Innovation-in-action: Hop-on Hop-off buses

by Johan Samuelsson on September 18, 2012

Examples of how industries, companies and organisations are using innovation to compete.

Hop-on-hop-off

I’ve recently made several weekend trips in Europe and have for the first time in years been using sightseeing buses. It has been both a surprising and pleasant experience, leading me to reflect on the changes/ innovations this industry has introduced over the last couple of years.

The past: an inflexible experience

The sightseeing operators had long been providing the same type of service: scheduled tours from a single starting point with maybe one quick stop during the tour, returning to the starting point. The industry benefitted from the general increase in travel, but was at the same time fighting trends that made tourists choose other alternatives:

  • Tourists were becoming more active, wanting to explore on their own.
  • The sights, e.g. museums and palaces, had upgraded their offerings with interactive displays, audio tours, etc. It had become more interesting to spend time at the sights than just getting a quick view when passing by.
  • The internet allowed tourists to do their own research and planning before arriving, allowing them to use public transportation or other means to see the main sights.
  • The local commuter networks and place managers had introduced 2- and 3-day travel passes, directly targeting the tourists’ transportation needs.

Sightseeing buses were losing market shares, being considered a dull option for exploring the city, and not taking advantage of the increasing number of tourists.

Using existing assets in a new way

hop-on-hop-off-buses-21355964Let’s take a look on how the operators have introduced the "Hop-on  hop-off" concept – an innovation that has changed the industry. The customers now buy a multi-day ticket that allow them unlimited use of the sightseeing buses, entering and exiting at convenient stops (sights, hotels and train stations), at their own schedule!

  • Recognizing that tourists have a fixed budget for sightseeing tours, i.e. it’s hard to extract more money from each customer, the operators instead provided a better offering, allowing the customer freedom to plan their own day. The operators also added frequent, regular departures, removing the need for the customers to rush to specific departure times – always a hassle, especially on vacations:-)
  • The utilization by each customer has increased that much, but the customers are now spreading the use over the whole day, allowing the operator to get more utilization out of each bus, instead of optimizing for peak periods.
  • Hop-on Hop-off has now become a convenient mode of transport for tourists – optimised for the tourists’ transport needs – hotels and sightseeing spots. The actual guided tour has become more of a nice "extra" for the customers.
  • It also provides a simpler and more convenient solution for tourists compared to travel passes on the local commuter network. There is however no hard feelings by the local transport authorities, as the tourists are just a small part of their business, and place managers are happy that there is now a better solution for tourists.
This has been done by using the operators’ existing capabilities (the buses) in a new way. The hop-on hop-off concept has also added a new capability that the operators quickly exploited: points-of-presence. Previously they were limited to a single starting point/sales-office. Now they have turned each stop into a new place-of-business, using college students to sell tickets. This dramatically enhances the visibility of the service, and it’s much easier to sell the product now as it’s often only a couple of minutes until next bus arrives. Compare this with the previous, rigid experience with departure at only a couple of fixed times per day, single starting point and multi-hour duration!

 

Hop-on Hop-off: A strategic sweet-spot

hop-on-hop-off-bus-tours1The operators have identified their strategic sweet-spot, and executed well in taken advantage of this opportunity. The strategic sweet-spot is where customer demand and company capability overlaps, avoiding competitor offerings.
  • The tourists want flexible and convenient solutions for travel between their hot-spots (hotels and sights) during 2-3 days.
  • The operators use existing capabilities to provide unlimited service with frequent departures and multiple stops.
  • This change has turned previous competitors, e.g. museum tours, into collaborators!

I think most of us have witnessed this change, seeing many more sightseeing buses when visiting major cities, and also the many students selling the tours at various points. The operators are now innovating along other dimensions as well, e.g. branding where operators are building multi-city brands. Once again highlighting the need for continuous innovation!

About Johan Samuelsson :

Johan Samuelsson focuses on innovation management at Bearing Consulting Ltd, advising organisations in finding their strategic sweet-spots and establishing frameworks for continuous innovation.

Johan has been working in entrepreneurial environment throughout his career - both at start-ups and large cooperations. Before Bearing he was CEO for Citec Information AB, an information management company. This followed after a 10-year period in Silicon Valley, leading the product management and introducing new ideas and concepts at several start-ups. His career started at Ericsson, selling and implementing wireless systems in Asia and Russia. He received his education at Stockholm School of Economics with an MBA from Harvard Business School.

Leave a Comment

Previous post:

Next post: