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WeRoad: shaking the travel industry “all’italiana” Noémie Dominguez1 & Birgit Hagen2 1

University of Jean-Moulin 3 Lyon, France. [email protected] 2 University of Pavia, Italy. [email protected]

Forthcoming in P. Ghauri, Cateora P., International Marketing, 5th edition, McGraw Hill Education ---------------------------------------------------------------------------------------------------------------------------

WeRoad, the Italian disruptor 1) History of the company WeRoad, an Italian start-up headquartered in Milan, was founded in 2017 by Paolo De Nadai, Fabio Bin, and Erika De Santi. In 2019, just two years after foundation, a team of 56 people at headquarters and more than 300 travel coordinators realize around € 9,600.000 sales. WeRoad’s aim is to “Design and deliver experiences worth living and sharing” targeted to Millennials, “rewriting the rules of the travel industry every f**** step of the way!” and to “connect people, cultures and stories”. Innovation, discovery, and friendship stand at the heart of their mission (box 1). Box. 1: WeRoad’s Mission and Vision Passion: “we take pride in what we do” Discovery: “we are not afraid to get out of our comfort zones” Daring: “we challenge the status quo” Sharing: “we are one team” Respect: “we travel and treat others with respect” WOWness: “we go out of our way to wow” Source: WeRoad – Company Profile (2020) WeRoad’s adventure began on December 23, 2016, when Paolo De Nadai shared his idea with Fabio Bin, with whom he had worked in the past. To be realized by summer 2017, he imagined a yery different way of travel, i.e. “travel on the road, around the world for millennials. In Italy ‘Avventure nel mondo’ is on the market – with an image and a mood that is rather outdated. We can do better, please come on-board and help develop the project. I already have the name/brand: WeRoad’. The idea to create WeRoad came from the passion for travel and Paolo’s difficulties to find travel partners among his friends as Erika De Santi explains. “Looking for friends to travel with, discover new cultures, and share experience, one day he could not find anyone. He

thought ‘if I face this problem, others will too’. At the time, the solution to this problem – connecting lonely travellers – was not available. The idea for WeRoad was born”. Paolo De Nadai, as always, wants to move quickly and disrupt the market. Two weeks later, the kick-off meeting takes place: business model, branding, platform, website… everything is on the agenda. That day, the company’s DNA is defined: create a new long-distance travel experience for millennials based on three principles: 1) Connect millennials and create a community with the idea of sharing experience and creating durable friendship for the time to come 2) Create authentic experiences of local cultures: on the road, local food, typical accommodation, all year long. 3) Travel offers do not include flights. This is quite new in Italy and, thus, risky but it offers much more flexibility to the travellers. Three months later, Erika joins the team. She helps to develop and support customer services and speed WeRoad’s launch preparation. She says “With WeRoad I have found my personal and professional ikigai. From my youngest age, I have been attracted by tourism and international activities. I jobbed in hotels, city halls etc. when I was a teenager, studied foreign languages and Tourism Marketing in Surrey (UK) and then worked as project manager in a British start-up, in business development in Smartbox… WeRoad unites my passion for entrepreneurial activities and for travel, so I was really enthusiastic when Paolo offered the opportunity to take part to the adventure.” A small team of developers, together with the entrepreneurs, prepare and launch an app and a website in record time. The objective to organize the first trips by June 2017 is achieved: Just six months after its birth, Cuba and Morocco are WeRoaders’ first destinations. After the successful launch, Paolo, Fabio and Erika decide to reinforce the team to support WeRoad’s development and boost its activities. Erika explains: “Paolo is a serial entrepreneur: he has already created many other firms, has hundreds of ideas at the same time… In that sense, Fabio is the perfect counterpart for Paolo: when Paolo goes too fast, Fabio slows things down. Fabio studied communication at the university and worked in communication agencies. He knowns perfectly how cool products should be and look like. He is the kind of guy who makes something trivial iconic. He has also this key capability of identifying and getting the right information at the right time. Our three profiles match perfectly and we all have one key point in common: everybody wants to improve, do better, and grow.” In September 2017, she studies new destinations, recruits new coordinators, and structures the team, the operations and the product portfolio for 2018. The objective is clear: grow quickly in order to attract millennials, talents, and also investors. Again, the goal is met: WeRoad grows fast. In 2018-2019 more than 300 tour coordinators come on board and the team at headquarters increases to 56. The rapid development, however, brings challenges related to maintaining flexibility, creativity and rapid execution to ensure future fast growth. Also, scaling the business might dilute WeRoads’ spirit and culture, another key ingredient for success. Thus, recruitment in these two years is seen crucial: “Finding the

