The PIE: Tell me about the origins of your business, organising the extra-curricular activities of students learning English in the USA.
Robert Fried: I had no clue what this industry was. I had a friend who was taking high school graduates seniors to Europe every year and he noticed a large amount of international students that were coming into the US. I was working in private equity in LA. He came to me one day and said we had to buy a bus.
Are you crazy? Why would I buy a bus? He said a school in South Beach California had tons of international students and he worked with a tour company that was outrageously priced, took them to horrible accommodation and we could do these tours so much better.
I dismissed it at first but he kept on asking me to buy the bus. So, finally said I would go out on a limb and we bought one. For the first six months he ran all the tours and did trips to Las Vegas, San Fransisco, theme parks.
Language schools in the LA area all worked with the same tour company that didn’t offer staffing to the schools and they had to sign up all the students for the tour company. We offered to provide tours with lower cost and at higher quality, and provide staff so school staff did not have to do the work.
The PIE: You would be running the staff to sign up students?
RF: Do all the things their front desk would traditionally be doing. We started working with every school I walked into and eventually we started doing trips and proved we could offer lower price and higher quality tours.
Other companies in the industry had been there for 15-20 years, and they knew they were the only game in town. They could continue to raise their prices and offer low quality trips because there was no other competition. We started in LA and owned all of our own buses and ended up having 25 buses.
The PIE: Just in LA?
RF: Yes. We were running charters for school summer programs, helping them with excursions for summer programs in LA. I had to make the decision whether to expand my bus infrastructure or just expand tours.
We ended up selling the whole charter division to a large charter company and focused on expanding our tour business into San Diego, San Fransisco and Santa Barbara along the West Coast. We opened up those four cities over three years. In our first year, we took 1,200 students on tour and grew more than 100% every year. It was the same clientele, same students interested in the same West Coast trips like Las Vegas, San Fransisco, Yosemite.
The PIE: Do schools still offer trips themselves?
RF: Most schools don’t do their own excursions anymore. If they can focus on the school product, then they can use a company like ours and provide great tours so it complements what they do. The student doesn’t necessarily know who we are, they credit the school who will then get good reviews, agents will send more students back to their schools.
“In 2018, we had about 40,000 unique students or just over 100,000 trips”
At the beginning we made no money sometimes, but as we took more students on tours, we got better hotel rates, better bus rates. The hard part is a lot of tour companies pre-book tours in advance. We are in the last minute tour business because international students come to the US. They want to show up on Monday and say on Wednesday let us go to Vegas. We have to deal with those last minute bookings and figure out how we book group hotels and buses and plan tour guides.
The PIE: How did you overcome booking difficulties when you can’t book in advance?
RF: If you are booking groups, hotels want to know 30 days in advance. At the beginning we would book through hotelrooms.com because of their cancellation policy. We could book eight rooms and then book another eight rooms and then we could cancel them all last minute if needed.
We did different things to make the traditional group booking system work. After a few years we had enough volume that we could go through the normal channels. Now we have great relationships with hotels. We know how many students will go on tour based on the orientations and intake numbers. It has become a business that is more predictable.
The PIE: So you basically can know how many from an orientation group?
RF: Right. As the business developed, we added a portal that schools can log into and say how many students are going on tours, what tours they go on and what commission they earn from all those students. We also do surveys on the way home from every tour where students rate accommodation, the tour guide overall. Immediately the schools and the agents can see those scores so they know if we are doing a good job or bad job.
“Our biggest competition is students going on themselves”
The PIE: The ones you have love what you do and they come back?
RF: Yes, in 2018 we’ve had about 40,000 unique students or just over 100,000 trips. We track how many times students come back again depending on how long they are in the US. If they are short term, they do a bunch of trips quickly and leave. For those on longer term, you want to get them out throughout their term.
The PIE: When did you decide to go to direct agents too?
RF: Last year was our first ICEF Miami. We had no system with booking with agents, but every agent said they would love to offer this because all their students want it. It’s an easy way for them to provide something else the students ask for, and make a commission on it.
The PIE: Did going to agents directly eat into any of the school booking?
RF: It actually enhances it. If an agent books it and they go to the school, we still pay the school’s commission on top of that. In orientations, half of the students have pre-booked vouchers, and then the other half want to go on trips too.
“Our biggest selling point is that you go with a group of students and you come home with friends”
Our biggest competition is students who come to the US, rent a car and want to do things on their own. They don’t realise that most of the time that ends up costing more. Our biggest selling point is that you go with a group of students and you come home with friends.
The PIE: Do you mix up different groups of students from different schools?
RF: Absolutely. One question schools have is whether students talk about which schools are going to and if they’ll change schools because of it. When students get out of class and go out on a tour, they are not talking about school anymore. They are having fun, meeting new students. It enhances the quality of their experience and they go home having had these great experiences and will refer new students to go back to those schools.
The PIE: Are you still running it out of LA?
RF: Our headquarters is in LA, where we do all our operations, accounting, marketing. But we have offices in San Fransisco, Santa Barbra, San Diego, New York and DC. We are opening offices in Boston and Miami in January 2019. After that it will be Canada, then UK.
The survey tool has helped us to grow exponentially because now we are transparent with schools, agents and students. We are saying our trips are great, let us show you. We sell fun for a living what could be worse.