TLabs Showcase on travel startups featuring Russia-based online travel agency Travelmenu.
Who and what are you (including personnel and backgrounds)?
Nina Pogossova, Travelmenuâ€™s founder, first caught the travel bug when doing project work for Expedia while at Harvard Business School. Upon graduation she convinced her brother Mikhail, who she had previously successfully started a business with, that they should focus on building a company addressing the outbound travel market for Russia and the Ukraine.
The senior team is rounded out by Katrin Buckenmaier, who attended Harvard with Nina and has a combination of private equity and online travel experience, from having been at lastminute.com between 1999 and 2001.
What financial support did you have to launch the business?
To date Travelmenu has been funded by the founders.
What problem are you trying to solve?
Historically, travel in Russia has been dominated by tour operators, but consumers now want individual travel elements sold separately and at the right price point.
Describe the business, core products and services?
Travelmenu has the widest inventory in the Russian market: 250,000 hotels, 500 airlines and 40 tour operators. This allows the company to provide a lowest price guarantee.
Moreover, Travelmenu has created a databank of proprietary content to provide the consumer with inspiration about new destinations.
Consumers can access the Travelmenu product directly via its website or via a network of up to 2,700 partner travel agencies across the country.
Who are your key customers and users at launch?
- B2C: 180 million Russians and Ukrainians in five segments; young professionals, expats, rich/ultra-rich, upper income and middle class.
- B2B: mid-sized travel agencies.
- Corporate Market: SMEs with 40-100 employees.
Did you have customers validate your idea before investors?
The business model is well-established and as such Expedia, Travelocity and the likes had already done this job for us.
What is the business AND revenue model, strategy for profitability?
The travel business is essentially a volume business, as margins are small. Online travel agencies can make anything between 2-3% commission on flight bookings (higher when business class),10-20% commission on hotels for as long as they have direct contracts in place with the top hotel chains. Commission on package holidays is also around 12-14%.
While flights drive consumers to come to the website over and over again online travel agencies really make their money on hotel and package products.
SWOT analysis â€“ strengths, weaknesses, opportunities and threats?
- Broadest product inventory available in Russia and Ukraine to date, enabling Travelmenu to provide the consumer with the best prices
- Strong executive team coupled with a top-notch supervisory team, which includes a former CEO of Expedia UK as well as the head of the Federation of Russian Travel Agents.
- Travelmenu only launched its B2C user interface on 1 November 2010 and is hence only in the earliest stage of creating a consumer brand.
- Expansion into other CIS-countries as the next stage, including Kazakhastan, Georgia, Armenia, etc.
- Exploring the domestic travel opportunity.
- Highly-competitive market where access to funding and speed of execution will be key success factors.
Who advised you your idea isn’t going to be successful and why didn’t you listen to them?
The Travelmenu team has received broad encouragement across the board. The outbound travel market in Russia and the Ukraine is ripe with opportunity and ready to be taken.
We are excited at the prospect of creating the leading consumer travel brand in these countries.
What is your success metric 12 months from now?
Profits, profits, profits. Aside from the usual e-commerce KPIs like unique visitors and conversion rate, we will measure our success not only by looking at our revenue line but also by addressing the bottom line by driving operational efficiencies.