For travellers who think that the best surprise is no surprise, a Vancouver company is enabling them to virtually see where they are going before they get there.

VRX Studios Ltd. produces virtual, 360-degree tours of hotels, resorts, cities and tourist attractions worldwide for the Internet.

“Our core purpose is to educate, inspire and compel consumers,” says Dave MacLaren, VRX president and CEO.

Founded by MacLaren in January 2000, the company boasts an impressive list of customers, including names such as Carnival, Disney, Virgin Holidays, Sandals and Travelocity.

Photos by Jan Mansfield, Business Edge
VRX team, left to right, Marta Salgabo, Steve Ballegeer, Christopher Chong, MacLaren, Jennifer Perrin and Kate Bright.

But its largest customer and the core of its business is the seven-year-old online travel service Expedia Inc., which commissions custom virtual tours of hotels to post on its website.

VRX sends out photographers to the hotels, then uses its own proprietary technology to shoot and edit the images, from five to 15 per hotel. Prospective customers can click on the image to see what the hotel rooms, the lobby or the pool area look like.

MacLaren said he first got the idea from personal experience. “When I went on a vacation I couldn’t find any adequate visual content to help me feel confident in the decision I was making,” he says.

At the time, he was the president of Vancouver multi-media company DNA Media. He realized that although it was creating visually intensive and compelling multi-media CD ROMS, and virtual tours were being used in the real estate industry, no one was using the technique in the travel industry.

Using a base technology under licence from another company, MacLaren set up VRX Studios in a Yaletown building and soon created a proprietary process of shooting virtual tours, editing the images and presenting them in a 360° format. “We now produce and deliver the highest-quality, most web-friendly virtual tours in the world. There is no one that beats us,” says a confident MacLaren.

The company was initially funded through Cambridge Ventures, a public company. “I had the idea, pitched Cambridge Ventures, and had my initial round of funding within six days,” says MacLaren, 32, who studied economics at the University of British Columbia and used to work in corporate banking with ScotiaBank. “In total, we’ve raised about $2 million in funding, all within the first two years.”

VRX Worldwide Inc. (the parent company of VRX Studios), started out on the Alberta Stock Exchange and has been listed on the Toronto Venture Exchange (VRW) for the past four years.

“We’ve been profitable for three years,” notes MacLaren. “We’re a tremendous story. There are very few companies in Vancouver, let alone Canada or the U.S., that over the last five years have become profitable.”

He says the company produced $10,000 in revenue the first year, about $350,000 the second and about $1.3 million the third year. Last year, it generated $4.2 million; the target for this year is $6 million.

“We’re on target,” says MacLaren, adding that within the last six months the company has qualified to “graduate” from the Venture exchange to the full board, and will be making that move as soon as it clears the last step in that process.

Besides the company’s core Expedia business, the production and licensing of destination content also contributes to the bottom line.

It shoots top vacation destinations – the Caribbean, Mexico, Hawaii, London, Rome, Paris, Amsterdam, etc., as well as tourist attractions and creates virtual tours that are archived and marketed to third-party businesses under licence.

VRX has also developed Xplore Travel group, its own online booking site. Using Expedia’s trademarked booking engine, the company is creating destination-specific, “content-centric” websites where consumers can book complete holiday packages.

“Xplore is a way for us to create additional revenue from booking, but also to test our different ways of using content, how much content to use, how big the images should be, quality, etc.,” notes MacLaren. Their first site targets Las Vegas (www.xplorelasvegas.com), with production under way for sites for Hawaii, Paris, Cancun and various cities in the U.S.

MacLaren declines to offer specifics about plans for the Expedia side of the business when its exclusive contract with that company expires at the end of this year. But he notes that everything it has done for Expedia in the last three years could be replicated for a competitor in six months.

“The future has a lot of different options. We are negotiating a new contract with Expedia, but we are also negotiating with parties both in Europe and North America for a similar type arrangement,” he says. “We are also considering a VRX option where we don’t work with another party, where we go out and reshoot all the hotels ourselves, own that content, and then license it like we do our destination content.”

As for competition for the market, MacLaren says his competitors include “every photographer in the world who can create a virtual tour.”

But not every photographer can produce more than 1,500 virtual tours a month, with a consistent quality and format only possible by controlling everything in-house, from providing the photographers, the technology and the processing, to the content management and delivery, he adds.

Business is being driven by the growth of the Internet, online travel and online advertising. “Those three trends are pulling us faster than sometimes we can keep up,” he says.

(Jan Mansfield can be reached at jan@businessedge.ca)