People

Lonely Planet’s Carolyn Sutton

The best-known publisher of guidebooks for independent travelers extends its forays into a digital, politically volatile, increasingly mobile world.
Abe De RamosMarch 22, 2006

Since publishing Across Asia on the Cheap in 1973, Lonely Planet has grown to become the largest independent travel-guidebook publisher in the world, with over 600 titles, 200 authors, and 400 employees globally. Faced with growing competition and free information from the internet, Australia-based Lonely Planet now aims to strengthen its brand while remaining focused on the independent-traveler market. CFO Carolyn Sutton is as passionate about the company as are its founders, Tony and Maureen Wheeler. She is also a key member of the product-development approval team. Sutton talks to CFO Asia on the future of Lonely Planet in a digital, politically volatile, but increasingly mobile world.

What was Lonely Planet’s most important achievement in the last fiscal year?

Our most important achievement is we helped over 6 million travelers across the world. Travel is one of the world’s most important activities because it promotes tolerance and understanding of diversity and difference. It transforms individuals. Financially, our revenues are in excess of A$100 million (US$74 million), and in 2005 we’ve continued the recent trend for strong growth in revenue and profits.

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What are your initiatives this year?

We’re expanding our range of titles and we now cover destinations such as East Timor, Afghanistan, and Nicaragua. We’ll be listing more off-the-beaten-track places so people can have more hidden-gem experiences. Based on feedback from travelers, we’re also providing more information on sustainable travel and volunteering.

Outside of the guidebook range, we’ve decided to build a new website with a content-management system that will enable us to add functionality and content much quicker. We’re also on the first stage of a major SAP implementation, starting in Australia and which will be rolled out globally. As we’ve continued to add more products, businesses and channels, it has become more challenging for us to report in an effective and timely manner, because what we had was a different system in each region. SAP will enable us to reduce our reporting time substantially.

What recent trends have you seen in the travel industry, and how are you responding to these?

There’s an overall growth in travel globally, including independent travel, which is our target market. Travelers are becoming more and more experienced, so they’re becoming more demanding. They want more detailed, more up-to-date content. We’re seeing a lot of emerging markets in Asia, especially China, where outbound tourism has doubled since 1999.

One of the most significant changes that we’ve seen is the increased use of the internet for people accessing travel-planning information. We conducted an online user survey and we had over 20,000 responses from 170 countries; 91 percent of respondents say they frequently use the internet as a source of pre-travel information.

With the rise of low-cost airlines, travel-destination selection is also changing. People are making decisions much closer to their departure date, and their decisions are being driven by opportunities as opposed to the actual destination. It’s no longer only, “I’m going to this particular destination.” It’s now, “I can get a cheap fare to this destination, so that’s where I’m going.”

How are you capturing the Chinese market?

We announced last January in Beijing that we have entered into a licensing agreement with a Chinese publisher who will publish the Lonely Planet guide in Chinese, and we expect to have the first guidebooks in the market in the middle of this year. It will primarily be a translation of existing content, but we would expect to have additional content to meet the needs of the local market. We see this as an opportunity for us to get a different perspective of that market — and that could potentially flow through to the content we put in our English-language books as well.

How have global security issues affected you?

9/11 was a wake-up call for Lonely Planet because after a number of years of strong growth, we were all of a sudden experiencing a sales downturn. So we restructured the business, centralizing production back to Australia and making changes around the way we evaluate new initiatives. It was a fairly large cultural shift too in terms of financial awareness and accountability. We did have difficult years in 2002 and 2003 — because after 9/11 we had SARS — but for the last three years, travel has rebounded strongly. Currently, we’re in a stronger financial position than we’ve ever been.

There have been a number of calamities since then. Did any of those affect your business?

Travelers are becoming increasingly resilient; what we see is a shift in patterns. If there’s a problem in a particular country, they’ll go somewhere else instead. After the bombings in Bali, people were going to Thailand; after the tsunami, people were going to Bali. So in all of those events, we didn’t experience significant downturns at all.

Lonely Planet is publishing more titles than before. How do you make a decision what titles to publish and how many copies to print?

