At ITB Asia (travel trade show) in Singapore Peter Stenberg represents his Kota Kinabalu-based Rustic Travel. As a buyer, he there meets with various hospitality groups and local tour operators, mainly aiming to sign up new hotels and negotiate contracts with suppliers. His so-called DMC – Destination Management Company – is headquartered in Sabah (Borneo), where the business he started along with his wife has continued to grow annually, and also managed to survive the most difficult test possible; Covid-19. Peter shares his story and how this part of the travel industry operates, facilitating what end customers buy as trips via physical travel agents in Europe (yes, such providers are still around and in fact thrives!).
The start of Rustic Travel goes back to 2013, while Peter’s debut within the travel sector even further. After college, he worked for Scandinavian Leisure Group, going to the usual vacation spots such Mallorca, Canarian Islands, Cyprus and more. Later he went to Sabah on a holiday to spend some time with an old colleague – a trip that would change his life forever.
“I liked it there and was bored of Denmark. And being entrepreneurial I started knocking doors to see if I could land a job – which I did, with a Danish company within oil and gas logistics and project management,” recalls the Dane.
It was a regional job which involved lots of travelling in the region, bringing Peter to India among other countries.
“That’s where I got my real business education because anyone that has been doing business in India knows how difficult it is,” states Peter. “It was a fantastic job; I was in my late 20s at that time, learned a lot and was exposed to various things.”
When the Danish operations later closed down, Peter’s background within tourism kicked in. And as he wanted to remain in Borneo, Peter he then decided to start a travel company together with his partner (who also became his wife).
“What we did was crazy, because we basically started off with absolutely nothing. I believed as a Dane what we could begin by focusing on the Danish market and have an edge. And for the first two, three years we did all kinds of direct marketing on that market and we managed to get a bit of volume within B2C into Sabah.”
B2B market entrance
One thing led to the other, and hotels started noticing Rustic Travel as a partner that could generate business.
“Suddenly we started getting better contract rates, which also meant we could enter into the B2B market – where your profits are lower, but the volumes much higher. So that’s our core business today: ninety-five percent of everything we sell being via travel agencies in Europe,” Peter explains.
“In Malaysia we have contracts with probably around 100 hotels. We could we could have 500, but we stick to a smaller selection that is good and we can manage well and have good relationships with. Also – different from if you buy from an OTA and based on our own experience from visiting – we know why we want to sell certain hotels on specific markets.”
“And now, 12 years later, we are still going strong, offering trips not only all over Malaysia but also in Indonesia, Vietnam, Thailand, and having just started off with Nepal.”
Their forecasted volume is now 10,000 room nights for the whole year.
“Aside the Covid years we’ve managed to grow our revenue with 20 to 30 % every year – which is something we are quite proud. And what is the secret sauce when we’re all selling the same in this industry? We find the good suppliers, the good tour operators, and then we have to bundle it up. And we have to offer good prices, be super-efficient and hyper-focused on delivering what we promise. Because in Europe, the consumer laws are really strict. So, should there be delays in the itinerary, it will be costly. Such things must not occur among our providers.”
As a DMC Peter says they are no better than any of their suppliers. And when some mistake occur is when they really have to show if they are a good or a bad travel provider.
“We need to know our suppliers and we need to visit them once in a while. It’s essential to have a personal relationship with them, so that we can pick up the phone and find a solution when something goes wrong.”
Covid survival
“We’re happy but obviously during Covid, it was difficult times; two years without issuing an invoice and coming close to a mental breakdown. The business took a big hit – with all that you had built up over many years basically gone overnight.”
Rustic Travel overcame that crisis by cutting down its staff to a bare minimum. In addition, Peter took the decision to move with his family to Singapore, as he was able to find a job there based on previous experience.
“Logistics was booming at the time, and those companies had problems to get people, especially in a place like Singapore that relies on a lot of foreign workers. And with an office also there I already had a permit to stay. I started working for the Danish company DSV and did that for 2.5 years. Then, when the travel business started bouncing back enough, I returned to focus on our own travel company.”
