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815 days ago
 

What are the top five questions from startups entering the travel industry?

As a neutral and independent standards body, we at OpenTravel get questions, and lots of them, about the travel industry.

Topics range from connectivity and distribution technology to segment-specific questions (airline pricing and scheduling, hotel ownership structures, etc.) to how to work with the GDSs and OTAs to asking for contacts to advice on which graduate program to attend (seriously).

At least people are finding their way to us, which is great, but what it really shows us is that the technical and commercial machinations of the travel industry are opaque to new entrants, and that opacity can make it difficult to break in.

So what are the top five questions I get from startups and new entrants to travel?

1. How do I get access to travel industry information and inventory?

Let’s dispense with the basics first – to get access to any travel industry information and/or inventory, you must have a commercial agreement in place to utilize that industry data.

This answer breaks hearts sometimes but let’s get real – there is no pot of aggregated data (information, inventory, availability, pricing, etc.) freely available in this industry.

The GDSs and large OTAs have lots of data, and there are many other pots out there, but you can’t get to any of them without (repeat after me) a commercial agreement in place.

In case it’s not obvious, this means you’ll be paying for data. While this is becoming more commonplace for startups in other verticals, the amount of money required to get access to data can in many cases be a high hurdle to clear for many startups.

The reasons are many and complex, but the main reason is that aggregation of travel information and inventory has taken time and money on the part of the data holder, so why should they give it away?

Historically, large holders of travel industry information and inventory have been accused of being gatekeepers, guarding their data jealously.

Based on public statements and new initiatives, it’s fair to say that many of these gatekeepers are working to become gateways, to provide a more open model to the industry and those who wish to work in it.

That answer then logically leads to the next question:

2. What is the best source for [insert segment name here] information and inventory?

I love this question because it’s the best one to ask, but I usually have to ask a few questions before I can answer. Do you want, for example, access to every hotel in the world or just certain categories of properties or certain brands or certain regions?

And do you want information and inventory, or just one or the other?

The answer could be Pegasus, a GDS or OTA, one of the new entrants like Room Key or Global Hotel Exchange, or even a specific hotel group or brand or representation company.

Ownership and management structures in the hotel industry are layered and can be totally confusing to someone from the outside looking in.

If we’re talking about airlines, the answer is a bit more straightforward – the GDS or one of the technology providers is probably the answer. Direct connects are available to some airlines, but that means getting on multiple development calendars, and most use a third party technology provider for their direct connect platform anyway.

If the question is about access to long tail segments (tours and activities, vacation rental, golf, hostels, ground transport, etc.) then the answer is a bit more complicated, as the information and inventory in these segments aren’t as widely aggregated and distributed as airlines, car rental and hotel.

Some segments are dominated by a few large players that aggregate large amounts of data; other segments are still fragmented enough that there isn’t even much data available.

It just depends on what information and inventory you’re looking for to support your business.

3. This is all great information! Now whom can I talk to at [insert company name here] to get started?

Another great question, but I hate it because it’s almost impossible for me to answer. Like all large companies everywhere, large travel companies can be siloed, bureaucratic, hierarchical, and suffer from turnover and internal reorganizations (or some combination thereof).

The person I might have referred you to last week may not be there any longer, may be doing something else or may have had someone else’s job unloaded onto her so she’s now doing two jobs and has yet to see the light of day. Or I might not have a clue.

After a career in travel, I have a long list of contacts but I do have to update and purge it on a regular basis to keep up with the changes.

It doesn’t help that the travel industry can be less than welcoming to new entrants, and it’s not always easy to find business development professionals listed on the contact us page on web sites.

Skinny margins and keeping up with fast-changing consumer demand can make companies less interested in talking to potential partners and more interested in keeping the business afloat.

In most cases, the burden is on you the new entrant to make a case for why the travel company should talk to you, and remember to have a well-formulated pitch and, more importantly, ROI for the travel company to consider.

To an established travel company, your startup represents a fair amount of risk. The ROI needs to be clear and easy to understand across a large organization for them to take that risk because there are frequently many departments involved, each with their own risk profiles.