right people is difficult. Even outstanding candidates do not get through if we have the impression that s/he is not in love with WeRoad. […] We all go the extra-mile, from the developers to coordinators, without exception. All share the idea to constantly improve and grow the fastest possible” (Fabio Bin). De Nadai adds: ‘Difficult to understand and believe if you do not work with us …The atmosphere is unique, a concentrate of professionalism, passion to write the future, to grow the fastest possible, to make ideas happen in 0 time’. Just to give you an example, says Erika “Every day we do something new. We have opened 30 destinations, we will open 20 more by the summer”. Erika goes further and explains that “we have a lot of multicultural profiles and international experience coming in with our people: this is gold! It really helps us in our development. ” Sustained growth comes from existing and new business: new age segments (35 + and 40 +), new, special travel experiences (e.g. Backpackers, pioneers, international groups, and WOW accommodation) and new destinations – including short travel in Italy – are created and added to the offer. In 2019, just two years after foundation, WeRoad is the number 1 provider in Europe in the Youth Adventure Travel segment and ranks second worldwide; the number of destinations quadrupled from 20 to 80 and the number of coordinators increased from 7 to more than 300; WeRoaders are overly satisfied with their travel experience – the satisfaction score holds at 9,1/10 - and the community is growing exponentially. In September 2019, WeRoad decides to go international. The destination is Spain “because of its cultural similarity to Italy”, says Erika. De Nadai’s goal “to enter the market in October, I want at least 5 groups of WeRoaders travelling around the world by Dec 31st.” is realized. In record time and, again,” with huge effort from our developers, the team of coordinators and the Spanish team sales open in October. During the Christmas holidays, 56 WeRoaders were travelling!” In 2019, 8,000 millennials took part to one of the 720 tours organised by WeRoad (figure 2), and 2020 started in the most promising way. More than 70 destinations are available online in Europe, Africa, Americas, Asia and the Middle East (Figure 1).

Box 2. WeRoad around the world

Source: www.weroad.it

Figure 1. WeRoad’s growth

Source: www.weroad.it

2) The role of social media Social media play a key role in WeRoad’s success. While being new to the market, the start-up managed to build a strong community without paid search or ads. WeRoad instead publishes ‘true’, original WeRoad content, such as inspirational videos that attract millennials’ attention: new destinations, mood of travelling on the road, making friends, discovering new cultures, among others are at the heart of their communication.

Figure 2: WeRoad content

Thus, the Facebook and Instagram pages become key drivers for the start-up, allowing WeRoad to build a strong community and to grow fast (box 2). Since journeys happen only if a minimum number of participants is reached, interested millennials contribute to their realization by actively looking for travel companions, sharing flight and destination information, to bring onboard the required group members. WeRoaders thus co-promote and co-organize their travel and they celebrate once it is confirmed. This strategy makes Millennials key actors of their travel and places them at the heart of the start-up development.

Figure 3. Growth of the WeRoad digital communities

Source: internal documents (2020)

Also in Covid-times, says Erika, ‘staying in touch with our communities is key. Our business is human, it is not ‘travel’. We connect with people and we connect them with others.’

Panorama of the travel industry The travel industry plays a key role in the global economy. In 2019, tourism (+ 4% in volume) outpaced the world economy (+ 3,2%), making it a powerful driver for economic growth and development worldwide. According to the UNWTO, 1.5 billion international tourist arrivals were recorded globally in 2019, generating € 1,237 billion turnover (+2,6% compared to 2018). The low prices of fuel and the enhanced visa facilitation worldwide explain these positive results. Moreover, tourism exports (+ 4,4%) grow faster than merchandise exports (+ 3,6%), helping many countries to diversify their economies and reduce their trade deficit (UNWTO, 2019). These figures made tourism the third largest exporting industry worldwide, after chemicals and fuels but ahead of automotive products and food (UNWTO, 2019).