Today they are back at around 15 full-time staff and happy having managed to re-recruit nearly every staff member they had pre-Covid. And a general manager at the headquarters in Sabah oversees the operations, so Peter can work mainly from Singapore.
Nature and adventures
Rustic Travel is clearly a Borneo and nature specialist: “Sabah is still the core product – that’s our specialty. Usually, our customers are people interested in adventures, where Malaysia in particular is a country one visits for its stunning nature and outdoor activities. And the same goes for our focus in Vietnam. But if your target is spending two weeks on the beach you won’t book it with us. There’s no value we can add to that.”
When asked to mention the tree most important reasons to visit Sabah Peter responds:
“First and foremost, everybody should visit Kinabatangan River (which luckily 95% are also doing), where you have the best wildlife in Southeast Asia. Second is the amazing beaches, both on islands and also at some of the beach resorts around Kota Kinabalu. Third will be the people: like in many other Southeast Asian destinations, people are very friendly, curious, and talkative. And in Malaysia most people can speak English, so you can actually communicate with most locals.”
Elaborating further on their differentiation Peter informs that their customers almost entirely come through travel agents in Europe.
“It is when we provide these tailor-made trips that we can actually add value into the chain, because if you travel in Malaysia for say two weeks it may involve four domestic flights, and boat and land transfers, in addition to the hotels. And for the accommodation we are not more expensive than if you book online yourself. We just feel that we add in more value because we do the tours and transfers as well, and where we have a much more hands-on knowledge about our local operators.”
“In the end it’s definitely more expensive to enter a travel agency in Copenhagen and buy a full package, where everything is included. However, it will save people a lot of time and when you buy from a travel agency within the EU you have a lot of consumer rights protection. So, most people are actually okay to pay 10 – 20% more to the package price and avoid having all the hassle of doing all the bookings themselves,” adds Peter.
The big change happening in the market I think is that the more expensive packages are
still booked through agencies and the more budget ones are booked via the OTAs.”
Clients of Rustic Travel belongs to those looking for service and convenience; where they get everything included.
Expanding it to other countries, this DMC works with local providers of tours of similar kind – which is the case for example in Vietnam where another Danish person provides nature tours.
“We also do incentive groups for companies, taking a trip usually for 3 – 4 days, wanting to give their key customers some great days, or bringing their key staff on an outing and that may include some training.”
Especially companies from Italy, Portugal and Spain book such outings and Peter thinks this is due to culture; that it’s more normal for companies in Southern Europe to invite customers or bring employees on retreats.
“I’ve been traveling in Europe throughout the years, knocking doors and meeting people. Then, any day I might get a call from someone who knows someone: ‘Hey, I met you back in 2015 and we are thinking about adding Malaysia to our travel offers.’ It’s all about good, old-fashioned networking and relationship-building for B2B sales.”
Attending travel trade shows in Europe – as a seller – is also necessary; including ITB Berlin.
“There you can over three days easily shake hands with 150 different buyers from the travel agencies. And if two or three of those turns into new clients, we are super happy, because each one can result in a lot of bookings annually.”
There may also be a buyer of trips to Malaysia looking to change supplier. And from getting the initial interest it often takes two years before the client is ready to sell packages supplied by Rustic Travel.
Importance for Borneo
As for here in Asia, individuals and for instance Nordic companies can also be supplied.
“Absolutely! And we hear all the time that the travel agency sector is doomed, but I can tell you I could come up with so many different kind of niche segments within our industry that we could develop. It’s just a matter of having the hands to do it.”
Finally, readers may wonder how the status of the Borneo rainforest, given all the palm oil farming that have caused a lot of deforestation. To this Peter responds that the continued growth in tourism on Borneo plays an important role, as a balance to the palm industry.
“It’s always good to have a financial incentive to change things – which is here that they are actually doing a lot of protection in Sabah, because of wildlife needing to often move big distances from area to area, depending on the fruit season, etc. So, in Sabah they created wildlife corridors. Sometimes we have to explain to people, to justify it, that at least they’re trying to do things the right way with these wildlife corridors and also having animal rescue units.”
