LoungeBuddy carves out a comfortable niche in airline lounges
It’s not often that a new niche is created in travel – so what LoungeBuddy has accomplished in a short time is impressive.
Only available since last week’s launch of Apple’s new iOS7, LoungeBuddy is an app focused entirely on airport lounges. Lounges are a rapidly growing business, and have become a key element of differentiation for airlines competing for business traveler loyalty.
LoungeBuddy allows travelers to search, rate and share lounges from around the world, using ratings, photos and location to make decisions about which lounges are best for them. The app also includes day pass costs for those seeking to test out different lounges.
The app is slick and visually appealing, with an intuitive interface that sets a high standard for apps taking advantage of the creative potential unleashed by iOS7.
For road warriors, the key feature here is the ability to add elite statuses and service classes into the app. The app will then list available lounges according to location, which can also be pre-determined by entering an itinerary into the app so it knows the exact details of each trip.
After launching last week, the app was seeing enormous group – with up to 10,000 downloads every 6 hours.
Co-founder Tyler Dikman has been pleasantly surprised with the app’s traction:
“At this point, we’re still a top 10 most downloaded travel app in 82 countries and have already begun discussions with several major airlines.”
The lesson here is that there are still plenty of untapped potential in the travel space. Look for black holes of information, or opacity that may benefit from transparency – which can then lead to a lucrative business model as no one wants to be left behind when it comes to access and accuracy to this new information.
It’s also vital to pay attention to trends in loyalty, and how airline competitiveness can be leveraged into a compelling value proposition by a third party.
Co-founder Tyler Dikman took some time out from the launch to speak to Tnooz at the Delta lounge in SFO last week, and to answer the Q&A.
Tell us how you founded the company, why and what made you decide to jump in and create the business.
Since I graduated high school in 2002, I’ve flown well north of a million miles. During this time, I had become an expert in travel booking, upgrades, and optimizing my travel experience.
However, I could never seem to find accurate and unbiased information on airport lounges. In addition, each lounge had different amenities, access requirements, and standards.
With all of my elite statuses and premium credit cards, I had access to hundreds of lounges around the world, yet the lounge I happened to enter either lacked the specific amenity I needed, or was drastically different from the marketing materials I was able to find online. I knew that if someone as travel savvy as me was having trouble, most other travellers were as well.
Back in July of 2012, I teamed up with Zac Altman to explore building a solution to increase transparency, accessibility, and data accuracy of airport lounges.
Zac had recently built and sold Taxi Pro, Australia’s most popular taxi booking app, and was as passionate about travel as I was. Together, we flushed out the concept and enlisted Brent Griffith to spearhead our marketing and community management efforts. We’re excited our launch has finally arrived!
What is the size of team and names of executives and key personnel?
4 including – Tyler Dikman co-founder and CEO, Zac Altman co-founder and CTO, and Brent Griffith co-founder and VP-Marketing
What is your estimation of the market size?
We’re looking at passengers who presently receive airport lounge access as part of their service class, premium credit card, or elite status who aren’t paying an additional fee to gain lounge access, but clearly have a value placed on the access.
Based on a survey of over 700 travellers, we found that the average value placed on lounge access was $25 – $75 per entry.
With our estimate of just over 1 million passengers using lounges daily, the airport lounge industry is worth over $10 billion annually.
Please describe your competition.
With our current business model, there is no other platform on the market that offers a single resource for up-to-date airport lounge information, along with a community that provides ratings, reviews, and photos of these lounges.
There are plenty of products out there that provide complete directories of airports which may include some of the airport lounges, however, the information is usually extremely basic, doesn’t focus on the value associated with these amenities, and most importantly, doesn’t describe when/how you are eligible for access.
What is your revenue model and strategy for profitability?
At the present time, LoungeBuddy is 100% focused on delivering the best resource for airport lounge information, and growing the LoungeBuddy community.
Over time, we want passengers to be able to use LoungeBuddy any time they are at the airport to be able to find, and book their airport oasis. Our revenue model is focused on offering a better travel experience for all passengers, while providing additional revenue to the air travel industry, and ensuring that airport lounges maintain their mantra of exclusivity and calm.
Describe what your start-up does, what problem it solves (differently to what is already out there) and for whom.
Commercial air travel today is typically less than a pleasant experience. No matter how savvy you are, you’re still going to be subjected to delays, cancellations, layovers, and other circumstances that will leave you stranded in the airport for hours at a time.
Over 100 million passengers passing through the Top 100 busiest airports annually are able to make the most of their time by visiting airport lounges – to relax, be productive, eat, have a beer/cocktail, and freshen up.
The other 3 billion passengers (the remaining 94%) have no easy access to these lounges because access is complicated, expensive, and restricted. Even those with access don’t know which lounge is best for their needs – whether it is having a shower after that red eye flight, a quiet space to be productive, or a comfortable place to relax in after a long day.