To have a well-formulated pitch for a travel company, you have to educate yourself, which leads to the next question:

4. Where can I go for more information?

Some segments are rich in research and documentation, especially the hotel industry with research published by the Cornell School of Hospitality, Smith Travel Research, the HSMAI Foundation and others.

The US Travel Association and PhoCusWright have published research covering a wide variety of segments over the years, and there are other many other commercial and association resources (Google “travel industry research” and you’ll see what I mean).

There are also industry associations geared toward education, including HEDNA in the hotel industry, CASMA in the airline industry, the Adventure Travel Trade Association, the NGCOA in golf, VRMA in vacation rental, and several more.

Most have events and meetings on a regular basis, and some have white papers and other artifacts available to the public. All of them have contact information published on their websites.

There are multiple B2B and B2C sites and publications serving all aspects of the travel industry, more than you could possibly read.

One of my favorite places for industry research is the press room pages of company sites because you can see what that company thinks is important, and of course public filings always make interesting reading because you can see how companies are allocating resources and which divisions are making money.

And I can’t forget conferences, of which there are many in the travel industry. So many that it’s hard to tell which will give you your money’s worth (that’s probably worth another post on its own), so ask around for recommendations then GO!

Nothing beats face-to-face networking in this industry, and most conferences provide a decent educational experience and plenty of time to make new friends.

Finally, this is the question I get the most often:

5. Why is travel data so difficult to understand?

And it’s hard for me to answer because the answers I could give sound so lame:

  • It’s just evolved that way
  • It’s because of the legacy structure of the underlying databases
  • It’s worked for this long

But the fact is that travel data structures are labyrinth and complex because there are so many inputs – some regulations, some supplier-mandated, some intermediary-mandated and some technically mandated.

Technology and platforms had to be scalable to process millions of transactions in a short period of time and stand up to it, and the technology was first built in the 1940s and had stuff bolted onto it over the last sixty years. And frankly it worked well for a good long time.

As a whole, the travel industry seems to recognize that the need to ‘open up’ is critical for the industry to innovate and thrive.

All three of the GDSs have recently announced initiatives of varying types to allow developers access to data and/or services, something that would have been unthinkable five years ago, and many other large travel companies are doing the same.

Our job at OpenTravel is to work with companies to create more modern and usable methods of interoperability as they open up, and forward-thinking companies work with us every day to make connectivity easier.

As an industry, we have to recognize that innovation in the industry is inevitable, not be threatened by outside innovation, and finally, welcome the interest in the industry by outsiders, and remember that a rising tide lifts all boats.

So those are the questions I hear all the time, but I know there are a ton of other issues plaguing startups in the travel industry.

What have you encountered? How can the industry change to make things easier?

NB: Signpost, supply chain, start line, information sign and cry baby laptop images via Shutterstock.

 
 
Valyn Perini

About the Writer :: Valyn Perini

Valyn Perini is a contributing Node to Tnooz and the Vice President of Strategic Relationships for Nor1.

She was most recently the CEO of the OpenTravel Alliance, where she oversaw the operations of the organization, including developing and executing strategies to reach the goal of standardized electronic distribution of travel and traveler information.

Her travel career includes stints with InterContinental, Westin and Swissôtel, with PricewaterhouseCoopers as a travel technology consultant, and as the director of product strategy for Newmarket International.

Valyn speaks on industry topics at events around the world, and writes about travel when she can find the time.
Originally from Atlanta, Valyn now lives in Boston.

 

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  1. Best of Tnooz last week - Apple crunch, Parity probe, Startup dilemmas, GDS highs and lows | Tnooz

    [...] What are the top five questions from startups entering the travel industry? [...]

     
  2. Minh Bảo

    Great articles. It is on time for me. I have tried to understand the travel industry, especially in Vietnam.

    I think the big problem for start-up is how to cover all the areas in our country in short time and extend to outside.

    The margin for commission is not too much, so the game is now the scale of how many hotels, tours, places you can cover.

     
  3. Alexander Maltsev

    Excellent article!

    I wonder, how can the guy on the second picture write like that?

     
  4. Steve Sherlock

    Some great resources for start-ups to follow up here, to begin the exposure.

