How To Grow a TravelTech Startup: Top Tips From Founders
Travel is booming.
We are travelling more, we’re ready to throw in an extra buck for exciting experiences and we do not move anywhere without the most important travel companion: technology.
This is the perfect time to be a travel startup, with their online distribution channels, user-friendly interfaces and business models that eliminate intermediaries to lower prices for travellers.
But why are many new TravelTech startups struggling?
During our 18 months of organising the first TravelTech hackathon on a plane Hack Horizon, we had a chance to pitch in front of big travel companies and meet passionate startup founders. Through this process, we observed 3 main problems that are blocking innovation in this industry.
Firstly, the current industry leaders are slow to move while many TravelTech innovations can only gain traction if they are supported by the existing infrastructure. Sometimes even strong teams fail, if the cost of adopting their technology does nor justify the immediate ROI.
The second one is scale. 4 out of 5 trip-planning or travel inspiration startups that launched since 2012 have failed. High competition pushes the customer acquisition costs up what results in a tough market for incumbents especially in a B2C space.
“ TravelTech is highly competitive whereby scale is a major barrier to entry. If you look at the global landscape, Priceline and Expedia own the entire space, with the exception of fast-rising Airbnb. Meanwhile in China, Ctrip — a partly Priceline-owned booking platform — is close to monopolizing the online travel sector.”
— Eric Gnock Fat (Klook)
Lastly, we’re seeing a lot of startups going for the known-and-tested ideas and redesigning them for the local market rather than bringing in entirely fresh business models.
Fortunately, 2017 is seeing positive changes. With incubator programs like Hangar51 by AIG, Avro by Qantas Airlines or TestBED by Marriott, founders can connect with the decision-makers while co-working spaces like the TravelTech Lab in London or VoyagerHQ in NYC help with community building and knowledge exchange between founders.
With these shifts, investor confidence is back up and Q1 2017 was so far the third-highest quarter for TravelTech funding since 2012.
So How to Succeed In TravelTech?
We asked 5 founders from TravelTech startups that stand out in the current ecosystem and asked them what were some of the things that helped them talk to customers, get traction, connect with key players and raise money.
Here’s what they said.
Maggie Lau, Sam The Local
In our first year of operation, my co-founder commented on a post that senior management from Cathay Pacific posted in a LinkedIn group. From there, we ended up meeting them for lunch and have been closely working with Cathay Pacific ever since.
Know your data
One of our assumptions at the beginning was that millennials would be our target market. After all, they’re all about “experiential travel” and getting unique experiences which they could show off on their Snapchat or Instagram profiles. We quickly learned that we could not be more wrong. The people who actually use are service are between the ages of 30–55. Looking at your data is crucial for effective targeting.
Tom Charman, KOMPAS
Focus on the unique
Now is one of the best times to be raising money in TravelTech. The funding available continues to grow, but the big thing you need to ensure is whether there’s a market for what you’re doing. Although there are lots of people competing, if you are able to find that competitive edge, there’s a good chance you’ll stand out among the rest.
Follow the user
Customer research is key — we regularly review, test and iterate our product based on feedback provided by target users. We’ve created small focus groups that we use for customer testing, to find out how people adapt to new changes. Combined with general market research, we have an engagement rate that’s 10 times higher than the industry standard.
It’s all about testing and adapting. Tweet this
Jeremy Freedman, Global Nomadic
Be your best customer
When I started Global Nomadic, the first thing I did was depart on an 18 month voyage to meet as many NGO projects as I could find, ensure they are reputable and worthy to be listed on the website. It is very important to develop personal relationships in business, and understand who you’re dealing with. If you go the extra mile, it really shows in your business.
We never fundraised. I founded the company using my savings, and grew it organically ever since. After several years I accepted a small investment from my cousin. Whilst the funds were useful for marketing campaigns, it is his personal inputs that made it all worthwhile. If you can grow your company organically, do it. It proves your business acumen and the strength of your business model, as you are only dependent upon yourself to be successful.
Stephenie Rodriguez, JOZU For Women
Know your niche
I knew there was a gap in the market for a travel portal exclusively designed for women — by women. Women travel differently than men and the survey we conducted in the ideation phase was crucial for our value proposition. We found that more than 85% of women are the key decision makers in leisure travel purchases and when planning they generally don’t trust the quality of the reviews due to background differences. We used it to create a safe place for women to find the knowledge from other females.
85% of women are the key decision makers in leisure travel purchases. — Tweet this.
Get ecosystem support
Don’t be afraid to think outside the traditional funding streams. Find people or organizations who have a shared interest in your customers. We took the traditional route and sought Silicon Valley VC nods before developing the first line of code. Ironically, as all of the VCs we spoke to were men, we were unable to validate the product and this forced us to look at a larger opportunity and identify strategic partners. We were invited to be a part of the AMADEUS start-up program (led by a woman!), and in this partnership with the leading travel solution provider helped us to grow our platform much quicker.
Olamide Sule, Jetsetter Jobs
Build a good network
Travel industry is no different from others when it comes to speaking to big organisations. Let’s say you want to meet with STA about a partnership, but you don’t really know anyone at a decision-making level and you haven’t got enough traction to get through to the relevant people. We had to go to a lot of events and work with smaller companies to build up our network and gain a customer base to get our foot in the door.
Target the hubs
For growth hacks, joining a number of Facebook groups has been instrumental for researching and implementing tactics. I recommend joining Badass Marketers & Founders (BAMF) run by Josh Fetcher of Autopilot and Traffic & Copy set up by Vin Clancy & Charlie Price. These communities are incredibly active and are a great for learning new strategies while sharing their own valuable insights
Raphael Balbalola, Flyto
Seek the Domino Effect
Our initial injection of cash came from MasterCard. This allowed us to build our way to the first MVP which led the further investment from Telefônica and getting into the Wayra accelerator programme. It’s fair to say if we didn’t get that initial injection of capital and mentorship, we would not be where we are today.
Be a storyteller
It’s all about telling a story — as cliche as it may sound if you capture your audience’s heart, their minds will follow. I always start my pitch with a question “How many of you have or have had the ambition of seeing world?” It taps into a really personal area and helps them understand how my business can make their dreams come true. Personalisation is another big trend to keep in mind when crafting your customer experience strategy — it will make your user come back for more.