Ahoy the Pirates of Penzance [Travel Industry Disruption version]
Being called a bunch of pirates in an industry isn’t as bad an insult as it sounds – especially in the context of being seen as potential disruptive forces in the travel sector.
Thus the participants in the innovation and investment competition at the annual EyeForTravel Travel Distribution Summit in London will probably be rather pleased to be associated with rather unconventional ways of finding treasure.
Four companies pitched their businesses and answered questions from judges and the audience.
Blink – Same day hotel bookings (mobile app)
Madrid-based. Founded by founded by two Spaniards named Rebeca Minguela & Alex Perez. Daniel Reilly, a former director of travel for Groupon in the UK and Ireland, presented. Undisclosed funding. 30 staff including ten interns. Currently feature 500 hotels. 85,000 consumers have downloaded the app.
Looks a well executed app however there are future challenges:
- Will it be possible to generate sufficient traction as a standalone B2C same day hotel booking service when existing hotel OTAs launch their own same day hotel booking services? (The existing players already have the hotel relationships and consumer traction)
- Blink currently offers lower pricing than available from OTAs. They achieve this because the rate parity contracts hotels are signing with other intermediaries and agents only apply to online distribution and Blink, being mobile based, should be classified as a non-online channel. Can that position be sustained long term though?
HallSt – P2P hotel room trading
Barcelona-based. Founded by Alfredo Ouro. Team of four. Currently has agreements with 100 hotels although the model doesn’t necessarily require a hotels co-operation.
One way of describing HallSt is an after market for hotel bookings. If you no longer need your room booking you can swap it for another hotel on another date, donate it (e.g. to family members of hospital patients) or perhaps resell it….
Their model would also permit you to trade in hotel rooms (Making HallSt the E-Trade of hotels) so if your understanding of a market suggests hotel prices may go up – book now and resell later. Day trading for nights.
One of the judges, on saying he didn’t quite get what HallSt is, was given the memorable reply “because it is new, sir”.
Their largest challenges look to be around:
- Marketplace traction requiring two sided growth at equal pace – for a traveller to be able to resell their room – someone has to want to buy it (via HallSt). The business will have to address how to get through the slow first few years ensuring that buyers and sellers of rooms both see benefits before the marketplace has sufficient depth and maturity on both sides.
- Working with hotels – do hotels have to permit HallSt to run a secondary market on their hotel? Or can HallSt work OK without the hotels explicit permission. What happens if hotels put up barriers (e.g. cancellation fees) as a result of Tingo from TripAdvisor? Will HallSt’s nascent model be collateral damage?
CityBot – Personal travel itinerary creation engine (mobile app)
San Francisco-based. Founded by Greg Solovyev. Team of four. Self funded but currently raising.
The primary purpose of CityBot is to suggest to a traveller what they may like to do that day. It does this by creating a sample itinerary. Travellers can then swap out individual components (eg. a restaurant meal) with other components – either from a similar category or from a new category. (e.g. change one proposed restaurant with another).
Ultimately the traveller is then able to have all the commercially provided components booked via the app. CityBot expect to receive about 15% commission on tours and activities equating to approximately $24 per booking.
Looks a great user interface execution. Challenges will be around:
- The user interface will have to become much more complex to handle booking capability (the proposed monetisation method). It is hard to keep totally elegant design when complexity is introduced. At this point the traveller may wish to book outside of the app reducing a potential revenue source for CityBot.
- Cities have different structures – for example a city with a big magnetic attraction such as Cairo (the pyramids) may have a different template for a day itinerary than one that is compact (such as New York). City specific itinerary templates are going to be interesting to research (and therefore scale)
The judges applied four criteria to their decision:
- Investment potential
- Product usefulness
- Excitement around the product
- Problem areas
And the winner?
CityBot! Well done to founder Solovyev and his team.
NB: Disclosure – my company TourCMS also pitched. We are based in the UK, have a team of 2.5 and provide a Software as a Service (SaaS) reservation system to 250 suppliers in 40 countries. As a result of running a multi-channel reservation sytem TourCMS has the data that is necessary for mobile sourced (last-minute) tour and activity bookings from mobile apps like CityBot. TourCMS secured second in the competition.
Alex is a contributing Node to Tnooz and writes about travel technology, travel startups, specialist tour operators and the tours & activities sector. He has previously led ecommerce, social media and reservation system projects for airlines, leading mainstream tour operators and hotel distribution companies in both leisure and business travel sectors.
He is the CEO of TourCMS, a web based software-as-a-service reservation system and distribution platform used by many specialist tour operators worldwide to take online bookings and distribute to 3rd parties.
He also moderates Small Fish Big Ocean, a community that welcomes small tour operators and niche travel agents to come and discuss travel ecommerce issues. Alex has a computing degree, is passionate about usability, speaks French and still writes and reviews code.