    I worked on start-ups for over 10 years in the online travel industry and learnt a lot. Working for an airline now for two years I have a learnt a hell of a lot.

    It’s exposed me to more jargon that one can poke a stick at. My tip to starts-ups is: to try avoid the jargon as much as you can, as it will only bamboozle you and make you think things are more difficult than they really are.

    Instead just draw diagrams or flow charts of the moving bits and how they fit together, so you can start with a higher level view. Use crayons if you must – its child play after all, that’s is if you can avoid the jargon ;-)

     
    • Greg Abbott

      Valyn, excellent! thanks for sharing these. You’ve basically authored the first five questions to the FAQ page that should be mandatory for all travel starts to read! Also gets the juices flowing for Travel Traction.

      @Steve, you MUST share your diagram of “the moving bits and how they fit together” for the travel industry! I am sure it would be helpful. I’ve attempted this to show different system integration experience for our organization (and internal training) and the result literally looks like a plate of spaghetti beat with a hammer.

       
  5. Paige

    Great article! Definitely some good tips. I have spent the past 4 years expanding my contacts in the industry and sometimes I feel i’m just tapping the surface. Start now building the network you will need later. Hopefully see you in Vegas!

     
  6. Niraj Shah

    Great Article Valyn.

     
  7. Andy Beal

    Some great advice Valyn. It’s whet my appetite for your Travel Traction event in Vegas. I’m looking forward to attending and learning more about building contacts and data partners for GuestComment.com (which we’re launching very soon!) :-)

     
  8. Michal W

    It takes time to build something with big data, but nothing is impossible. To some extent, not being a travel industry insider might be an issue here – saw it happening before. Good points, Valyn. In plus of Room Key and GHX, there’s also Treovi :)

     
    • Valyn Perini

      Michael,

      Respectfully, I don’t agree with your point – some of the most successful travel startups have been created by non-travel people, and some failed startups have been created by travel people.

      I would echo Alex’s point above – there are lots of opportunities in this industry to meet people to ask questions and loads of resources available for inquiring minds.

      And good luck with Treovi!

       
      • Michal W

        All depends on which side you’re on :) Often the industry people are lagging in regards to what the traveler needs, in these cases, it is true.
        On the other side when a rookie gets its way into the three-letter-madness (OTAs, CRS, GDS, etc…) he will immediately go down to question five and will be like: “why is it that complicated?”. That’s more what I ment here.
        Thank you for your kind words.

         
  9. Timothy O'Neil-Dunne

    This is relevant and timely. The answers to the question why is it like this comes with an acronym (because its travel we LOVE acronyms( BIABLT which stands for Because Its Always Been Like That.

    Which causes newbies to make assumptions that because its not logical then it can be reformed. And there has many a start up ship foundered on the Symplegades of the Travel Industry Gatekeepers.

    As Ms Perini represents the whole industry – she has herself to steer carefully and keep all her stakeholders happy. Recognizing that there is a distinct lack of support for startups in Travel, I started an accelerator for Travel Startups called VaultPad which has just opened its first office in the UK. Most of the time is spent educating people on how to navigate these dangerous waters.

    There is no shortage of good ideas. There is however a shortage of comprehension by prospective startups as to the extent of the complexity of the space Just because your idea is not implemented does not necessarily mean that it is a good idea.

    One point Valyn makes is the presence of Gatekeepers who jealously guard their posts. Getting past them takes a lot of stamina. So if there was one characteristic I would advise in any one wanting to come to the industry – be prepared for one long hard slog that will take at least twice as long as you think it will take. There are no short cuts to success in the travel industry.

    That said – this is a market ripe for new talent to challenge the status quo. Building on open standards and driving change is good for everyone. Hogging the space in the middle is not a natural act!

    Best of luck to you all. And don’t give up.

    Cheers

    Timothy

     
  10. RobertKCole

    The number one question I hear from travel startups is “Do you think we will really have an opportunity to meet Valyn Perrini?” ;^)

    Seriously, very nicely done Valyn.

    By the way, the Cornell mafia want you to know the official name of the school is the “Cornell School of Hotel Administration.”

