Blog homeI am a natural fan of online travel startups. Admittedly none wow me particularly at the moment but that is because I am generally cynical. They say that journalists ought to be cynical whilst entrepreneurs ought to be positive…. not quite sure where that leaves me as a blogging entrepreneur!
Also none wow me because I have zero time to travel right at the moment. If I could actually spend a week or two travelling I could actually use some of these travel websites in earnest and perhaps be more positive about them. Otherwise they just remain as digital executions to be admired (mainly) but underused.
The long term players have the money
There is a lot of money in online travel. The challenge is that the people with the money (in travel technology) such as GDSes, airlines (er, perhaps not any more!) and the other big travel players have NO true understanding how to invest their money.
If a hotel company was as confident on getting a return on their online investment as they are on spending millions on building a new hotel then they would invest it quite happily. However they are not that confident. This is somewhat a sympton of the senior guys (and ladies) having come up via the product / commercial ranks. That isn’t a criticism but what it means is that if they are asked to come up with a 5 year vision for the company it will tend to be product / marketing based, rather than online.
Besides, why move now?
Name me an online travel startup that has actually made a significant change to their sector in the last 2-3 years? Anyone? (here is hoping you can come up with one!). 5 years ago we saw new online travel companies that changed the industry forever. Have we seen any of those in the last few years?
Take for example TripIt or Dopplr.
Both quite interesting in their own way. Both VC backed. Both permit you in varying ways to save a trip itinerary and do clever things with that itinerary. I have a blog post lined up analysing their features from a developer perspective (Dopplr have a simple API but not very powerful, TripIt has a powerful API but with power comes complexity and extended integration timelines)
TripIt and Dopplr look like they are nicely carving up the itinerary sharing sector of online travel. No one can come along and compete.
Think again.
See what Orbitz have done using Facebook Connect
Yep, itinerary sharing [at a basic level]
Details: When a user books a trip, she has the option to log in with her Facebook account. Then, she’s prompted to share her booked trip with her friends. Friends take notice of her trip on Facebook and click the newsfeed story to come back to Orbitz to book a similar trip. Now, you can more easily travel with friends with Facebook Connect!
See. Easy.
Pretty much achieves the same goal as TripIt / Dopplr look to achieve but without the fuss.
The companies with the money in online travel have not had to make their move yet. Over the last few years evolution has been pretty slow. The worsening economy hasn’t helped speed up online travel evolution either.
As the Orbitz example shows, the travel companies with the money / web traffic can just copy existing startup ideas and build their own solutions. They don’t need to acquire to get there.
Please someone comment and tell me about sites that are live now and will be super big in the next few years (overtaking existing players). The travel industry tends to pride itself on innovation and rejuvenation - but recently I haven’t seem much to get super excited about?
This isn’t to say that sites within their own niches can’t become successful, of course they can, but that isn’t the same as creating something that will give a return that the VCs involved within the online travel industry require for their millions of dollars.
Here are 10 travel companies that have raised VC money in 2009 [WSJ]
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Hi Alex
I thought it was interesting to see that RouteRANK has launched.
The other startup that I’m curious about but haven’t had the chance to really try is Traxo.com, which aims (I believe) to use GDS data to do something similar to Dopplr without users having to take any action. In theory it sounds better than the Orbitz FB Connect feature, which presumably only works for Orbitz users. I wonder how comprehensively Traxo will pick up your trips.
A big chunk of my MBA dissertation was on innovation in Orbitz, Travelocity and Expedia, and I concluded that they have not been organised to create radical user-experience innovations that impact the whole site – much greater focus on technical backend innovation to enable lower prices or better margins in the way they package.
Alan
Hey Alex,
Don’t you think you are a bit exaggerating here:
“The challenge is that the people with the money (in travel technology) such as GDSes, airlines (er, perhaps not any more!) and the other big travel players have NO true understanding how to invest their money”.
If those companies didn’t have a clue about how to invest their money, how come they are still present today? How come some of them have been bought by private equity funds? How come the trade press comes to them when the choosen topic is on innovation? How come some of them do buy little gems in order to grow?
To have such a statement required more details about what you mean when you say “NO true understanding”.
Sorry Pal, I thought I should point this out.
Guillaume
I’m reminded of the Expedia website. Look at it 5 years ago and look it today. Has a single thing changed? I think it’s exactly the same site. Is it complacency or are they just afraid to change anything? If it ain’t broke..
And while I haven’t played with Orbitz’s itinerary feature, from your description it seems as though you have to have booked with Orbitz in order to use it. Is that correct? If so, TripIt and Dopplr have nothing to worry about. Being unaffiliated with any one online travel site means they’re actually useful for end users who may use a variety of booking sites to make their plans.
@ Guillaume
I was referring to online investments. I appreciate that the line before made it sound like I was referring to all investments. I was just referring to innovative web ones.
When I wrote “NO true understanding on how to invest” – that isn’t a problem they should be too concerned about or be seen as criticism. They are gaining their understanding about what to invest in from looking at the startups. None of the startups are capturing market share that can’t be recaptured later when the travel companies with the money / booking traffic eventually decide what they want / need to do.
@ Jeff – the Orbitz tool has been live for a week. Of course it isn’t as full featured as TripIt / Dopplr. However they COULD (if they so wished) build it up (or create a second similar tool).
Overall my general point is that the larger travel companies are not going to have to acquire at some future point in order to get back into the game…. they will just build and use their existing travel relationships to make a marketplace success of whatever they eventually end up doing.
Hi, Alex — Scott Hintz from TripIt here. Just wanted to second Jeff’s comment that the power of TripIt is that we combine bookings from over 600+ different sites into a single master itinerary. Most consumers book travel across many different sites, and that’s a big reason why we created TripIt to organize all that information. We even import things like restaurant bookings from OpenTable, ground transportation from SuperShuttle, event tickets from TicketMaster, and so many other things not even booked on sites like Orbitz, yet are important components of many trips.
Also, having spent many years at Hotwire, including under the umbrella of Expedia, I think it’s hard to run a transaction processing business (travel booking) and also be good at social media, mobile, interoperability with other applications, and all the other things folks like TripIt are focused on. Sure, any company can build anything, but it’s a matter of what you’re focused on and are able to do well.
@ Scott
Thanks for commenting. I do agree actually….. my theory (which we do with our own business) is just to be part of the jigsaw…. but be the best part of the jigsaw for whatever we look to do
The barrier to entry that TripIt is creating isn’t to do with the execution of the itinerary sharing, but on the commercial relationships. Whilst that is a great barrier to other startups it isn’t such a barrier to large travel companies who already have many multi-website partnerships in place
I was pretty wowed the first time I saw adioso.com, even though the meta-space is already quite saturated.
@Jeff: http://www.utinerary.com/expedia10yrs.jpg
The UI has been the same not for 5 years, but amazingly, 10 years (I guess 11 now)!