ToursbyLocals: Connecting Tourists with Authentic, Local Guides
ToursByLocals is a leading online marketplace connecting travelers in search of customized, private tours with a curated selection of local tour guides, providing exceptional travel experiences in over 160 countries.
Background
ToursbyLocals (“TBL”) is a two-sided marketplace focused on connecting tourists with local, experienced tour guides across the world. Founded in 2008, ToursbyLocals was created by partners Paul and Dave, who were visiting the Great Wall of China and met a few local women who shared their vast knowledge in exchange for souvenirs. After returning to their home in Canada, Paul and Dave worked to build a platform that would enable tourists to seamlessly connect with local, authentic guides. Today, nearly 1.5 million people have taken a tour with one of TBL’s 4,100 experienced guides. TBL’s headquarters is based in Vancouver, BC and has offices in Argentina, Malaysia and Scotland.
What strategy does TBL deploy to create value?
TBL creates value for both its tour operators and tourists via its website, which serves as a matching and booking platform for tourists and tour guide operators. TBL’s platform provides the following services:
For tourists…
- TBL’s website enables tourists to search for private tours in 160 countries.
- TBL customers have access to a multitude of offerings, including customizable half-day, full-day, and multi-day private tour experiences (up to 6 people) that are created and led by insightful guides.
- TBL’s platform only features the very best tour guides around the world due to TBL’s careful selection and screening process. TBL’s team of recruiting specialists proactively search for deeply knowledgeable and reliable prospect guides in select areas. After encouraging these prospects to apply, TBL then assesses their language competency and conducts a background check. TBL also requires that tour guides accept the Company’s “Tour Guide Agreement” policy, which includes best practices for pricing, setting availability, itinerary organization, and more.
- Private messaging functionality allows for guides and tourists to communicate throughout the booking process.
- TBL’s rating and review system allows for tourists to read through uncensored comments by travelers who have taken the guide’s tours.
- Website processes safe and secure credit card payments via Paypal. TBL holds the payment in trust until the completion of the tour to ensure customer satisfaction.
- 24-7 Customer Service team helps process customer refunds, ensure tour quality and monitor prompt tour guide communication.
For guides…
- TBL platform provides tour operators with a steady stream of new customers that highly value personalized, private tours. Due to the robust tour guide selection and screening process, the majority of customers report being “very satisfied” with their tours, so that tourists repeatedly use the TBL website when booking new tours across the globe.
- Website enables operators to accept or deny new bookings.
- Back-end system allows for operators to manage their schedule and existing bookings. TBL allows guides to multi-home (i.e. guides may work for tour guide agencies or advertise via OTAs).
- TBL allows guides to set their own availability and pricing. (Albeit TBL requires guides adhere to its “Tour Guide Agreement” policy as outlined above).
- Private messaging functionality enables tour operators to answer questions and provide itinerary details
- Customer Service team handles frequently asked questions around admin, logistics and payments so that tour guide operators can focus on itinerary design and exceptional tour delivery.
How does TBL capture value?
ToursbyLocals captures value, or monetizes its services, by charging customers a one-time booking fee and small payment processing fee. Note that TBL does not charge customers a subscription fee to access tour listings. TBL charges tour operators, or its suppliers, a monthly fee which covers all services associated with the TBL platform (demand generation, customer support, scheduling and booking functionality, messaging system, payment processing).
Scaling and Sustaining TBL
From 2008 – 2019, TBL largely grew its tourist base by word-of-mouth. TBL grew its supplier base by prioritizing investing in its tour guide recruitment specialists and customer support functionality. This allowed TBL to add high-quality tour guides in different geographies to the platform and ensure customer satisfaction via 24-7 customer support. In January 2020, TBL raised >$30M to invest more heavily in its sales and marketing team to proactively grow its tourist base. While COVID-related international travel restrictions had a huge impact on the business, TBL was able to use a portion of these funds to retain its high quality tour operator supply and even rolled out virtual tours during this period. Going forward, TBL should continue to prioritize tour guide quality and carefully select for tour operators that offer new itinerary ideas and experiences. TBL can also expand its language offerings and currency options in order to target a broader group of tourists (the majority of current tourists hail from the U.S., Canada, Australia and Europe).