1) A fragmented and changing industry The travel industry is highly fragmented and competitive with many companies vying for market share. Over the past five years, the market was quickly digitalizing and Online Travel Agencies (OTA) had captured the highest shares of travel booking, hurting historical players. Traditional Tour Agencies (TTA), such as TUI (Germany) and Thomas Cook (UK), had to make room to OTAs such as Expedia (USA), Booking (US, NL) or MakeMyTrip (UK). With the rise of new technologies and emerging markets, tourism is moving from mass-market to customization, from traditional physical retail points to online retail. The development of platforms and the “sharing economy”, as well as the digitization of services changed firms’ business models: it facilitated the access to information on prices and destinations, increasing the bargaining power of customers and allowing new players to enter the market. Thanks to artificial intelligence, customers are able to compare companies’ offers and select the most attractive ones: historical players are losing their competitive advantages to the benefit of new ones - such as Airbnb - capable of offering innovative solutions to consumers and to rejuvenate the whole sector. According to the UNWTO (2019), OTAs have seen a much faster revenue expansion (+20.3%) than TTAs (+1.7%) between 2013-2017: online transactions representing 60% of the total transaction and OTAs should experience a 15% average annual growth until 2025 (Xerfi Global, 2018). Apart from digitization, the industry is also adapting to the evolution of travellers’ profiles. First, emerging markets are becoming more and more important both as destinations and as revenue generators. Since 2012, China is the largest spender with 1/5th of the global traveling expenditures, far ahead of the United States and Germany (Xerfi Global, 2018, UNWTO, 2020). Emerging markets are also becoming more attractive destinations to travellers. While Europe remained the main destination for tourism in 2019, Asian and Middle Eastern countries achieved good performances in terms of number of tourists and local spending (see figure 4 &

5 Appendix). Visa facilitation, investments in local infrastructures and major sports events mainly explain these results.

With the rise of ecological concerns, also transportation, accommodation, journey and consumption are becoming more sustainable as evidenced by the Scandinavian “Flygskam” (shame of flying) movement. Facing institutional and public pressures towards climate change and social development, travel companies have to include sustainability in their search for new destinations, their business models and their actions. For example, the efficient use of resources, the promotion of biodiversity conservation, actions to tackle climate change and the like will become important factors for travel companies, in line with current consumer trends. Consumers are now looking for unique, authentic, immersive and eco-friendly experiences they can share online (box 2). Box 2. Traveling in the 2020s: new trends • Travel ‘to change’: live like a local, quest for authenticity and transformation • Travel ‘to show’: ‘Instagramable’ moments, experiences and destinations • Pursuit of a healthy life: walking, wellness and sports tourism. • Rise of the ‘access’ economy • Solo travel & multigenerational travel, as a result of aging population and single households • Rising awareness on sustainability: zero plastic and climate change. Source: UNWTO (2020) These new trends are particularly characteristic of millennials, who are looking for true, unique, and highly-personalized experiences.

2) The Millennials revolution Born between 1981 and 1996, the millennial generation is the largest in terms of population, travel frequency and spending. In 2020, more than a quarter of the world's population are millennials (World Bank, 2020). Because of their number, their purchasing and influential power, they are becoming the most valuable segment in the travel and hospitality industry. Their annual buying power is estimated at $ 200 billion (Credera, 2018). Moreover, travel is deeply important for millennials in both their personal and professional lives. When interviewed about their priorities, 38% of them are traveling for work and leisure, 53% said they would prioritize travel over buying a house, 80% are looking for unique experience to learn about locals (Airbnb, 2016; Credera, 2018). Thus, unsurprisingly, competition among companies is fierce to win the business and loyalty of these consumers.

