How Erik built a tour operator business from scratch (and how he sold it.)
San Francisco tour founder Erik Hormann started with one Volkswagen bus and built a thriving vintage van tour business. After 5 years, he sold it to new owners, bringing the business full circle. This is his story and it is packed with lessons and advice for tour operators.
At a Glance
San Francisco tour founder comes full circle in business, driven by his love for his city and Volkswagen buses.
Tour Style: Van/Bus – fully restored, 7 passengers, 1971 Volkswagen Type 2 Transporter Buses
Tour Niche: San Francisco breweries and wineries, as well as city areas, including Alcatraz. Also available for charter services and corporate/team outings.
Booking Platform: Peek Pro
Tour Customization Level: Medium; guests can request specific stops for tours when renting out a whole van or booking a private tour/outing.
Special Skills: Vantigo guides are “walking encyclopedias of San Francisco”, including Alcatraz and the startup history and lore of tech giants such as Twitter and Google. Smaller vehicle size permits access to areas restricted from larger tour vehicles.
Erik Hormann had experience and skill set in technology but he found joy in giving tours on the weekends in his vintage Volkswagen van. His interest and enthusiasm for the city of San Francisco, with its landmarks the Golden Gate Bridge and household name tech startups, runs deep.
In 2013, he started Vantigo tour company. When he first started, Erik had just one VW bus. Over time, he grew the business to two fully restored buses and a team of guides. After five years, his business finally came full circle when he sold it in 2018. However, his love for the Vantigo business has kept him lightly involved even until today.
Vantigo offers both standard and customizable private tours. All tours are small, as each van seats 7, for a total of 14 if you use both vehicles.
The business name, Vantigo, came together by combining the Spanish word “contigo”, meaning “with you” with “van” (as in the VW van). Using this fun play on words, the name emerged: to go with you in a van, “Vantigo”.
The Vantigo Story with Erik Hormann and Tourpreneur’s Shane Whaley
Episode 30 of the Tourpreneur Podcast, a podcast for tour operators and tour professionals with Shane Whaley
Along with a twin brother, Erik was brought home from the hospital in a Volkswagen bus, setting his love of the vehicles in motion. Years later, when Vantigo was growing, he even painted his second VW fleet bus the same color as the one he was raised in. The devotion of VW loyalists along with his own love for them sparked Erik’s idea to create a San Francisco tour company using the iconic vans.
Today, Vantigo describes their tours as “Unconventional City Adventures” in which guests can share the love of vintage VWs with the love of stories.
He had a concept but how did Erik amass his knowledge of San Francisco?
San Fran has a lot of history – both very old and more modern. As a tech guy, Erik knew the interest people would have in the stories behind big tech startups like Twitter and Google. But he needed to know a lot more. So he studied. A lot.
“San Francisco Library actually would provide free docent tours of different districts every day. So I did a good amount of those. I went on other people’s tours – which now I’ve become friends with some of those operators. And then I just I literally hit the library, got every documentary, every book I could,”
Once he was well-versed in San Francisco history, he found it fun for him and pleasing to his tour guests to mix tech history with city history.
So now Erik had the knowledge – and knowledge is power… except a VW bus doesn’t have a lot of power for San Francisco’s famous hills.
How did he overcome that obstacle?
Erik would go out late in the evening and practice and plan routes, judging how his van might take the steep hills loaded with 7 or 8 people. He mapped routes taking into account daytime traffic flow and patterns.
After perfecting typical routes, Erik then developed alternate routes for unexpected traffic changes. Armed with this well-rehearsed approach, he always had a plan – both to avoid too much traffic and to take people to see what interested them most.
This adaptability he passed on as he grew Vantigo and hired other tour guides.
How did he determine pricing? And what would he recommend to other tour operators just starting out?
Erik followed the method of studying your market and setting your prices based on them. Likewise, you should study your market. Ask yourself:
- What are my individual competitors charging?
- What is the average charge for tours in my area?
- How long are other tours compared to how many hours my tour will be?
- Based on this, am I planning to charge enough? Too much? Can I afford to undercut other tours just slightly to give me an edge?
