About two years ago, Toronto youth-travel tour operator Alexander Handa took a hard look at the limited Canadian market and realized his growth horizons didn’t extend very far. Handa, whose family founded Handa Travel, had launched Handa Travel Student Trip Ltd. The company was tripping along on a rapid expansion trajectory, sending high-school and university students on experience-based sun, ski and European vacations. By 2013, the company ranked 25th on the PROFIT 500 ranking of Canada’s Fastest-Growing Companies.
So, last year, Handa looked to the U.S. for the company’s next phase of growth. It seemed like a no-brainer. After all, tens of thousands of American teens flock to sun locations during the fabled spring break, and Handa figured his concept—stem-to-stern tour packages—would sell briskly.
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It didn’t take Handa long to discover that for all the superficial similarities, the vast U.S. market is a deep ocean with lots of unfamiliar undercurrents. From the regulatory and insurance framework to the finer points of American sales culture, Handa’s U.S. expansion gambit turned out to be a foreign adventure in every way.
“That,” he says, “was a big learning experience.” Among Handa’s lessons:
Target 50 markets, not one
The tour and travel business is heavily regulated, but the rules vary—sometimes sharply—from state to state. For example, each jurisdiction, Handa says, has its own insurance and licensing policies. Early on, he realized that it didn’t make sense to launch across the entire U.S. because of the formidable cost of dealing with so many distinct species of red tape.
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Instead, Handa began researching and came to the conclusion that he should focus initially on the Boston area and a swath of New England that takes in Massachusetts, Connecticut and New Hampshire. Boston has thousands of students, and the U.S. Northeast seemed to be culturally similar to Canada.
Retool the product
Everyone in the travel industry knows a few key points about the way that Americans travel. First, they tend to go abroad far less often than do Canadians and Europeans. Second, Americans take shorter holidays; whereas Canadians will set aside an entire week for a sun or ski holiday, American working-age adults want more flexibility, often booking three- to five-day trips.
Members of the 16- to 26-year-old set prefer compact holidays just like their parents. “I don’t know why that is,” Handa says. His company not only had to refine its tour packages but find suppliers that would provide components (hotel rooms, plane trips, etc.) for shorter-duration packages. Indeed, one of the early sweet spots for Handa’s U.S. expansion has been selling three-day, all-inclusive ski trips to Quebec.
Solve the hiring puzzle
“We wanted to hire local people in Massachusetts,” Handa says. “We found it very, very difficult.”
Handa quickly realized that American job-seekers expect employers to foot the cost of a health-benefits package that can add US$5,000 to $10,000 to an entry-level sales person’s salary.
But he also discovered that American sales professionals and customers alike are more keyed to a hard-sell approach than Handa has employed in his Canadian operation. In Canada, the company’s soft-sell tactic is to help a prospective customer plan the trip of a lifetime, he says, whereas “Americans champion a good salesperson and a good sales pitch. They’re OK to be sold to.”
Initially, Handa says, the people who were auditioning for the jobs didn’t seem to understand the company’s culture. After setting up an eight-person office in Boston last summer, Handa dispatched two Canadian sales managers to project the firm’s culture. In the meantime, he has brought the American employees up to Toronto for training.
Keep branding consistent
One area in which Handa didn’t have to do a big rethink was around his company’s edgy, suggestive branding. He has gotten the same sort of feedback when selling tours in the Dominican Republic and Australia: “Eighteen- to 24-year-olds are consuming the same videos, the same magazines and the same websites. Design and messaging among that demographic is streamlining very quickly.”
Today, heading into the company’s second summer in Boston, Handa is feeling bullish about expansion into the U.S. The reluctance by families to spend on frills such as holidays, a hallmark of the post-2008 economy, appears to have abated in the past year. Handa, indeed, has ambitious goals: last year, international revenue accounted for about 10% of his company’s gross revenue. Within five years, Handa wants that proportion to reach 50%. The goal, he says, is not to sell to all 300 million Americans; rather, the goal is to expand his company’s reach in the U.S. Northeast, which, he adds, is about the same size as Canada in terms of population. “It’s a decent area to increase our share instead of spreading ourselves too thin.”
READ: Selling to Americans