Why is travel so important for millennials? Unlike their elder counterparts, millennials do not want to wait for their golden age to discover the world. Their behaviour is explained by several elements. Firstly, the rise of social media made it easy to ‘see’ and to become fascinated by new cultures to discover, lands to explore, people to meet. Thus, travelling for an “experience-hungry generation” (Credera, 2018), becomes a key social driver. Secondly, the development of university cooperation and exchange programs naturally places travel at the heart of educational paths and strengthened millennials’ appetite for it. Thirdly, millennials are rather skeptical about their retirement plans and prefer to live new experiences today rather than in an uncertain future. Overall, they are not attracted by financial wealth but rather by happiness, work-life balance, and alignment of values. Travelling is seen as an opportunity for growth and experience in a particular job, educational field or more in general, life.

What makes millennials unique? Millennials are distinct on four dimensions, namely in relation to brand loyalty, digital technologies, socialization, and experience. Contrary to common knowledge, millennials are the most brand-loyal travellers. Their booking decisions are not based on price but rather on the direct and indirect benefits offered by the company or the loyalty programs they are members of such e.g. vouchers, upgrades, redeem points for purchase in a partner company, among others. A study conducted by Sabre Research (2016) showed that, when travelling, millennials agree to pay $41 more to stay within their preferred hotel program. Thus, capturing their loyalty is a key success factor in the industry and firms have to be innovative to retain their customers and gain market shares. Innovation is important as millennials are tech-savvy. They grew up with new technologies, social media, mobile phones. As they feel comfortable with the digital technologies, they plan, compare, book and buy travels differently than the older generations. 60% of the online sales are made through dedicated apps (Xerfi, 2018), notably by millennials who are deeply influenced by their mobile user experience and social media advertising. Looking for personalized services, they are also highly concerned by permanent access to online entertainment and wifi connection. Millennials are social: staying connected to the world, sharing photos, videos, thoughts, tips and recommendations is crucial for them. A study conducted by Credera (2016) revealed that 84% of millennials are likely to plan their trip based on photos seen on social media platforms, notably by peers. Millennial travellers rely on peer-to-peer visual user-generated content to make the most out of their vacation and get the best insider tips from social media influencers of their own age (Digit, 2020). Contrary to the elders, they want to be part of a global travel experience rather than just passive customers. Millennials are experiential: they are looking for authentic experience. Regardless of whether they travel solo, in group or with other generations, they want to live and share unique experiences (Airbnb, 2016), and highly value the ‘local’ during their travel. According to Credera (2017), 77% of the millennial business travellers do not hesitate to extend the length of their trip abroad, blending business and leisure to discover the local culture and meet local people (as compared to 58% of generation X and 43% of baby boomer travellers).

Moving ahead in uncertain times The advent of Covid-19 in 2020 abruptly calls for the reorientation from a ‘fast growth’ to a ‘survival mode’. As Erika explains, “with the lockdown and the ban on long distance flights, we had two options: stop everything and come back in 2021 or try to stay active no matter what. And this is what we did.” Again, WeRoad was successful: July 2020 has been the ‘best-monthever’ in company history. The travel industry, however, is one of the most impacted by Covid19 (McKinsey, 2020) and the company is called to develop viable strategies for the future.

Questions: 1) Perform an assessment of the company: what are the key strengths and weaknesses of the company? 2) Analyze the profile of the entrepreneurs: how can their personalities and experience influence WeRoad's development? 3) Analyse the company’s first move into the international arena: What factors have enabled it to advance from the domestic stage to the international stage? Would you have selected Spain as your first target market? Why/why not? 4) Make recommendations concerning WeRoad’s future: What are the most promising avenues (markets/products) that should enable WeRoad to continue its success? Explain why!

Bibliography & Sitography Airbnb (2016), “Airbnb and the Rise of Millennial Travel”, Airbnb Report Credera (2018), “Capitalizing on Millennial Travel Behaviors and Attitudes Diggit Magazine (2020), “Millennials and their ‘backpack full of apps” (online) McKinsey (July 2020). Reimagining marketing in the next normal. UNWTO (2019), International Tourism Highlights – edition 2019. UNWTO (2020), World Tourism Barometer Xerfi Global (2018), The Global Travel Industry: the market www.weroad.it

Appendix: Table 1. Key Performance Indicators of leading global companies in the travel industry (million dollars) 2017

2018

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