1 00:00:04,140 --> 00:00:06,600 Sean Aylmer: Welcome to the Fear and Greed Daily Interview, I'm Sean 2 00:00:06,690 --> 00:00:09,660 Sean Aylmer: Aylmer. Just two years ago the outlook for the tourism 3 00:00:09,809 --> 00:00:12,629 Sean Aylmer: industry was pretty grim. It's incredible to see just how 4 00:00:12,630 --> 00:00:15,539 Sean Aylmer: well the sector's bounced back. But just how different is 5 00:00:15,540 --> 00:00:18,629 Sean Aylmer: it from the sector pre- pandemic? How many operators came 6 00:00:18,629 --> 00:00:21,630 Sean Aylmer: out the other side? David Anderson is the co- founder 7 00:00:21,630 --> 00:00:24,900 Sean Aylmer: and CEO of Big Red Group, the parent company of 8 00:00:24,900 --> 00:00:28,889 Sean Aylmer: brands like RedBalloon and Adrenaline. David, welcome to Fear and Greed. 9 00:00:29,580 --> 00:00:30,690 David Anderson: Thank you for having me, Sean. 10 00:00:31,440 --> 00:00:33,630 Sean Aylmer: So how'd you do it? How did you get through COVID? 11 00:00:35,699 --> 00:00:38,880 David Anderson: Look, there was a moment in March 2020 where we 12 00:00:38,880 --> 00:00:41,820 David Anderson: had about 300 and something dollars worth of revenue for 13 00:00:41,820 --> 00:00:44,670 David Anderson: the day, and I must confess, I was wondering about 14 00:00:44,670 --> 00:00:50,309 David Anderson: making payroll. But interestingly, what we found was that the Australian 15 00:00:50,309 --> 00:00:53,879 David Anderson: consumers wanted to dream and so we found the ability 16 00:00:55,290 --> 00:00:59,370 David Anderson: to sell a future mother- in- law's tea that they 17 00:00:59,370 --> 00:01:01,260 David Anderson: could achieve and they could go out and have at 18 00:01:01,260 --> 00:01:03,780 David Anderson: some point over the next five years. So I think we 19 00:01:03,780 --> 00:01:06,959 David Anderson: found a way to continue to engage the consumer and 20 00:01:06,959 --> 00:01:09,479 David Anderson: have them dream about coming out and doing experiences again, 21 00:01:09,929 --> 00:01:13,020 David Anderson: and that was the fundamental savior, I think, for our 22 00:01:13,020 --> 00:01:13,650 David Anderson: business at that point in time. 23 00:01:14,910 --> 00:01:16,890 Sean Aylmer: Okay, so just actually I should probably take a step 24 00:01:16,890 --> 00:01:20,730 Sean Aylmer: back. For those who don't know either RedBalloon or Adrenaline, 25 00:01:20,970 --> 00:01:24,630 Sean Aylmer: you are, well, an experience, you sell experiences. Is that 26 00:01:24,690 --> 00:01:25,770 Sean Aylmer: the best way to describe you? 27 00:01:26,250 --> 00:01:28,890 David Anderson: We do. I think imagine you want to go and 28 00:01:29,369 --> 00:01:32,160 David Anderson: swim with dolphins in (inaudible) Bay or you want 29 00:01:32,160 --> 00:01:34,740 David Anderson: to sail in a hot air balloon over the Hunter 30 00:01:34,740 --> 00:01:37,920 David Anderson: Valley, or you want to swim with sharks in Adelaide, 31 00:01:37,920 --> 00:01:41,730 David Anderson: or you want to race V8 cars or Maseratis at 32 00:01:41,730 --> 00:01:44,249 David Anderson: the weekend, we enable all of that. And so we 33 00:01:44,250 --> 00:01:48,210 David Anderson: represent an enormous industry and we have about 3, 000 34 00:01:48,240 --> 00:01:52,140 David Anderson: suppliers who seek to shift the way you experience life 35 00:01:52,230 --> 00:01:53,280 David Anderson: and give you that opportunity. 36 00:01:55,530 --> 00:01:58,800 Sean Aylmer: I mean, I remember RedBalloon in its very early days, 37 00:01:58,800 --> 00:02:02,070 Sean Aylmer: and you have been great marketers of the product, but 38 00:02:02,070 --> 00:02:05,219 Sean Aylmer: it seems to me experiences weren't a thing 20 years 39 00:02:05,219 --> 00:02:07,680 Sean Aylmer: ago or 15 years ago, or maybe they were, but 40 00:02:07,740 --> 00:02:10,740 Sean Aylmer: just not well known. But this whole new genre seems 41 00:02:10,740 --> 00:02:13,260 Sean Aylmer: to have developed over the last 15 years or so 42 00:02:13,740 --> 00:02:17,669 Sean Aylmer: whereby now experiences are such a great present to give 43 00:02:17,669 --> 00:02:21,299 Sean Aylmer: or just a great thing to do. Is that right? 