(Ambrosio’s note: I’ve written a few articles on My Destination, the online travel guide franchise based in the U.K., and I’ve kept in touch with one of its co-founders, James Street. James has been telling me about their expansion into the U.S. market, the challenges they’ve faced along the way, and why he is confident that there is a bright future for My Destination in the States. I really enjoyed learning about this new phase in the company’s growth, so I invited James to contribute a first person article on this very subject. I’m happy to share with you the latest developments with My Destination, in the words of their co-founder, James Street.)
How My Destination Got Started
To date, the brand My Destination has been relatively unheard of in the States. To give you a quick overview, My Destination is a comprehensive online travel guide for over 100 destinations around the world. Neil Waller and I started the company back in 2006. We started our first site in a popular seaside resort in Spain while still at University, but seeing quick success, we left our business course and quickly expanded into a similar market in nearby Portugal.
Back then, our plan was to set up in a new market, put some basic information on a site, and then employ someone suitable to operate the site on a day to day basis. We quickly realized this was not going to be very effective when our first employee had done very little in the first couple of months and seemed to be ill nearly 50% of the time.
My Destination’s Franchise Business Model
This was one of the problems with managing someone remotely. And so going back to the drawing board, we came up with a franchise model whereby we would provide the site with a very easy to use admin system, along with all the technical support someone would need to operate the site. This leaves the local expert or franchisee with two key jobs — to provide the content and to sell advertising on the site.
There is a revenue split on both advertising and bookings made on the site, but the reason this model is so effective is that the local experts on the ground are essentially operating a business with a team of 40 technical experts at their disposal. At the heart of this is the all-important development team that continually develops new features for the sites, keeping them ahead of the competition. Our sites are like chameleons because if you track their progress over a 6 month period, you would notice a huge amount of change.
My Destination’s Expansion Plans in the U.S.
It is this model that has seen our company grow to over 110 destinations around the world, adding approximately 4 destinations a month to this total. However, the one market that we have yet to really crack is the United States. Currently, we have only 8 sites either launched or coming soon in the U.S. It’s a tougher market to conquer for a few reasons:
1. FDD and Franchising Law – To be able to franchise in the U.S., you have to be registered in each and every state and the FDD changes for each state so the whole process to set up in the country is not only slow but it is expensive.
2. Competition – The competition is a little tougher in the States. Obviously people in the U.S. are more web savvy than anywhere else in the world. So there is more likely to be a greater level of competition, largely from the local tourism authority. One of the greatest reasons why we have seen such success in some areas, including places you would not expect in Northern Africa, is the complete lack of competition in some markets. Even for some major tourism destinations, such as Rio de Janeiro, the lack of competition is remarkable and it is very easy for our site to stand out.
3. Early days – We have been eligible to sell franchises in the States for only a year to date. Like everywhere else in the world, including Canada, what we usually see is we sell one site and then we get a lot of enquiries for destinations around it. No one likes to be the first and we are confident that we now have that momentum in the States.
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The future of My Destination U.S. looks bright. Having sold 8 franchises already, we have taken on the Los Angeles site ourselves (to be launched in September) in order to show what can be achieved. Our team will also be attending the West Coast Franchise Expo in Los Angeles from November 4-6, 2011.