Two Tickets To Paradise
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Do you daydream at your day job about swimming with the dolphins on your next vacation in Hawaii? Does your pulse quicken when you imagine yourself coming across a lost tribe in the Brazilian jungle? Do you find yourself drooling as you fantasize about touring chocolate factories in Switzerland? Would you love to spend all your time visiting art museums?
If we've almost lost your attention because your mind is off thinking about any one of these or a thousand other variations, then you might want to consider starting an adventure or specialty travel company.
The market is ripe for energetic entrepreneurs. According to the Travel Industry Association of America, between 1993 and 1997, half of all American adults did something adventurous, from the 64.7 million who camped out to the 3.9 million who hang glided. And almost one-third of those who hadn't done anything said they were looking to add adrenaline to a future trip.
According to Jerry Mallett, president of the Adventure Travel Trade Association, Americans are spending $220 billion on these activities each year (compared with over $500 billion for the general leisure U.S. travel market and $3.5 trillion worldwide). After climbing to the double digits, annual growth of the adventure travel industry is currently 8 percent.
For one thing, baby boomers will enter their peak spending years over the next decade and are eager to pay for something other than the same boring getaways. That might mean shelling out a few hundred for a bike tour of wineries or $75,000 to climb Mt. Everest. But adventure travel companies say the hot demand is for vigorous activities combined with upscale accommodations and meals, which means higher prices.
And then there's the softer and more diverse vacation choices listed in the semiannual Specialty Travel Index (www.spectrav.com), such as a week in Mexico learning Spanish or a trip to Paris to take gourmet cooking classes. Whatever the interest or age, there's something for everyone.
Scott S. Smith writes for Business Start-Ups when he isn't traveling adventurously in places like Northern Ireland and Cuba.
Finding A Niche
The first key to success is to find a niche-and there are plenty of them. All of this is waiting for the right entrepreneur, both for companies servicing inbound (providing local tours by referral from travel planners) and outbound (sending customers on tours they've designed) customers.
Tricia Suriel, 38, saw an opportunity for a mountain bike touring company in the overlooked destination of the Dominican Republic. After starting Iguana Mama with $10,000 in 1993, she decided to sell her Breckenridge, Colorado, children's ski school, put the proceeds into the ever-growing new operation and move to the island. She's now something of a celebrity there.
Similarly, George Deeb got frustrated while trying to compare offerings for things he wanted to do, like scuba dive in Belize or climb Mt. Kilimanjaro. Using business contacts he'd acquired as an investment banker, the 31-year-old secured venture funding for a comparison-shopping Web site (www.iexplore.com) where consumers could find the perfect trip by checking out offerings from different companies; he then talked 100 companies (that compete with one another) into putting everything about their 5,000 vacation packages online, backed by extensive help-desk support. Now, iExplore Inc. provides everything from weather information to maps while earning a commission on booked tours and sales of travel gear. But if you don't own a ski school and aren't a finance professional, you'll probably need to work harder and more creatively to get the money together.
Potential Start-Up Problems
Start-up costs range from $5,000 to upwards of $25,000-in fact, those who've tried this say you're risking failure if you don't have at least $25,000. Keep in mind that your dream may not pay off right away, and you might have to shell out a lot more for marketing than you expected.
There are plenty of other start-up issues to consider as well, such as your own industry experience (or lack thereof). Travel entrepreneurs advise you to work at a tour company before venturing out on your own. Otherwise, like Josh Cohen, you'll face big problems.
In 1991, Cohen, 26 at the time, used his credit cards to start what was to become InnerQuest Wilderness Adventures in Sausalito, California. Then he ran into a series of speed bumps: Someone had already claimed his business name, and it was costly to change it; his first ad in an adventure travel magazine flopped due to a malfunctioning toll-free number; plus, he hadn't figured out how to turn his outdoor personal-growth courses into a year-round business. Eventually, he had to put most of his profits back into the business to try to keep it going-all $100,000 of it-and it still wasn't enough: By 1997, the early debts forced him to reorganize under bankruptcy laws.
But the painful lessons learned made InnerQuest's financial reorganization very successful, and Cohen, now 35, has added ecotours in Belize and Costa Rica during most of the year, taking groups into the deep rain forests where most tourists never venture.
