As we speed through Q4, it’s time to reflect on what’s impacted the travel sector this year as well as the growth, successes and (and some failures) of several disruptive travel tech startups. Sure, every tech start-up dreams of having the ‘killer app,’ revolutionizing operations or customer service, but who actually brought it to market? Who marketed it to the right audiences in the right channels? With an eye toward 2020 and the future of travel tech, let’s examine the common threads in their success stories and how they met customer demands for a seamless, integrated, connected travel experience.
Who’s succeeding and why?
2019 has seen continued innovation in the travel industry for both travel providers and customers. Startups have formed serving every niche of travel, from airline operations to hotel management to every leg of the passenger journey. What are the leading market trends and business priorities in travel tech? Let’s review the new entries, major players and emerging trends in travel.
- Airlines are often portrayed in media as lumbering dinosaurs weighed down by legacy systems, but low-cost carriers (LCCs) have been especially receptive to travel startups providing inter-connectivity for airline alliances formerly limited via GDS/codesharing agreements. Startups now race to provide travel platforms designed to update legacy systems to new digital functionality. Communication innovations also extend to airline operations as a whole, promising to streamline processes and make the ‘paperless cabin’ a reality.
- Airline booking is currently a major area of innovation with the rise of ‘managed interlining, whereby airlines have the ability to offer passengers more flexible interline flights entirely under their own brand. Meanwhile disruptive online travel agents (OTAs) include Klook, named by PlugandPlay as Asia’s biggest in-destination travel services booking platform (raising over $296 million) offering last-minute booking. Similarly, GoEuro (recently raised another $150 million) offers air, rail and bus travelers a single search tool to compare and book their journey across Europe.
- Travel-on-demand enterprises offer a more modular take on tourism. Founded in Milan and covered in Forbes, DayBreakHotels is a travel tech startup allowing its app and website users to book hotel rooms for day use around the world, often for 40% and 70% cheaper than overnight rooms. This ‘a la carte’ business model is becoming increasingly commonplace among tourists and vacationers looking to rent just a single room, service and time of day.
- Startups innovating in customer loyalty solutions include Seatfrog, a UK software startup enabling railway companies to upgrade passengers’ train seating up to half an hour before departure. With UK rail continuing its modernization efforts and mobile compatibility, Seatfrog’s mobile app could soon become indispensable to commuters.
- Focusing on the passenger experience has paid off for several travel startups bundling the entire journey from booking to destination. Disruption management is an unexpected yet promising niche, giving passengers early IROP notification of delays and cancellations, benefiting customers and travel providers alike. For example, 2017 startup Instalocate’s app is designed to help fliers seek airline compensation in the event of travel disruptions.
- Headquartered in Zurich, Switzerland, Beekeeper has raised $to date for its software connecting the hospitality industry’s workforce. Styled after Slack, the cubicle jockey’s best friend, Beekeeper’s mobile app features tools for hotel owners to touch base with hourly workers. The software also boasts integration with task management platforms including Alice (Expedia) and Service Optimization Software (Amadeus). Meanwhile Cloudbeds, cited by Skift as the fastest-growing travel and hospitality company in the US, manages operations for hotels and vacation rentals using tools for rates, inventory, payment, and more, bundled under a single sign-in.
Where Do Startups Go Wrong?
Moving away from the honor roll to the proverbial hit list, in what areas have some travel startups missed the mark? Let’s identify several common pitfalls:
- Lack of market awareness: Many startups fail to fully understand the addressable travel market. Selling to airlines, for example, requires businesses to adopt a totally different marketing strategy than does marketing an enterprise software product. One major difference is that the airline market’s a small pond with only several hundred customers to realistically sell to. Ignorance of the market is no excuse when your competitors are leveraging digital agencies to keep their travel messaging on point.
- Lack of industry expertise: Likewise, startups often under-estimate the extreme complexities of the airline industry and the many systems upon which the sector is built. Travel’s high level of nuance often requires in-house or outsourced industry expertise; many business failures are the direct result of ignoring key industry realities such as mobile experience and payment preferences. An infamous example still in recent memory is crowd-sourced travel startup Gidsy, sold off to GetYourGuide in 2013 after failing to make sales when booking activities due to its excessive focus on P2P concerns.
- Targeting the wrong buyers: Startups often follow a generic approach even while pitching to specific buyers. Who is actually speaking to their audience: a startup marketing to ‘airlines’ or one marketing directly to the ‘Revenue Manager, Customer Experience Manager and Head of Digital Transformation’ to see what they think about the startup’s MVP?
- No clear value proposition: This classic pitfall is so important that it should be much less commonplace. If your business can’t clearly articulate its ‘value prop,’ then neither can your customers!
- One-trick ponies: The problem with being a hit-or-miss is that statistically most businesses will miss. Successful travel tech startups often learn to diversify early after recognizing that in every niche market, there’s always someone better. Instead of investing in disruptive solutions themselves, many shrewd startups build upon new solutions for a faster go-to-market strategy. However, identifying these innovators early can be a challenge. Founded in 2014, Sonder leases and manages rental properties for tourists, but after having raised a total of $345 million, it’s now moving into the real estate space to build and furnish new rental units.
It’s clear that when strategizing (and budgeting), travel startups must always keep marketing in mind—not as just one department among many, but as the lifeblood of the company, carrying its message to investors, buyers, end users and media.
Achieving Startup Success
Today’s travelers want an experience that’s not fragmented, allowing them to go where they want, easily redeem rewards they’ve earned, and pay on any device in whichever currency they choose. Competitive travel tech startups must directly address these market demands while speaking to the most relevant audiences using a compelling benefit statement. How can businesses ensure they’ve got it right?
Just like startups themselves, digital agencies serving travel tech companies can fail to truly understand travel markets and consumers. To be successful marketers, agencies must possess extensive travel industry knowledge while taking care to avoid becoming pigeonholed by neglecting key travel markets. Our own marketing initiatives have repeatedly shown us the value of being a full partner capable of applying travel market expertise, of identifying the right travel brand buyer personas and perhaps most importantly, addressing travel’s most pressing challenges using our clients’ specific solutions. While it’s true that travel is ever-evolving in terms of demand and technology advances, it’s also vital to keep customer experience and loyalty at the forefront of your marketing efforts. By delivering timely content with clear solutions to eager travel audiences, we as marketers can stay relevant and add genuine business value to our clients—startups or otherwise.
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