The breadth of range of titles is an important brand attribute for Lonely Planet. If travelers want to go to a destination and we’re able to put an author into that country safely, and if it’s commercially viable to do so, we’ll publish a title for that destination. We do operate on a title cost-subsidization basis. On the number of copies, we look at travel-pattern trends, and we also have historical knowledge. Generally, we’ll have a minimum of two to three print runs over an edition’s life, the majority being in the first print run, and then repeat print runs are based on sales and sales forecasts. The best-sellers would be on a two-year cycle.

How often do you review your sales forecasts?

We do it monthly. Rather than printing stocks of a particular title and sending it to our regional warehouses — and discovering that we need more in the U.K. than the U.S., for example — we think of what they need in the next two months and replenish them based on actual sales.

You have an interesting role in product-development approvals. What are your responsibilities?

The finance team has a commercial arm involved in product-development assessments and valuation. Through this, we get a good understanding of products and trends so we can better evaluate whether the assumptions being made are realistic. We understand what the major variables are, and what happens if one of those variables moves against our assumptions. We have a strategy and business-planning manager and his accountabilities include supporting the online and digital teams. Our commercial manager who looks after the print-publishing businesses is very familiar with Lonely Planet products, and has a very good knowledge of the business and competitors. But certainly the knowledge in the finance team is not in the standard of what our publishers have. They are the experts in their area, and what we have is complementary to theirs.

Shareholder John Singleton sees a lot of potential in licensing the brand. Founder Tony Wheeler is against it. How is that reconciled?

Our board is remarkably alive and is passionate about Lonely Planet’s goal to deliver value to travelers. So often it comes down to the question of, “Does it add value to the traveler?” We had the licensing discussion at the management level, and that didn’t pass the question so we haven’t proceeded with it. Lonely Planet is quite unique in that financial drivers are not the major drivers. Obviously we need to have sustainable profit so we can continue to operate, but the primary criterion is to continue to inspire and enable travelers to connect with the world. If a proposal is not going to meet that goal, we won’t do it.

What role does the Lonely Planet website play in your business?

Obviously, the nature of guidebooks is much more perishable; the internet gives us the opportunity to offer complimentary information to travelers. It also enables us to interact with travelers. We have a very large internet community; our Thorn Tree forum has over 290,000 members. That’s very important for us because it communicates to us what we’re doing right, where we could improve, what’s happening, what’s hot, what’s not, what other additional information they want from us. And all of those interactions enable us to improve our product.

You have considered a digital-delivery model of your guidebook content, choosing between a subscription model and a pay-per-download model.

That’s an example of our trying to understand what travelers want. We don’t think subscription is a viable model. We have strong feedback around the pick-and-pack model where people can effectively design their own guidebook. We’re not currently able to deliver that, but that’s something we’d like to do in the future.

Some competitors accept advertising on their guidebooks and websites. As an independent publisher, what is Lonely Planet’s policy?

We don’t accept advertising in our guidebooks; if you’re paying for a guidebook you wouldn’t expect to be hit by advertising. On the internet, starting in December, we have accepted paid advertising, but only after asking travelers what they thought about it. A majority were very accepting. But we’ve also been very strict in terms of who we want to advertise, and what kind of advertising they can have. It’s quite limited at the moment, you see text ads, and certainly we wouldn’t be allowing pop-ups.

You have worked for public companies. How does that compare to working with a private one?

The major difference for me is the involvement of the founders. The Wheelers’ influence is incredibly strong. They are such inspiring people and so passionate about encouraging people to travel. They have created a strong and loyal pool of people at Lonely Planet. Their roles are as non-executive directors, but they still spend a lot of time in the office. Tony is probably still traveling around six months a year. He is frequently authoring and taking photographs for us.

Are there plans to take the company public?

No.

How do you spend your holidays?

I live in Melbourne so I spend a couple of weeks a year in Tasmania catching up with family. I would have a number of extended weekends when I travel interstate, and one to two larger overseas holidays. I travel quite a bit for work to visit our other offices, and sometimes am able to add a few days or week holiday onto the trip.

What’s your favorite destination?

It varies on what kind of holiday I’m going to have. I’ve been fortunate to have spent quite a bit of time in Europe over the last few years. When we closed down our France office in 2004, I spent three months in Paris negotiating a new licensing arrangement. It’s one of my favorite cities. I also really like and travel quite a bit to Asia, and closer to home, Queensland. In March, I will be visiting our offices in San Francisco and London, and hope to go on an author trip as well. I’d be traveling with one of the Lonely Planet authors for three days, which is likely to be a South American or European country.

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