Blog homeWho is making money right now in online travel? Anyone? Or no one?
Potential models are:
- Transactional – agents, suppliers etc
- Special offer distribution systems
- Price comparison
- Meta search
- Destination content sites
- Tools and services (mobile apps etc)
- Product review sites (featuring consumer reviews)
- Travel blogs
The above list is in my finger in the air – who is making money – order.
I believe (but have no evidence) that websites that are more product focussed – either being transactional, related to special offers or generate other opportunities for consumers to compare prices tend to be the most successful at the moment.
Web sites / web companies following models in the top half of the list don’t tend to have any web 2.0 features.
The big questions are:
- Do we think that the models from the bottom half of the list will ever make money (at scale) – or will features from those models just eventually be merged into transactional companies? [features that will be replicated rather than acquired]
- Why do the trade press and travel industry conferences spend so much effort covering discussion of issues from models from the bottom half of the list – rather than following the money at the top half?
- VCs tend to invest in models from the bottom half of the list – don’t they?
Do I have the list right?
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I think that travel is a somewhat unique category on the web in that if you can figure out a way to get customers/readers/users in the door and get them to engage deeply on your site, then you will make money. There are internet based companies, focused on travel, of each type on your list and in each type there are examples of those that make money and those that don’t perhaps with the exception of tools where I can’t really think of an example of a company making money.
At the end of the day, whatever the specific approach, it’s all about building something that customers actually value (and therefore will use). In travel, if you can find something that the travel planner values and bring them value, you will do fine. There are categories on the web where that is not the case. I also tend to think that labeling something “web 2.0″ does not really help much. Do real customers care whether a company whose services they like is a 1998, 2002 or 2009 vintage? These rather basic rules apply to all companies no matter what year they were founded.
Elie
CEO
Oyster Hotel Reviews
Yeah web 2.0 is a fairly weird description and is less useful day by day.
I tend to use the phrase to mean where the value of the site isn’t in the functionality but in the content generated by the users. On social sites that can be the network effect.
I agree with you point about customers not caring about labelling….. actually if I took this post back I think I would have given it another headline! I blame this blog’s editor, myself.
Are _any_ web 2.0 / UGC websites making money? ; )
Perhaps one of the good things about the financial crisis is that VCs are increasingly moving away from the “first generate traffic and increase the user count, then we’ll figure out how to make money”-approach to a (re-)focus on actual cash flows, no matter how “projected” they may initially be. I think while a few, large web 2.0 websites may thrive off traffic-enabled ad revenues or some kind vertical integration like Expedia and Tripadvisor, the rest of the web 2.0 internet is probably still looking for a business model. And I think UGC travel websites will also have a more difficult time employing the freemium model that seems viable elsewhere.
Cheers,
Tao
I think the order is on target, although I don’t see the difference between price comparison and meta-search sites.
In general, transactional sites are already adding web 2.0 features while web 2.0 sites are adding more transactional products. HostelWorld has an active customer base adding plenty of new content via user reviews, social network-y profiles, podcasts and user submitted video. TripAdvisor is a product review site – though I doubt it would fit your web 2.0 categorization – yet just launched it’s spin on flight meta-search, and is clearly not struggling to make money. And I imagine TA Mobile isn’t far away.
Travel blogs will be most dependent on achieving scale to generate substantial revenue, which is no small task. But I think there is opportunity for a Gawker-style travel network to emerge based on a collection of niches, so long as editorial quality is strong.
And VC investment? C’mon that’s so 2007
Just curious as I stumbled into this posting: I’m a photographer doing also 360° panos for hotels, ships and tourism related locations. Collaborating with the website http://www.360Cities.net (VC investment inside
) we as photographers are interested to license our content via embedding to other tourism related websites. So we fall probably in the lower bottom half of the list.
Saluti from Italy,
Thomas
We’re transactional, provide destination content, tools and services (mobile apps etc), travel blogs and run our own travel philanthropy program. Perhaps it’s those that successfully combine all, focus on customer engagement and leverage social media effectively that will be the ones to continue to grow and thrive.
It’s worth reading a somewhat related post from the BOOT titled “Meta-search vs Online Travel Agents” http://tims-boot.blogspot.com/2009/07/meta-search-vs-online-travel-agents.html
I guess these are the guys at the top half.
Yes as a blogger I am making money, is it going to change my life, no, am I getting a return of time, probably not.
I have an upcoming rant about “web 2.0″ sites, so watch this space!