Travellers around the world already spend money in the airport terminal on mediocre food, expensive drinks, magazines, and WiFi.
It has become clear that passengers are willing to pay for additional services to improve their air travel experience as is evidenced by last year’s record breaking ancillary revenue of $36 billion, but airport lounge suppliers are still missing a significant opportunity to capture revenue in the airport terminal.
Tell us why should people or companies use your startup.
There are few guarantees in air travel these days. Delays, cancellations, diversions, and misconnects are never within our control, but having a place to make the most of your time in the airport is. LoungeBuddy is your answer to finding a place to relax, be productive, freshen up, or just get away from it all. A better travel experience awaits – use LoungeBuddy to find it.
LoungeBuddy is the only product that unlocks the mystery of the thousands of airport lounges around the world by providing detailed ratings, reviews, photos, and access requirements for these airport oases. In addition, we include the cost to purchase one-time entry as well as the guests you may bring with you at no additional cost. LoungeBuddy is a single solution to making a passenger’s airport experience significantly better.
Other than going viral and receiving mountains of positive PR, what is the strategy for raising awareness and getting customers/users?
Since LoungeBuddy is the only single resource for airport lounge information, we’ve already begun discussions with complimentary service providers that can leverage LoungeBuddy’s platform to provide a better travel experience for their customers.
There are a number of geo-targeted advertising opportunities that we’ve been testing in the past few months, including hyper-targeted airport advertising. We’re considering implementing other techniques in the near future, and hope to share them with your readers soon.
How did your initial idea evolve? Were there changes/any pivots along the way? What other options have you considered for the business if the original vision fails?
When we were initially exploring the airport lounge concept, we had no idea how big the potential market actually was. We knew that there were numerous lounges out there, but didn’t realize that the number was in the thousands and the current population who visited these lounges annually was in the hundreds of millions.
As we fleshed out the idea, we realized that LoungeBuddy shouldn’t just be a platform for those with lounge access already, but to make these airport oases available to all passengers for a one-time fee.
LoungeBuddy is still in the infancy stage of development and we have a lot of exciting announcements in the coming months. There are some amazing opportunities in the airport lounge space that have never been explored by any other company, so we’re looking forward to reshaping the way people view airport lounges and the incredible value they play in a passenger’s travel experience.
Where do you see yourselves in 3 years time, what specific challenges do you hope to have overcome?
LoungeBuddy’s singular vision is helping travellers find and access their airport oasis. Three years from now, we’ll have coverage in all major airports around the world (we’re presently in 60 of the busiest airports) and redefine when/why passengers use airport lounges.
In the same way that OpenTable has reshaped how customers discover and access restaurants, LoungeBuddy will do the same for lounges in airports around the world.
What is wrong with the travel, tourism and hospitality industry that requires another startup to help it out?
The airport lounge industry is massive, yet there’s no company out there bringing it all together.
LoungeBuddy addresses a market of hundreds of millions presently using airport lounges, and gives the billions of passengers without access the opportunity to have a better airport experience.
LoungeBuddy has a stellar product – and the lightning-quick traction supports this. The interface is captivating, and the features quickly allow travelers to see what lounges they have access to – and which ones they might want to purchase day passes for.
It also addresses the need to know what’s beyond those doors prior to paying, and offers a comprehensive look at different airports for business travelers. This is a much more targeted value proposition than some in the space, such as Smart Layover, which focus on selling hotels, experiences and other products to make a layover more tenable.
The business model has yet to be fleshed out, but there’s some very obvious paths: taking a cut of in-app purchases for day pass purchases, up-selling travelers to annual memberships (and some recurring revenue share), and in-app advertising from both airport vendors and competing lounges are all potentially large and steady revenue streams. The beauty here is that each of these revenue streams can co-exist, allowing for a significant revenue base to be built over time.
The team is also addressing a need that they have experienced themselves as passionate and active travelers. This understanding of their core demographic should help them scale the product, and ensure that it remains relevant to travelers as they make their way around the world’s airports.
We’re very bullish on this app, which has built its own niche in the same vein as Hotel Tonight. By partnering directly with airlines as far as lounge inventory, the app also has no middleman and can get right to the source.
For airlines and lounge operators, providing inventory via this app is a no brainer: they avoid technology and distribution costs, and can drive incremental revenue. Lounges have set overhead costs, so the imperative is to sell as many passes each day as possible – and to convert more travelers to members. The more conversions, the more return on the asset the companies will see.
A triple win, for travelers, lounge operators and LoungeBuddy. Always a good position to be in – and execution of this vision is still a challenge for any app in its infancy.
Nick Vivion was a reporter (and later also global events lead) for Tnooz between August 2012 and July 2015. He was the launch co-founder of Booty's, a global street food restaurant in New Orleans and now is AVP Operations, North America at Zomato.