Source: https://www.toursbylocals.com/
Really interesting post! I hadn’t heard about TBL, but this sounds like the place to look at when I travel. It makes me wonder though how difficult it is to retain and growth with these customers given customers will only travel a few times a year and their first entry point into a trip is with the flight provider/hotel providers. Things like tours come after the fact and in the value chain, so TBL might be in a more susceptible position in the competitive market.
Thank you for the blog post, Kaitlyn. ToursbyLocals is a fascinating business; it’s interesting that it isn’t quite a tour company but rather a matching service for tourists and guides.
My top concern with ToursbyLocals’ business model is its scalability. First, it’s fundamentally difficult to grow a highly customized, private service. Each tour guide is offering a niche service to (presumably) a small group of customers per tour, resulting in limited reach and few opportunities to quickly build credibility in a new geographic region. Second, the more customized the service, the more challenging it is to identify (and compensate) high-quality talent. To recruit the best tourists, ToursbyLocals must undergo a long evaluation and onboarding period with competency and background checks, which makes it hard to source high volumes of talent at a fast pace to keep up with customer demand.
I am also curious about its operational sustainability. Consider this – what if a tour guide calls in sick… ToursbyLocals will likely have to cancel the trip and refund the customer. It’s impossible to find a stand-in or replacement for a tour guide if the tours are hyper-personalized. This can have a substantial impact on ToursbyLocal’s service continuity, customer retention, and profit margins.
Great post, Kaitlyn! I actually had not heard about TBL but seems like TBL’s competitors are using similar strategies for their own products. Based on my understanding, TBL is acting as a marketplace that gives you access to individual guides who run their own tours. From the user’s perspective, I wonder how TBL select their tour guides and how guides’ experiences with the company are. I could find countless reviews from travelers but none from tour guides. As the guides set their own prices for tours, the costs of private tours can be quite high I assume.
Interesting! I’m really curious about their screening and selection process. On the one hand, this sounds like a great way to allow knowledgeable locals to show off their city, even if they don’t have professional expertise in history, architecture, tour guiding, etc. On the other hand, it sounds like an easy way to get scammed and have a terrible experience in a foreign place.
With 160 countries–and numerous locations within each– how can TBL possibly vet all of their tour guides and validate their local knowledge? There’s no way that TBL can be enough of an expert on each country or city to fully vet candidates. The reviews and ratings system is obviously a great performance management system once guides have started booking clients on the platform, but the upfront challenge to me seems even greater.
I love this! I am sure a lot of tourists would like to get a local guide but do not want to go through a presumebly expensive tour agency.
When it comes to its scalability, they might be able to connect locals (do not have to be professional tour guides) who are eager to practice a foreign language on this platform. I assume matching apps are filling this need but this platform might potentially fill the gap of “safety” (some people do not trust the people they meet on matching apps).
This is really interesting! I’ve never heard of TBL but really looks like a promising! I checked out their website and noticed that they don’t have that many reviews/tours ( Paris & London) which tells me that they’re either catering to the wrong customer segment or that their marketing campaigns need to be really targeted.
I think the real problem to scale and sustain this product on top of what you have mentioned is whether I have any incentive to go to this website : When AirBnB, Orbitz and even Marriott Hotels offer ‘experiences’, they’re really tapping into extensions of the offerings to get an increased share of my wallet while acting as a ‘one stop shop’ for all my travel needs.
I do believe that this model has a lot of merit but I’m really curious to understand who are they catering to vs who purchases their products and see if there’s a disconnect which can help them tweak their product better to the customers who wants these private, very local tours. That can then differentiate them by catering to a specific segment – maybe luxury segment where you want very private tours or groups who are on a budget etc.
This is really interesting, Kaitlyn, and I want to use this service next time I travel abroad! I know anecdotally that consumers (especially millennials and Gen Z) are shifting their spending more towards experiences, so it seems like a worthy business opportunity. Piggy-backing on what Karthik mentioned, I think they are probably feeling significant pressure from competitors like Airbnb who offer similar experiences. However, I am optimistic that TBL is able to differentiate on (a) quality, (b) variety, and (c) specificity/expertise.
One way that they could continue to differentiate and generate an even more sticky customer base would be to create a “traveler portal” where individuals can see their past experiences, record memories, and share their travel log with others. This social aspect is something that Airbnb lacks, but TBL could easily add. They could even position themselves for an Airbnb acquisition if it is so desired by the founders, if they are able to prove true value beyond simply the first iteration of their marketplace.