     
  11. Minime

    If we are getting these type of questions from future start ups I assume they don’t have the minimal knowledge to begin any travel related company.

    I have to disagree with Mr.Kost, the job of a start up is not to make a game changing company but a profitable one.

     
    • Valyn Perini

      Minime,

      Perhaps, but people have to start somewhere. Getting answers to basic questions leads to more questions and ultimately to a strategy, which could include the decision to abandon the idea.

      The travel industry has been known to be dismissive of new ideas, to our collective loss. Answering questions, even basic ones, is not overly onerous and might actually lead to something game-changing AND profitable. One never knows.

       
    • Alex Kremer

      I couldn’t disagree more. It’s often the unprofitable, the crazy, the ridiculous that change the game. They do it by paving the way with new thinking. Often, these trailblazers are not the ones who properly capitalize on this new thinking, but the world is usually better off. So here’s to more crazy ideas.

      And to those startups out there that just read Valyn’s excellent post, read and re-read point 4. You won’t get anywhere without being really good at it. As an industry outsider, I took the time to visit conferences and got to know people before I had even the remotest idea of what I was doing. It was only with the help, advice and encouragement of the people I got to know that led me to figure out my path. There are a ton of great people working in this industry who want to see new ideas succeed. Go forth and find them.

       
  12. Valyn Perini

    Jim and Robert, thanks for the kind comments.

    Thomas and Evan, you both make excellent points about creating a business without relying on an existing provider(s) in the industry. That is entirely possible with some creative and smart thinking, along with solid knowledge of how the industry works.

     
  13. Robert Kost

    Excellent article, Valyn. Of course, the answer to a lot of the questions seems in essence to be: “because that’s the way it is.” And, it is the job of the start up to change the way it is.

     
  14. Evan Konwiser

    I think another relevant question is: How do I build a travel product that doesn’t rely on any industry player? (including for data, inventory, transactions, etc.)

    Because after you’ve gone through and gotten your unsatisfactory answers to the 5 above, this is inevitably where you end up. And if you can crack it, all the better for your sanity during the early days of your company.

     
    • Ron Hodson

      Good point Evan. Industry players rely on structured data, and they have the advantage of existing scale to use that to their advantage. A startup can’t compete if you’re trying to offer better data, so the only other options are usability (like Kayak has done) or better marketing (which is harder with Google SEO changes).

      Areas of the travel industry that have unstructured data (no large, organized databases) aren’t an easy business either, since you have to figure out how to gather and monetize that data. Startups don’t usually have the money, resources or knowledge to collect their own proprietary databases, but it can happen. Yelp leveraged crowdsourcing to help build their database, and Foursquare did the same. They are by no means the norm (and Foursquare likely isn’t profitable yet), but it points up one avenue to how companies have gone around established data holders.

      We’ve been building our own proprietary database of places to go and things to do in the U.S., and we’re well over 30,000 places in the U.S. related to entertainment, food & drink and travel. However it’s hard to tell when you have enough data, and only your customers can determine that based on how they use your services.

      For instance, Viator has a huge inventory of tours and activities, but they are not everywhere. Yet I would think that Viator has reached the tipping point for the market they are in, so it really depends on what your goals are.

      Great article Valyn.

       
  15. James Menge

    What a great article.

    I get asked many of the same questions almost daily,,, I LOVE #3: People in the travel industry. I find that some either wonder why anyone else would ever want to get ‘into’ the travel industry while others are more than willing to help. Generally, most of the people I’ve asked for help are pretty good about it.

    I’ve had the benefit of working on tangential products (non-mainstream) over many years, so when someone has the next great idea in travel, or an investment company thinks about dropping $20M into a startup, I’m psyched (or psychoed) with them.

    Innovation in travel is a good thing and we (in the travel industry) should always welcome it.

     
  16. Thomas Allier

    I wish I would have read this article 6 months ago when starting my business. It cost me a lot of time to figure this all out.

    Starting with 0 contact in the industry, it sometimes takes 5 doors to knock for 1 to open.

    Also I believe it’s totally possible to do great online travel business without any acces to travel data information. Example : the search box of dealbase.com

     
 
 

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