44 00:02:21,299 --> 00:02:22,949 Sean Aylmer: I mean, is this a whole new genre over the 45 00:02:22,949 --> 00:02:23,789 Sean Aylmer: last 15 years? 46 00:02:24,059 --> 00:02:27,300 David Anderson: Well, I think it's growing enormously. Obviously, I believe in 47 00:02:27,300 --> 00:02:30,810 David Anderson: the big wave of stories over stuff, and I think 48 00:02:31,169 --> 00:02:33,989 David Anderson: it is actually a relatively small percentage of a gifting 49 00:02:33,990 --> 00:02:37,258 David Anderson: spend today. It's actually only about 5% of the gifting wallet, 50 00:02:37,320 --> 00:02:40,320 David Anderson: an experience. And one of the big jobs we have, 51 00:02:40,379 --> 00:02:42,419 David Anderson: of course, is to increase that as a percentage of 52 00:02:42,450 --> 00:02:45,900 David Anderson: total spend and have people give up Tonka Toys and 53 00:02:47,280 --> 00:02:51,419 David Anderson: physical stuff and return for experiences. But that said, you 54 00:02:51,419 --> 00:02:55,260 David Anderson: experience industry is growing at about 15 to 16% a 55 00:02:55,260 --> 00:02:59,219 David Anderson: year. It's about a $ 1. 5 billion marketplace in Australia 56 00:02:59,219 --> 00:03:03,510 David Anderson: today, and we do see continually, and particularly amongst the 57 00:03:03,510 --> 00:03:07,350 David Anderson: young generation, a pursuit of stories over stuff. 58 00:03:07,860 --> 00:03:12,329 Sean Aylmer: Yeah, okay. So what's the industry look like today compared 59 00:03:12,330 --> 00:03:15,360 Sean Aylmer: to pre- pandemic? Is it a whole new network of 60 00:03:15,360 --> 00:03:18,419 Sean Aylmer: tour and experience operators? Did most of them make it 61 00:03:18,419 --> 00:03:19,830 Sean Aylmer: through? Where are we at? 62 00:03:20,220 --> 00:03:23,040 David Anderson: Most of them made it through, but bear in mind 63 00:03:23,040 --> 00:03:26,369 David Anderson: that 80% of our suppliers employ five people or less. 64 00:03:26,460 --> 00:03:30,539 David Anderson: So the very small, typically family- run businesses. And they 65 00:03:30,540 --> 00:03:34,799 David Anderson: do it because they pursue their craft. It's a passion 66 00:03:34,799 --> 00:03:37,470 David Anderson: that they're following. And so for many, it was a 67 00:03:37,470 --> 00:03:40,290 David Anderson: very difficult time, but you can be very lean as 68 00:03:40,290 --> 00:03:43,080 David Anderson: a small family business and find a way through, and 69 00:03:43,080 --> 00:03:45,120 David Anderson: many of them have done that. And I think on 70 00:03:45,120 --> 00:03:48,330 David Anderson: the far side, we are in quite a different place. 71 00:03:48,660 --> 00:03:53,699 David Anderson: Inbound tourism hasn't returned yet fully, it's about 60% of pre- 72 00:03:53,699 --> 00:03:58,920 David Anderson: pandemic levels. China's actually only about 25% of pre- pandemic levels, 73 00:03:58,920 --> 00:04:00,630 David Anderson: which used to be a huge part of the inbound 74 00:04:00,630 --> 00:04:05,400 David Anderson: tourism market for us, whereas Australian outbound's actually about 80% 75 00:04:05,400 --> 00:04:08,280 David Anderson: of pre- pandemic levels. And so there are more Australians 76 00:04:08,280 --> 00:04:11,879 David Anderson: leaving than there are tourists coming in right now compared 77 00:04:11,879 --> 00:04:15,060 David Anderson: to pre- pandemic. And so I think what they see 78 00:04:15,060 --> 00:04:17,520 David Anderson: in that, of course, is some volume challenges for themselves. 