How Outdooractive became a successful platform
Part 2 of the interview: How it all began
Hartmut, in the first part of the interview we heard your story and how you founded Outdooractive. What happened then?
Well, the most difficult thing about building an internet platform is to make it a profitable business. Especially if you don’t have a direct business model. So if you don’t sell something directly and profit directly from it. Unfortunately, we have chosen a very complex topic.
Then why didn’t you choose a simpler model?
There were no simple topics left (laughs). To be honest, I didn’t choose the theme so consciously according to a business model, but simply based on the needs of the users. As a tourist, planning a holiday is still a puzzle – especially an active holiday. You sit on your computer for hours and end up buying a few books from Amazon to collect the information you need for your holiday. We want to solve this problem by building the world’s digital travel guide. We do this by bringing together all those who are involved in tourism with their information in one system. Then we achieve all the information in one database. These pieces of information is then distributed via a network of output channels under different brands. All information are transported from whoever has it to whoever needs it. No matter under which brand, in which language and with which technology.
Sounds complicated.
It is. We’ve been building on it for 15 years now with over 100 people. Over the years, we have mapped the entire tourist world in one data structure. As a trained structural engineer, I started at the very bottom with the foundation and created the basic data structure on which all systems with artificial intelligence can build upon today and in the future. In times when all other players in our market were busy with the chic presentation of long texts and colorful images on websites, we were dealing with data structures of all tourist data and international standards. This is extremely tedious and time-consuming and at first not visible and completely unsexy. In sales and with our customers, we have also struggled with it. We were always complicated and rigid and the agencies were always much closer to the customer’s wish to build a fancy website. Unfortunately, this is still the case with various clients today. Even those who supposedly know how to take care of your data then become weak when commissioning a new website and take the shortcut to an individual solution from the agency. But slowly this will understand better and more and more destinations that they have to change their priorities.
Back to the business model: How does this work at Outdooractive?
Our business model is not direct, but a detour. That makes things more complicated. We don’t sell books, trips, overnight stays or guided tours with a commission model like the large (travel) platforms do. For the classification in the entire digital travel market we are the last vertical, namely for the individual traveler. Verticals are market areas for which there are digital platforms. The first verticals were package tours, which were later divided into hotel booking platforms and flight search engines. Then came car rental platforms, table reservations, camping sites, events and bookable experiences. However, the individual tourist does not need a flight first or a hotel or a rental car. What he needs first is inspiration as to where he could travel. This choice of destination, and thus the most important decision in holiday planning, is made when his interests can be fulfilled in the destination. The basis of this decision is the information as to whether one can play golf, go skiing or lie at the beach in the destination. Or also whether there is the right offer for the children and whether there are enough moderate mountain-biking tours, which start directly in that place. All this information is necessary before the guest makes his most important decision: “I travel to the destination”. Only then does the guest need accommodation, rental car, event tickets, ski pass, etc. The variety and complexity of the information is extremely high. That’s why the topic has not yet been solved by a large platform.
And what is the solution then?
We act on behalf of our B2B customers – 80% of them are destinations of all sizes. Destinations do marketing and want to show potential guests the beauty and advantages of their destination. For this purpose we provide a comprehensive digital basis as a complete solution, with connected reach via many channels. Our service includes the complete service with software, updates, hosting, cartography, community, legal compliance, know-how transfer, content distribution and reporting. We charge our entire service on a monthly basis as Software-as-a-Service (Saas).
Due to the large and growing number of our customers, we are able to invest a large amount in the central development of the software, which currently amounts to around € 5 million per year. The development and operation of the platform is thus a solidarity community, which is partly co-financed by all customers. Similar models exist, for example, among tax consultants in Germany, who jointly finance the DATEV software via SaaS. Every euro collected, is immediately invested in the further development of the platform and implemented according to the wishes of the customers. Of course, we cannot fulfill every wish of every single customer, but we listen carefully and align our development priorities with the market. For years we have had the largest amount available for central development, which has brought us into the role of market leader. We are a little proud of that (laughs).
But there are other partners apart from the destinations, aren’t there?