Tim Vanderhoof, 32, took industry experience one step further. Despite having spent much of his life "in every facet of the travel industry here and abroad," he figured he could still use some mature help. He split the costs, risks and ownership with Nancy Johnson, who had 20 years more experience, and in April 1999, they formed AlfresCo Corp., a Seattle company that provides adventure programs for corporate training.
Vanderhoof and Johnson also planned a slow rollout to work out the kinks. "Our mantra is 'underpromise and overdeliver,' and when I assess a project, I add 50 percent to the time I expect to be able to finish," Vanderhoof explains.
Taking Over Another Company
Another way to minimize your start-up risks is to take over an existing operation that isn't exploiting its potential. Brian Mullis, 30, started as director of operations for what is now called The World Outside in Boulder, Colorado, in 1993, after he earned his master's degree in recreation from Springfield College in Massachusetts. Five years later, his parents co-signed a $100,000 loan so he could take over the firm, and he has added 20 percent more programs to the menu, resulting in 13 percent annual growth and 30 percent profit.
Taking over a company is the best way to get into back-country tours because the U.S. Forest Service, which controls the most desirable lands, rarely issues licenses to new operators. But that can still mean starting from scratch.
Toby Hemmerling, 29, worked as a ski tour operations manager in Aspen, Colorado, for several years. He and a former partner, Burke Blackman, researched local licenses and found a family firm in nearby Steamboat Springs, Colorado, that was barely using the 15 square miles it had been allotted for wilderness skiing. The asking price of nearly half a million dollars was steep, considering that the owners' equipment was worth almost nothing, but the partners saw enormous possibilities.
"We worked out a detailed business plan and met with 200 potential investors, asking everyone we could think of for names of people who might be interested," recalls Hemmerling. "A week before deadline, we only had 17 of the 20 commitments we needed and were about out of prospects, when someone we had presented to but who hadn't shown much interest decided to provide all the money himself."
In August 1999, Steamboat Powder Cats Montjoux LLC became an entirely new company on the same property and expected 1,800 people to pay an average of $240 each for a package, totaling $432,000 for its first December-to-April season.
A Start-Up Plan
Once you have a cool idea and a reasonable combination of money and experience, the start-up plan has to be worked out in as much nitty-gritty detail as possible.
Cost-effective advertising and marketing is the greatest challenge once you've launched your venture. Cohen of InnerQuest found mailing lists of supposed "adventure travelers" worthless and now primarily relies on features in magazines like Men's Health and GQ to find initial contacts. Most of his business now consists of happy repeat customers; his brochures feature their testimonials.
Sinem Iber, 27, took a different approach when she started North Star Tours Inc. of Houston in 1995. She began by going to Turkey and spending a lot of time checking into location details for her highly personalized cultural tours; she then spread the word about her service and primo guidebooks by giving free lectures at bookstores throughout Texas. At the end of each talk, someone in the audience always wanted her help.
Suriel invited travel writers to take tours and ended up with rave reviews in places like The New York Times. She also developed a colorful, thorough Web site (www.iguanamama.com), where she posts all the articles for prospective customers to read.
Suriel exhorts those who want to go into adventure and specialty travel to stick with their vision. It took her five years to make a real profit, but now she's flying high. Says Suriel, "Too many travel entrepreneurs fail simply because they don't listen to their gut and they give up too soon."
Specialty Travel Business Resources
- Entrepreneur's "Specialty Travel and Tours Business Start-Up Guide" provides important tips about the things you should know before you jump into the field.
- The Adventure Travel Trade Association (719-530-0171, www.adventuretravel.com) keeps its members up-to-date on developments in the field. Certification seminars are held at its annual world conference; the next one takes place September 11-14 in Anchorage, Alaska.
- Specialty Travel Index (415-459-4900, www.specialtytravel.com) is a twice-yearly magazine showing travel companies the adventure and special-interest tours that are being offered.
- Special-interest publications aimed at the adventure travel market, such as Escape Magazine,Outside Magazine and National Geographic Adventure, will give you ideas on what's being offered and ways to reach potential customers.
AlfresCo Corp., (206) 763-1909, www.alfresco.com
InnerQuest Wilderness Adventures, (800) 990-HERO, www.innerquest.com
North Star Tours Inc., (800) 206-0537
Steamboat Powder Cats Montjoux LLC, (800) 288-0543,www.powdercats.com
The World Outside, (800) 488-8483, www.theworldoutside.com
Travel Industry Association of America, www.tia.org