- Conversely, can the market support a slightly higher price?
- Would having lower prices on certain days help fill my tours?
After you get going, get some notoriety and a good number of positive reviews, you can consider raising your prices.
What about specific licensing, insurance, and/or regulations? How does a new tour operator navigate those?
Every area has its own regulations and requirements.
Learn what you need to have, such as a tour license, various insurances, and so on. Most importantly, don’t get discouraged if it takes a few months to get everything in proper order. Use that time to intensely study your city or tour topic. Refine and perfect the information you’ll give your guests throughout your tour.
Make friends with other operators in your area and beyond. Consider doing some unofficial practice tours with family and friends to get their thoughts and feedback.
How do you get noticed? What should your marketing strategy be?
“Days I didn’t have bookings… I would go down to Fisherman’s Wharf and try to like street hustle people, you know. Which, in hindsight, is kind of funny to see this guy out there with a VW bus saying, ‘Hey, man, you want to come on a tour?’” – Erik Hormann, Founder of Vantigo
Erik was really lucky to have the UK Guardian do a cover story on him, which resulted in spin-off stories in publications like Huffington Post. That catapulted his business very quickly. However, most tour operators won’t receive that kind of publicity.
That’s why he recommends not dismissing tour resellers, such as Tripadvisor and Yelp, but to consider using them and even using Google Adwords.
Furthermore, Erik stresses getting a good Tripadvisor rating. Although it can be difficult to understand the Tripadvisor ranking and rating algorithm, you should still seek positive reviews. That type of word of mouth and social vetting can really boost your business.
Perhaps just as important is to align yourself with other tour operators. Develop a relationship of cross-promotion with another tour.
“I found a community really wanted to help you out once you align yourself with other operators — maybe a food tour operator or someone else that’s in your area. We’re all trying to achieve the same goal, which is to show our city and how amazing it is, and all the different aspects of it in the culture and history,”Erik Hormann
Finally, the key to success in modern tour marketing, Erik believes, is working one angle at a time.
Whether that’s Google Adwords, cross-promoting with another tour, partnering with another business such as a hotel or putting out content on social media – get really, really good at it.
Know where you excel, concentrate on feeding that, and pay someone else to do other types of marketing. This approach is a long-game strategy that will grow your business.
Partnering? How to leverage your untapped markets
Erik and Shane discussed one aspect of building your business that is still underutilized and untapped in many regions, that is, partnering with hotels.
It can be extremely difficult – but not impossible – to get a discussion meeting about partnering with a hotel or hotel chain in your area.
Due to the enormous potential for cross-promotion, it’s more than worth it to seek an opening. You may need to know someone who knows someone, but you’ll never know if you don’t explore the potential.
Location, location, location = Tour, tour, tour… but don’t overdo it
If you live in an area with a large tourist draw attraction, like Alcatraz or Golden Gate Bridge are for San Francisco, Erik recommends not neglecting it in your tour offerings.
Obviously, you want other areas or themes as well, so you can draw in your market of customers. But the “big” attractions in your area should be a part of what you do.
This will help ensure that you’re not missing potential customers who may wish to see the landmark attractions.
That said, don’t go completely crazy by offering every single tour that comes to mind. You’ll dilute yourself and diminish your profits. Make sure that what you’re offering is not racking up more in cost than it’s really bringing in. Keep your profit balanced with measured costs and smart pricing.
How did you go from part-time on the weekends to full time?
First of all, Erik related, he had a lot of support at home. After that, he just made himself get out there.
“I had to learn a lot by myself. I had to get a lot more organized. I had to change a lot of my bad habits. [For example,] if you don’t respond to someone who sent you an email and says, ‘Hey, I want to spend my money with you and take a tour’. And you wait, you know, even six hours, they may have found someone else to book. So I had to learn really quickly that I had to be ultra responsive, I had to be a concierge to my customers.” — Erik Hormann
What about all the choices of booking software for tour sales and even branded merchandise?
There are a lot of booking and POS systems out there but after trying others, Erik preferred Peek.com. He found Peek is easy to navigate for his customers and provided the ability to run many aspects of his business right from his phone.