79 00:04:18,120 --> 00:04:21,540 David Anderson: On top of that, they are facing some existential challenges 80 00:04:21,540 --> 00:04:24,839 David Anderson: around the cost base. Fuel is 40% more expensive than 81 00:04:24,839 --> 00:04:29,370 David Anderson: it was pre- COVID, access to staff is extremely challenging, 82 00:04:29,699 --> 00:04:33,480 David Anderson: and so they are in a different place post- COVID, albeit, 83 00:04:34,110 --> 00:04:38,219 David Anderson: you typically find your small tour operator to be an 84 00:04:38,220 --> 00:04:42,178 David Anderson: incredibly optimistic individual. And so they look forward and very positively, 85 00:04:42,178 --> 00:04:44,490 David Anderson: but it is a challenging environment for them to operate in. 86 00:04:45,120 --> 00:04:47,129 Sean Aylmer: Stay with me, David, we'll be back in a minute. 87 00:04:53,399 --> 00:04:55,890 Sean Aylmer: My guest this morning is David Anderson, co- founder and 88 00:04:55,890 --> 00:04:59,518 Sean Aylmer: CEO of Big Red Group. I'm just interested, how do 89 00:04:59,520 --> 00:05:03,150 Sean Aylmer: you coordinate the thousands of suppliers you have? 90 00:05:03,719 --> 00:05:05,939 David Anderson: Well, first of all, I mean, there are probably about 40, 91 00:05:06,150 --> 00:05:10,320 David Anderson: 000 in the space, or small businesses in this space, 92 00:05:10,320 --> 00:05:13,289 David Anderson: in Australia and New Zealand. So we only have about 10% 93 00:05:13,290 --> 00:05:16,109 David Anderson: of those guys, and we take the best of the best. 94 00:05:16,110 --> 00:05:19,469 David Anderson: We consider ourselves to be a curator of the experiences, 95 00:05:19,469 --> 00:05:22,019 David Anderson: and we do that so that our guests and our 96 00:05:22,049 --> 00:05:24,900 David Anderson: consumers can feel really confident and have a lot of 97 00:05:24,900 --> 00:05:27,450 David Anderson: trust in our brand and what we deliver. To be 98 00:05:27,450 --> 00:05:30,540 David Anderson: a member of our marketplace, there's probably a 12- point 99 00:05:30,810 --> 00:05:36,420 David Anderson: process to step through in terms of our GST register, anti- slavery, 100 00:05:36,420 --> 00:05:37,950 David Anderson: et cetera, et cetera, et cetera. There's a whole point 101 00:05:37,950 --> 00:05:39,750 David Anderson: of processes that we step through to ensure that the 102 00:05:39,750 --> 00:05:43,410 David Anderson: product that we're going to represent is fit for purpose, 103 00:05:43,860 --> 00:05:45,630 David Anderson: but we do an extremely good job of supporting the 104 00:05:45,630 --> 00:05:48,539 David Anderson: cash flows of those operators. And so if people book 105 00:05:48,870 --> 00:05:54,029 David Anderson: to go on experiences through our network, then the operator 106 00:05:54,029 --> 00:05:57,568 David Anderson: is paid typically on the day or in the week 107 00:05:57,570 --> 00:06:02,370 David Anderson: that the customer turns up. We offer a significant amount 108 00:06:02,370 --> 00:06:05,789 David Anderson: of infrastructure and support to help them improve the quality 109 00:06:05,790 --> 00:06:08,160 David Anderson: of their products. And most of all, what we try 110 00:06:08,160 --> 00:06:11,189 David Anderson: and do is deliver them customers. And so what we find, 111 00:06:11,190 --> 00:06:14,428 David Anderson: of course, if you are, and I always talk about the Narrabeen paddleboarder, 112 00:06:14,428 --> 00:06:17,430 David Anderson: but if you think about a small operator, typically he's 113 00:06:17,430 --> 00:06:20,550 David Anderson: trying to figure out how to win customers online. We're 114 00:06:20,550 --> 00:06:24,210 David Anderson: a very different type of animal. We are a very 115 00:06:24,210 --> 00:06:27,270 David Anderson: large spender of performance spend with Google and so on, 116 00:06:27,270 --> 00:06:30,630 David Anderson: and so we're typically fishing in different ponds to the 117 00:06:30,630 --> 00:06:34,260 David Anderson: small operator, and so we can offer them adjacent and 118 00:06:34,260 --> 00:06:36,839 David Anderson: incremental customers over what they might find themselves. 