We talked to Thomas Mueller, founder, and CEO at Rainmaker Travel, about developing a social enterprise, and this is what he said about it.
First of all, how are you and your family doing in these COVID-19 times?
Thomas Mueller: This is a difficult question and has several aspects to look at. At first, when the Pandemic hit the world, our core markets in Africa have been hit early and hard since international tourism actually dropped overnight to almost zero. The same happened with regional and domestic travel. Almost all of our customers have lost all their revenue at the same time. However, the world was positive that this situation would go by in a couple of weeks or a few months. However, today we all know this was not the case and that the largest industry in the world – Hospitality and Tourism – which provides 1 out of 9 jobs globally has been hit severely as the first and will probably only be recovered as the last. For a full year all our customers, colleagues, partners, friends and families are suffering. This is the sad part. However, as an entrepreneur and as Winston Churchill once correctly said, “Never let a crisis go to waste.” The word Crisis actually means “Decision.” So it is time to make decisions.
This is the positive part of the Pandemic. The situation provides an unprecedented and hopefully once-in-a-lifetime opportunity to change for the better. In Hospitality and Tourism, our guests, the traveler, has digitized for a decade. The Pandemic has boosted this digitalization of our customers heavily. They correctly expect to be digitally served from the very first search throughout the entire customer journey from the respective hospitality and tourism businesses and destinations they intend to travel to. Now here is the trick, the hospitality and tourism industry, to a large extent, has not been digitized yet. In Africa, only 15% of the respective businesses use digital technology. Globally it is only 40%. The others are either still on manual and tedious, cumbersome pen & paper or some outdated, monolithic and expensive legacy applications that are difficult to integrate or where it is impossible to integrate them to provide the digital experience our customers expect.
As a result, the industry has forced our customers to run and make use of today’s market-dominating online travel agent platforms to which many hospitality and tourism businesses today have become dependent and pay 60% to 80% of their profits plus customer ownership. They have become a stooge and commodity for such platforms.
I strongly believe now is the time, and the pandemic has provided this opportunity to change for the better. Take back control of visibility, digital presence, reputation, communication, and distribution become less dependent on those platforms, and most importantly, restore economic sustainability, which was in danger if not already diminished for quite some time. Now, everybody has the opportunity to go through the digital transformation and provide the customers what they demand directly as a hospitality and tourism business and destination.
Tell us about you, your career, and how you founded Rainmaker Travel.
Thomas Mueller: I have finished three different apprenticeships in trade, commercial, retail and wholesale, consumer electronics, and IT and software development in the ’80s. I have been working in enterprise IT and corporate networking, process streamlining projects, systems integration and migration, consulting, sales, marketing, and advertising in the field of IBM and other companies. In the early 2000’s I accidentally entered the hospitality and tourism sector while working for brands of TUI and Thomas Cook, two of the once largest travel companies in the world. I had the benefit of working and living in nine other countries in Europe, Africa, North America, and Asia and have become a hotelier and tourism enthusiast by passion.
Since southern Africa has been my home for the last 12 years, I have assisted small, medium, and larger hospitality and tourism businesses to streamline their businesses, turn them around from distress, change and modernize business models. In a four year consulting project as General Manager Marketing & IT, I led with the Managing Director, the establishment of a new Hotel Management Company, the turnaround of two Hotels with a total of 152 rooms from a 2 million loss to a 4 million profit and at the same time we have built today’s #1 hotel in Namibia with 125 Rooms, Banqueting & Conferencing, SPA operation, five Food & Beverage outlets and a microbrewery from the first idea and pencil draw to the opening.
During this time, I discovered that there is a huge problem in the market. The complexity due to the fact that travelers have become ever more digital and that traditional long-tail value chains are declining drastically has grown tremendously for the hospitality and tourism businesses and destinations. All the new technology, the new platforms, and players in the market with all their different business models, etc., have entirely overwhelmed the owners and managers of such hospitality and tourism businesses as well as most of the destination management organizations (DMOs) or tourism authorities. They could not cope. This phenomenon could not only be seen in Africa but globally.
This was when I started rainmaker travel as a social enterprise. With a clear focus on the impact on our DNA from day one. I instantly knew that we do need to make the use of digital technology easy and affordable. Our business model from day one was to “Keep More Tourism Spend in Destinations” by “Democratizing Technology” and make it inclusively available to all emerging, micro, small and medium hospitality, and tourism businesses and entire destinations. The goal has always been to enable this segment digitally in order to restore economic sustainability and reduce dependency and get back control. In the last five years, we have been honored with six international awards for the impact provided and our 5 Stages of Success holistic model and managed services as well as the unique destination network open platform and ecosystem is operated in Africa and Europe, with some 30.000 businesses and 25 destinations integrated.
How does Rainmaker Travel innovate?
Thomas Mueller: We constantly innovate. We have a culture of “Everyday Learning” and “Fail fast and often.” This is true for me as a founder and all team members, customers, and partners involved in all aspects. Only if you constantly try new ideas and things, learn from them while failing, you know what works. If you don’t try, you would never know. This is often the problem of larger corporations which fall into the so-called “Innovator’s Dilemma.” The Pandemic has forced us to pivot in addition to our usual innovation culture. We created localized products that not only work in Africa but elsewhere in the world. That is not only the translation of some screens to another language, but that is also often a tedious and intense process in order to follow local regulations, etc. as well. We also changed the product structure from a pure “Do It For Me” managed service to a “Do it Yourself” and “Do it With Me” product to address the various needs of our global customers. Furthermore, we had to adapt our democratizing “Fair Price Model” to other territories of the world. In addition, the change of technology, the appearance of new technology, and ideas are seemingly going ever faster, so we constantly research, test, and try and see what we could do to stay ahead all the time.