Yes, that’s true. We try to bring together all those players involved in tourism. There are incredibly many players who do business in tourism, who are interested in information and who maintain their own data. Our mission is to have all this data in one database. It simply makes no sense if a tourism association has to maintain the information about the Alpine Club huts again, or cannot offer the information to the guests. So it simply makes sense that both data sources are merged: the tourist information of the destination and the information of the Alpine Club huts. The same applies to a great deal of other information, such as nature conservation, means of transport, ski resorts, accommodation and all other services and products in a destination. Google is already the furthest. It collects the information from all websites and present it beautifully prepared to the user’s questions.
Then it would be easiest to let Google do that?
Easy, yes. This is also a serious decision that we have to make: Either you let Google and the other big players make it easy, but then you have to live with what Google does and what business model Google is building for destinations. It could be for example possible in the future, that you only look good or only get bookings if you pay Google and the other big gatekeepers of the Internet.
Or you take the tax into your own hands as a destination. This starts with a database in which you collect all the information about the destination. The consolidation and management of information will be the most important task of destination management in the future. The data will then be made available in good quality to all major platforms. This means, that the destination itself has control over what is mainly written and disseminated in terms of information. That is exactly the reason why Outdooractive exists. It is our task to be the central content hub where all information is collected, structured and processed according to international standards and made available to all platforms and channels.
Then the key to success is the dissemination of data?
Exactly. Everyone who wants to get information today uses different tools and platforms. The decision on how to obtain information is just as individual as the users themselves. The focus is on information from friends and acquaintances that one learns through private chats and social platforms (which can also be personal conversations or birthday celebrations). But there are also news feeds, forums and blogs, as well as content, rating, shopping and booking platforms.
According to a study by Google, destination websites are only visited by 19% of travelers at all, and the trend is declining. This shows that although users need the information from the destination, they no longer consume it via the destination’s website. The detailed information from the destination, on the other hand, is essential and is increasingly required in structured digital form. Google & Co. will not create the detailed information, but only disseminate it.
Why do we need all the details?
Competition is getting tougher. On the one hand, because the world is getting smaller and smaller as a result of digitization and the destinations are facing much more international competition.
On the other hand, because user interfaces are becoming increasingly digital. Chatbots, language assistants and all artificial intelligence systems, which will now conquer the market very quickly, function completely differently from what we have been used to so far. When you ask Google a question, you get hundreds of thousands of hits that you can all look at when you work your way through the results page from top to bottom.
If you ask Hey, Google or Amazon Alexa a question, you get exactly one answer. The question, where to go for a bike ride next weekend, will be answered mercilessly by the systems with an answer tailored to the questioner. Then you are either in it or not. And questions, which one asks by language, are much more complex, there one asks already more easily after an excursion with good weather and a stopover possibility with vegetarian meals and a child playground. Google and Amazon can only provide meaningful answers to these questions if this information is made available in a structured, semantically prepared form.
Is that the reason for your success?
Not yet, that is the future. We are building on solutions for this extremely exciting future and we have done the important basic work for it over the years. On this basis, our customers will benefit greatly, even if these statements about the future do not yet show any visible success. Rather, we are busy passing on our know-how on all topics to our customers and further developing the entire industry, for example with the Outdooractive Conference.
The current success of our platform is primarily due to the fact that the content of our customers is already experiencing a large additional reach. Currently, our customers’ content receives on average approximately 25% of their reach via their own brand’s output channels (websites and apps) and 75%, three times as much reach via all other channels connected to the platform. This reach is also centrally reported in the Content Reach Report on all 3,000 channels and can be viewed in the DMS.
Does this mean that the best advertisement is the creation of content?
Exactly. Creating content is absolutely sustainable when it comes to structured and georeferenced content on the platform. The oldest contents in the platform are 15 years old and generate reach every year. The maintenance effort is low, since little changes are made to the static information. Via the platform, the contents are automatically linked with other contents, brought into the correct context of the applications and played out in many channels.
The evolution of the Outdooractive Platform also shows the trend towards digitization in tourism.
Are you curious how the story continues?
Look forward to the third part of the interview on our Corporate Blog