The Group Travel Market

Travel and Tourism are big business. Last year, it contributed a record $8.8 Trillion to the world’s total Gross Domestic Product. According to the U.S. Travel Association, Travel Expenditures by U.S. Citizens has grown steadily since 2009 from $720 billion to $1.076 trillion in 2017.

Of these trips, 44.9% was for overseas travel. Clearly, Americans appetite for international travel is growing rapidly – and they’re willing to spend to make it happen.

Most notably Baby Boomers nearing their retirement years as well as members of the Millennial Generation that have adopted a travel-mindset are contributing to this growth. Servicing this large population of travel enthusiasts won’t be easy – they expect unique experiences and world-class accommodations.

Trouvaille, French for “Lucky Find”, is a small group travel company currently raising on TruCrowd. The startup believes in connecting people by helping them appreciate the diversity of cultures, people, and natural environments through global travel.

The Startup

The aim of Trouvaille is to provide all-inclusive and stress-free travel options to travelers. The experiences range from domestic to international travel options, a one-day trip to a 10-day trip, and a standard package to a specially curated experience.

The three revenue streams of Trouvaille include Trouvaille signature trips, custom trip planning and development, and business-to-business travel. Demographically, it is targeting active seniors, families and millennial travelers.

Trouvaille appears to be entering a growing travel market – a positive. However, this leads us to our most significant concern: that that market is relentlessly competitive.

The small group travel industry has several large and established players that offer, more or less, the same services that Trouvaille does. These players include G Adventures and Intrepid.

Below is an in-depth look at Trouvaille as a prospective early-stage investment.

Trouvaille: Raising on TruCrowd

1. Competitive Market

Trouvaille is entering the small group travel market (defined as group trips of 2-20), as a niche within the luxury travel market. No matter how you slice it, they are entering a large and growing industry. According to Skift, the global tours and activities market is a $150 billion per year industry. All the more impressive, this spending is expected to rise by 9% per year well into the next decade.

Simply put, the demand for small group tours is rapidly increasing. Also of note, travelers increasingly prefer to take small group tours focused on fostering a sustainable, eco-friendly experience.

The market is vast and diversified with sub-niches such as adventure, ecotourism, or ethno-tourism; however, the number of travel companies catering to these special needs and demands are also rising.

A Google Search yields a plethora of competing options. The competitors of Trouvaille include large players like G Adventures, Intrepid, Contiki (which caters to the 18-35 crowd), and Tourradar that have more financial and  marketing resources.

IfOnly, another tech startup in this space has raised over $50M to date including capital raised on SeedInvest earlier this year. With backing from some of Silicon Valley’s best firms such as Khosla Ventures this team is quickly becoming a leader in this growing experiential travel market.

And perhaps an indirect competitor but still the largest elephant in the room is Airbnb, which has invested in their experiences platform, to enable tourists to book unique local experiences on the same platform where they book their accommodations.

Bottom line: There is no shortage of competition both big and small vying for group-travel spending dollars, which will create intense pressure on customer acquisition.  

2. Lack of Competitive Advantage

Trouvaille is aware of the highly competitive market it has chosen to enter. However, the company believes that they hold unique propositions like local, customizable tours that set them apart from the competitors.

We are less optimistic.

The truth of the matter is that Trouvaille is not the first company on the customization bandwagon – G Adventures created its own, modern group-travel bus to satisfy tourists. A quick perusal of the competition’s offerings leads to one inevitable conclusion: There is no dearth of travel companies offering exclusive, intimate, and unique experiences.

For example, Luxury Gold recently added nine new itineraries to its already existing 42 small-group tours and G Adventures offers well over 100 destinations.

Airbnb and IfOnly meanwhile have innumerable options for special travel experiences to peruse. Trouvaille may not be able to keep up with these large players while still keeping its costs and returns on investment under control. 

3. Lack of Experience

The team behind Trouvaille includes Paul S. Hardersen and Jazmin Jourdain. Paul Hardersen is a University Professor and does not have any experience with establishing or running a travel company. He intends to use his own travel experience and savviness.

However, as anyone who travels extensively knows, traveling individually and running a travel company are completely different ball games.

Similarly, Jazmin works around branding, corporate projects, and large-scale events. In this case, as well, she is aiming to leverage her extensive world travel experiences to the benefit of Trouvaille and its shareholders. Applying this to a small tech / experiential startup around the globe will be another beast altogether.  

4. Headquarters Location

Trouvaille plans to establish its global headquarters in Tucson, Arizona. A part of the proceeds of the current crowdfunding round will be put towards opening a commercial office space there.

Tucson as the choice for the primary market is confusing. The city does not offer any advantage to the company, and it is not considered a tourism hub.

Apart from the fact that the founder lives in Tucson, there is no plausible reason for it being chosen as the headquarters.

5. Travel Spending is Discretionary

Investors will also want to note the inherent risks associated with the travel industry in general. Travel spending is always highly discretionary, and as soon as recession hits, luxury travel and small group travel industries are among the first industries affected.

Due to the enormously competitive market, lack of competitive advantages, and lack of managerial experience, we are assigning Trouvaille the rating of Underweight.

The many deep pocketed incumbents it is up against have already built sizable, scaled operation that are well liked amongst customers. 

We cannot escape the question: What can Trouvaille offer the patrons of these companies that is truly unique?  

Lastly, the financial projections of Trouvaille also look quite unrealistic. The company expects to grow from practically no revenue ($27K) today to revenues of $23 million in 10 years. The company is doing well; however, growing from nil to $23 million is not a cakewalk. Adding to the challenges for this organization, the team has decided to add in a revenue participation component that seems misguided for an early stage venture of this nature. G Adventures itself took over 30 years to reach its current size of servicing 200,000 travelers and 28 offices worldwide.

The road to $23 million in revenue will not be easy and, in our estimation, Trouvaille is not equipped to get there. We advise investors to exercise extreme due diligence before investing in Trouvaille.

If you have any questions regarding the underweight rating of Trouvaille, you can reach us at hello@kingscrowd.com.