How does the coronavirus pandemic affect your business finances?
Thomas Mueller: Well, as mentioned above, we have lost a huge amount of payments from existing and still valid contracts. In April 2020, we already informed all our individual customers that we do provide them with a three months payment holiday as our contribution to fighting the Pandemic. We later extended this to six months. Well, we are now one year further, and still, most of our customers have no funds as there is no tourism.
If our operation would not have been 100% digital, 100% distributed, and completely lean in all aspects, it would have been a much tougher time. For now, we could stay afloat with the little customer payments we still received and with a personal cash injection from me.
At the same time, we have seen a boost in demand and inquiries for our services, platform, and solution, which is very promising. However, new projects are slow as the core for all destinations and businesses is to survive the pandemic, and funds are tied. But this is where we can perfectly assist any destination and all their hospitality and tourism businesses.
As a social enterprise, we have adopted even further to address the most urgent needs. Rapid Recovery from the Corona Measures, More Resilience in the Future, Less Dependency on Market Dominating Platforms, Taking back Control of Visibility, Digital Presence, Reputation, Communication, and Distribution, Restore Economic Sustainability. This is what is needed everywhere on a global scale today. As a unique and true supply-side platform or B2B Marketplace, we are perfectly doing this.
The world and travelers have become much more conscious of the aspect of sustainability. However, what they mainly have in mind is climate change, carbon footprint, waste, plastic, etc. So the focus due to the media presence is on ecological aspects. However, there are social and cultural aspects as well when it comes to responsible and sustainable tourism.
What is always being neglected, however, is that without the rapid recovery, resilience, and restoring economic sustainability, there will be absolutely no foundation and basis to even think of any other sustainability aspect at all, be it ecological, cultural, or social. Without economic sustainability, there are no funds, means, and resources for any hospitality and tourism business or destination to work with. This is why we, as a social enterprise with the impact in our DNA are focusing on this very aspect since day 1.
Did you have to make difficult choices regarding human resources, and what are the lessons learned?
Thomas Mueller: We have always been organized and very lean and flexible. We always used a colocation workspace or an adjacent office in my house. We always made use of a distributed network of professional companies which we contracted for various services and fulfillment. We knew we needed to set up our company 100% digital and distributed from the beginning if we want to stay bootstrapped as long as possible and work with little funds, only from my own cash injection and customer revenue in order to be able to follow our long term and broader social enterprise vision. So we have managed to be able to quickly scale up and scale down as needed. This structure has contributed a lot during the pandemic to stay afloat. With regards to employees, we have learned the hard way that there is little loyalty. We did not retrench for 10 months and only then have asked employees to contribute with a 20% lower salary payout, while we will put the 20% on a loan account to be paid out at a later stage. While most have declined to accept a lower salary, two have resigned immediately, seeing the payment issues arising. One needs to mention that our employees had all flexible work from anywhere from the beginning, a very decent salary, flexible work hours and a lot of other benefits. So we treated them very well. However, when it came to the day, we could not build on their loyalty, and in the end, we had to retrench them. In two cases, we only now needed to find out that they have made use of our salary, the freedom, and the less work during the pandemic to set up their own site business on our account. So that was interesting learning we had which will have an impact on the future of work in our company.
How did your customer relationship management evolve ? Do you use any specific tools to be efficient?
Thomas Mueller: We have always communicated with our customers, partners, etc., digitally using eMail, Slack, WhatsApp, etc. We have kept all channels open and have been helpful and assisting at any time. We never shut down or suspended any services to honest customers that communicated with us, and that we’re trying to find mutual solutions to get through this Pandemic together. However, we also experienced the other side. Customers that did not at all react, pay, or made any attempt to find an amicable and mutual solution. After having given them 11 months, they have actually forced us to suspend their accounts, shutdown services, and collect the debt using legal measures.
Did you benefit from any government grants, and did that help keep your business afloat?
Thomas Mueller: Not at all. They were simply non-available at all that we would fit into. In Namibia, there has been nothing. In South Africa, there have been a few announcements, but they have been provided in a very discriminative way as they were only available to black-owned hospitality and tourism businesses, while this is the minority, while the majority are white-owned hospitality and tourism business, but they in fact employ 80% of the people in hospitality and tourism. In Europe, we have not been eligible as we only established our operations in mid-2020. So, again, it was my own savings and the little payments we received from honest customers and some new projects in Europe that enabled us to stay afloat.
Your final thoughts?
Thomas Mueller: This has been a tough time. But I still see it as a very good and positive time in retrospect. We have very much pivoted, helped destinations and their hospitality and tourism businesses, and raised awareness of the broken value chain and the problems this incurs for the industry. Most of this would not have been possible the same way and in a relatively short time frame without the Pandemic. Now we are perfectly positioned to continue to follow and continue with our long-term social enterprise vision.
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