This supported functionality allows the sale of merchandise as well as occasionally turning people on the street into additional tour guests with just a few clicks.
What about soliciting and processing tips?
One benefit of Peek is the ability for people to tip using a card, which has become a business must in an increasingly cashless society.
By pairing this functionality with carefully worded messages, Erik and his tour guides didn’t really ask for tips in person.
Instead, they let guests know during the booking process and via reminder emails. Their success, Erik believes, in still getting tipped well was mainly due to how they worded it.
About tipping, Erik said, “We just reminded people that in the United States, a lot of people make their livelihood and [tips are part of] how they make their living wage, especially in a place like San Francisco.”
How did you keep your tour guides for so long?
Erik’s average tour guide employment length was 2.5-3 years, impressive for the industry. Two of the ways he kept them for so long were to pay really well and to provide earned PTO (paid time off).
PTO was performance-based. For every 10 five-star reviews, Erik explained, he awarded 4 hours of PTO. This gave the tour guides the incentive to be excellent as well as gave him a way to reward them but minimize tax implications.
To help encourage the gathering of great reviews, tour guides were given the ability to send after-tour follow-up messages. Personalization was highly favored to garner honest and genuine reviews.
On top of tangible rewards, feeling truly valued and appreciated were top priority. Erik made it a point to really notice the high level of skill people brought to the organization.
Any hiring process recommendations for securing highly-skilled tour guides?
Ask the right questions from moment one, Erik advised.
For example, the standard interview question where you ask someone to tell you about a big failure in their life and what they did about it — that can be really revealing.
If they can’t come up with something, they obviously can’t self-critique. That inability translates to any number of real-life scenarios, such as the bus breaking down. If they can’t relate a failure and how they coped with it, overcame it, how are they going to handle tough situations?
When it came time to sell how did that work? How did you value your company?
When you go to sell a tour company, you basically have only 3 options: sell to a larger company, sell to a competitor, or sell to someone interested in actually running the business as it has been.
Erik didn’t want to see his dream die so he was thrilled to sell to a former employee that loves the business and wanted to see it continue.
In valuing a business – especially a tour company – it can be difficult to come up with a value. However, Erik used the standard calculations of profits over a couple of years. Working with spreadsheets, he was able to document the fair value and his reasons to support his numbers.
About the process of selling (and buying a tour operator) he said, “I think that’s what people need to understand. If they are thinking about buying or selling a company, they need to look at the model and look at the numbers that someone has.
And if someone can’t come up with the numbers, maybe you want to pursue starting your own company, because there’s definitely a lot of companies out there that you might as well just start all over again. Because either the reputation’s not there, the traffic’s not there and/or maybe there’s too much reselling going on.”
What about dealing with the ins and outs of working with additional booking platforms and OTAs –such as Airbnb Experiences
Despite the fact that it can be a pain to transfer their booking information into your system, it can be worth it to help fill in booking holes you have.
However, Airbnb will likely never integrate with other systems the way they really need to. So you either have to do a lot of manual transferring or just forget it altogether.
That’s why most people use it only as more of an OTA or reseller, rather than a software provider.
Words of Wisdom from Erik Hormann
Advice from Erik Hormann, Founder of Vantigo about starting out in the tour business.
When you’re small and just starting out, don’t see every other tour as your competition. Instead, align yourself with them. Make friends with other operators. They can help you build your business and give you ideas. They may even refer potential customers to you.
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Links Mentioned in this Episode of the Tourpreneur Podcast with Erik Hormann
https://www.vantigo.com/ – founded by Erik Hormann
https://peek.com – booking software
https://www.linkedin.com/in/erikhormann/ – connect with Erik Hormann on LinkedIn
https://www.tripadvisor.com/Attraction_Review-g60713-d5478019-Reviews-Vantigo_Tours-San_Francisco_California.html – Vantigo on Tripadvisor
Read a travel bloggers review of the Vantigo SF beer tour.
https://www.facebook.com/tourpreneurshow – join the Tourpreneur Facebook group