119 00:06:37,260 --> 00:06:39,570 Sean Aylmer: Okay. So who is the typical customer or is there 120 00:06:39,570 --> 00:06:42,210 Sean Aylmer: no such thing as a typical customer of one of 121 00:06:42,630 --> 00:06:43,890 Sean Aylmer: RedBalloon or Adrenaline? 122 00:06:44,610 --> 00:06:47,039 David Anderson: I think about brands as the jobs they're hired to 123 00:06:47,040 --> 00:06:51,389 David Anderson: do, and so RedBalloon is very much a gifting brand, whereas 124 00:06:51,389 --> 00:06:55,320 David Anderson: Adrenaline much more about adventure and outdoor and for myself, 125 00:06:55,320 --> 00:06:57,810 David Anderson: and getting out there and enjoying Australia and what it 126 00:06:57,810 --> 00:07:01,170 David Anderson: has to offer. Our Experience Oz brand is a travel 127 00:07:01,170 --> 00:07:04,678 David Anderson: brand, and so I'm going to the Gold Coast for 128 00:07:04,678 --> 00:07:06,389 David Anderson: the weekend and I want to get my theme park 129 00:07:06,389 --> 00:07:09,029 David Anderson: tickets and so on and so forth. And so what we have is 130 00:07:09,029 --> 00:07:11,280 David Anderson: a very wide range of brands. On top of that, 131 00:07:11,609 --> 00:07:15,660 David Anderson: we also wholesale our inventory through third- party audiences like 132 00:07:15,660 --> 00:07:18,390 David Anderson: all of the auto clubs in Australia or the airlines, 133 00:07:18,840 --> 00:07:22,259 David Anderson: or indeed for international online travel agents for their guests 134 00:07:22,260 --> 00:07:25,110 David Anderson: coming into Australia, we wholesale our inventory as well. And 135 00:07:25,110 --> 00:07:27,929 David Anderson: today I think probably we are the largest wholesaler inventory 136 00:07:27,929 --> 00:07:31,169 David Anderson: into (inaudible) experiences in the world. And so I think we have 137 00:07:31,800 --> 00:07:35,400 David Anderson: a really broad range of people that would use our 138 00:07:35,400 --> 00:07:37,710 David Anderson: products, whether they're buying for themselves or whether they're buying 139 00:07:37,710 --> 00:07:38,190 David Anderson: a gift. 140 00:07:38,940 --> 00:07:41,429 Sean Aylmer: Okay. So what are the most popular experiences then? 141 00:07:42,270 --> 00:07:45,509 David Anderson: Look, it changes a lot. Actually, at the moment, one of the fastest growing 142 00:07:45,509 --> 00:07:48,179 David Anderson: categories is little homes, and we're really proud of our 143 00:07:48,270 --> 00:07:53,130 David Anderson: relationship with Unyoked. It's a fantastic product and the opportunity 144 00:07:53,130 --> 00:07:56,369 David Anderson: to digitally detox and be in a little home for the 145 00:07:56,370 --> 00:07:59,370 David Anderson: weekend is hugely popular alongside glamping and getting out there. 146 00:07:59,880 --> 00:08:03,030 David Anderson: Hard to get away from some of the traditional bucket 147 00:08:03,030 --> 00:08:06,780 David Anderson: list experiences like hot air ballooning and V8 car racing, 148 00:08:06,810 --> 00:08:11,190 David Anderson: but again, it really depends by brand. For example, again, 149 00:08:11,460 --> 00:08:15,389 David Anderson: our local agent business, which does concierge ticketing through hotels 150 00:08:15,389 --> 00:08:20,250 David Anderson: across Australia, 60% of visitors to Cairns don't book something 151 00:08:20,250 --> 00:08:21,990 David Anderson: to do until they get to Cairns. They want to 152 00:08:21,990 --> 00:08:23,219 David Anderson: know what the weather's going to be like. 153 00:08:23,910 --> 00:08:23,970 Sean Aylmer: Wow. 154 00:08:25,109 --> 00:08:27,570 David Anderson: At that point in time they'll figure out what it is they're going 155 00:08:28,110 --> 00:08:29,940 David Anderson: to do and it's going to be pretty weather dependent. 