With sizable investment from the private equity firm Tritium Partners, the Vancouver-based platform ToursByLocals plots big expansion.
Peer-to-peer travel platforms are a tough business to make work. From maintaining an optimal ratio of travelers to high-quality guides to having a team of customer service experts at the ready when things go wrong, many platforms connecting individuals to other individuals have failed. Earlier this year Vayable shuttered its doors; GetYourGuide actually started as a P2P platform before transitioning to a more traditional distributor.
Investors appear to be giving the peer-to-peer model a new look. Just last year, the Dutch platform Withlocals raised €8 million in a Series B funding round.
With 4,130 professional guides offering approximately 15,000 different tours around the world, ToursByLocals, which connects licensed individual guides with travelers, seems to have figured it out. And with a recent investment of $33 million by the private equity firm Tritium Partners, the 10-year-old company is primed to grow even more.
Up until now ToursByLocals has remained independent, and has bootstrapped the business, rejecting several earlier offers for investment. But, says co-founder and CEO Paul Melhus, it was time to grow.
The company plans to accelerate enhancements in technology, user experience, marketing, and hiring more talent.
“When we developed ToursByLocals, we didn’t spend much time on all of the backend systems we required to scale. It is expensive to invest in those systems,” he says.
In addition to building out the ToursByLocals technology, the investment will also help better market the platform to qualified travelers seeking authentic tours, and fortify the company’s global customer support teams. Melhus says the investment will help streamline “hygiene issues”—internal processes such as paying guides (which currently may require wiring money to 160+ countries).
Melhus says the team at Tritium Partners was a big reason he accepted the investment. “The Tritium folks have a lot of experience in building platforms and they have connections with the people who can help keep our growth going.”
ToursByLocals follows a fairly standard commission model: 20% of the funds travelers pay go to ToursByLocals; the guide keeps 80%.
For tour and activity operators who want to host their products on ToursByLocals, they may not be in luck. The platform is mainly focused on connecting individuals with individuals, not necessarily individuals with companies.
Such personalized interactions are one of travel’s main overarching trends, says Melhus. “I think we’re on a real growth curve here,” he says. “Modern travelers don’t want to sit on a bus with 50 other people. Travelers want that local, experiential travel. It seems like a better way for people to experience the places that they go to.”
