that by providing a modern tools to sell tours it is not only the best place to book tours but sell tours as well. Therefore we are aiming to be the booking platform for the Adventure Travel Industry. So idea went from tour operator to tour platform.
Why should people or companies use the business?
We did not want to create value for ourselves, the travel company, by reducing service of pressuring local partners. We wanted to create value for the client and for the provider, becoming the best place not just to buy, but to sell tours as well.
The solution for the customer is simple:
- Fastest and the best search tools in the industry
- Easy and simple bookings with instant confirmations and modern payment gateways
- Guaranteed tours, no minimum groups, transparency with presenting full range of pricing
- When traveling in large groups your tour gets cheaper as more people join instead of creating more profit for the middle man at the expense of your experience
- Same terms and pricing for join-in and private groups
- Sharing tour on social media helps clients to reduce price and makes customers our best marketers
The solution for the tour provider is effective:
- No cancellations
- Product and pricing reaches the client almost directly
- Local operator can earn more money and will get every booked client
- Encouraging smaller groups employs more people
- Instead of going to events and relying on agents conventional marketing, we provide well optimized digital platform where they can sell preferred tours and get immediate access to booking data
What is the strategy for raising awareness and the customer/user acquisition (apart from PR)?We give user opportunity to make the best possible deals by promoting the tour themselves; if more people join, the cheaper it gets for everyone. Even after the initial booking has closed. This pricing model makes our clients marketers at the same time;
We are sure that the offering simple the best solution for buying the tours it will generate organic interest towards our platform.
Where do you see the company in three years time and what specific challenges do you anticipate having to overcome?
We have gained a strong foothold as a platform to sell large variety of Adventure Travel tours and experiences. Even though we started with the product that is most familiar for us we’ve being getting lot of interest from various kinds of tour operators from diving tour to fishing safaris and polar adventures. As our pricing model seems to fit the needs and it helps both, customer and supplier.
Biggest problems will be the tour portfolio management and curating the content. This is something we need to do in the first phase but in the near future we trust that tour providers will take a major role on this. Then we can more strongly focus on creating even better user experience and best source to book tours.
What is wrong with the travel, tourism and hospitality industry that it requires a startup like yours to help it out?
The adventure travel industry is gigantic ($270B according to Adventure Travel Trade Association), but it’s rife with inefficiencies that translate into higher costs for the people who want to travel, providing less for those whose livelihoods rely on travellers.
A new platform, Faralong.com, is cutting costs for both sides of the travel market with their responsive booking engine, fixed booking fees, and direct online sales.
There are hundreds of tour companies and travel agencies handling the customers in the traditional way. Adventure Travel is one of the last segments of travel industry, which is still poorly digitalized.
The travel industry is a lumbering giant, ready for quick, innovative companies to come in and take over. Faralong.com is positioned to be that company.
What other technology company (in or outside of travel) would you consider yourselves most closely aligned to in terms of culture and style... and why?
We being using AirBnb and Uber as a benchmark as trying to create a platform, which changes the way, the industry works. Though some one might consider them as part of the travel industry but we see them purely as a modern way to connect services more directly to clients.
Amazon is another great example on how offering the best portfolio and easiest way to buy products people tend to use the easiest way. We are aiming to be “the Amazon” where clients first decide where they like to go and buy the tour via Faralong.
Which company would be the best fit to buy your startup?
One of the travel industry giants who would like to start using the same methodology for selling tour or they’d like to adapt a position in Adventure Travel Market.
Describe your startup in three words.
Easy, simple, affordable.
Tnooz view:
The smartest part about this product is that the startup is not touching the tours themselves. There is only third-party inventory to manage. And while the team must vet the operators to ensure consistency of product, they do not have to go out and create itineraries themselves. This leads to great upfront cost savings while also allowing them to expand further to ramp up as demand grows.
The mechanic is also a clever way to encourage participants to do some of the marketing on their own. Many adventure travelers are already doing this informally; by incentivizing them with cheaper adventures, there is likely great loyalty to be enjoyed as travelers see they can do more for less.
There are also cultural tours, which should broaden the appeal of the platform beyond just the most hard-core adventure junkies.
The platform seems like an easy sell to tour operators, who are getting another sales channel without having another financial cost or time commitment to manage. The operators can simply share existing tour inventory for bookings. And since most operators already offer a discount for larger groups, the economics mostly line up with how these businesses already operate.