156 00:08:30,570 --> 00:08:33,750 Sean Aylmer: Yeah. So tell me, where is the Australian tourism sector 157 00:08:33,809 --> 00:08:36,389 Sean Aylmer: up to now? We've been very much talking about the 158 00:08:36,389 --> 00:08:39,119 Sean Aylmer: Big Red group, but what about the industry as a 159 00:08:39,120 --> 00:08:41,728 Sean Aylmer: whole right now? How's it going? 160 00:08:42,330 --> 00:08:44,820 David Anderson: As I said, I think they face quite existential issues. 161 00:08:44,910 --> 00:08:48,150 David Anderson: As a small business community, they don't have the same 162 00:08:48,150 --> 00:08:52,110 David Anderson: access as, say, the airlines or the hotel industry, and 163 00:08:52,110 --> 00:08:57,269 David Anderson: so they're quite challenged around staffing, they're quite challenged around 164 00:08:57,270 --> 00:09:03,030 David Anderson: inbound demand returning. Interestingly, domestic travel spend is up 25% 165 00:09:03,090 --> 00:09:06,570 David Anderson: since pre- COVID. So the domestic audience are out there 166 00:09:06,840 --> 00:09:10,530 David Anderson: traveling and experiencing Australia, but international tourism is yet to 167 00:09:10,530 --> 00:09:13,620 David Anderson: return back, and that is creating a hole for them. 168 00:09:14,219 --> 00:09:18,029 David Anderson: And when you combine that with some of the indexing 169 00:09:18,029 --> 00:09:20,220 David Anderson: costs to run their business, then they're in a pretty 170 00:09:20,220 --> 00:09:21,270 David Anderson: challenging spot. 171 00:09:21,750 --> 00:09:25,078 Sean Aylmer: David, before you go, what's the best experience you've had? 172 00:09:26,309 --> 00:09:30,690 David Anderson: Well, experiences, in my view, are best shared, and often 173 00:09:30,750 --> 00:09:33,000 David Anderson: it's about the carpenter behind the chair, the people you 174 00:09:33,000 --> 00:09:37,199 David Anderson: meet. This last weekend I took my oldest son driving 175 00:09:37,199 --> 00:09:42,630 David Anderson: Lamborghinis, which he absolutely loved. I mean, he would say, " 176 00:09:43,200 --> 00:09:46,349 David Anderson: It wasn't that fast Dad." But to share that moment 177 00:09:46,349 --> 00:09:50,070 David Anderson: with your oldest son's great. And my youngest son, I 178 00:09:50,070 --> 00:09:53,002 David Anderson: think when I went dolphin swimming off in (inaudible) 179 00:09:53,429 --> 00:09:57,870 David Anderson: Bay last year was amazing, again, mainly because it was 180 00:09:57,870 --> 00:10:01,890 David Anderson: a 50- year- old business, third- generation family who could 181 00:10:01,890 --> 00:10:04,410 David Anderson: tell us everything there was to know about that experience. 182 00:10:04,410 --> 00:10:08,039 David Anderson: And the opportunity to be so close to wild Dolphins 183 00:10:08,040 --> 00:10:10,530 David Anderson: was mind- bending for my son. 184 00:10:11,010 --> 00:10:13,470 Sean Aylmer: Yeah. David, thank you for talking to Fear and Greed. 185 00:10:13,830 --> 00:10:14,310 David Anderson: You're welcome. 186 00:10:14,910 --> 00:10:17,550 Sean Aylmer: That was David Anderson, co- founder and chief executive officer 187 00:10:17,550 --> 00:10:20,580 Sean Aylmer: of Big Red Group. This is the Fear and Greed Daily Interview. 188 00:10:20,580 --> 00:10:22,588 Sean Aylmer: Join us every morning for the full episode of Fear 189 00:10:22,590 --> 00:10:26,369 Sean Aylmer: and Greed, Australia's most popular business podcast. I'm Sean Aylmer, 190 00:10:26,549 --> 00:10:27,089 Sean Aylmer: enjoy your day.