Digital

Finding the next big travel startup isn’t easy — just ask PhoCusWright

@denschaal

Nov 13, 2012 8:43 am

Skift Take

A startup doesn’t have to be the next Expedia, TripAdvisor or Kayak to become a good business, but finding one sure would be like manna from heaven.

— Dennis Schaal

Free Report: The State of Student Travel

In its four-year history, PhoCusWright’s Travel Innovation Summit has always provided fodder about travel-startup trends, whether they be trip-planning, social travel, or mobile, at that particular moment in time, but its designated winners and finalists haven’t exactly set the world on fire.

Around 30 or so companies, mostly startups and a few established brands (Concur, Amadeus, MapQuest) will be competing today in Scottsdale, Arizona, to enter the 2012 TIS winners’ circle. Entrants which are less than three years old and have attracted $1 million or less in funding will be vying for a $250,000 convertible bridge loan from General Catalyst Partners.

Of the 21 overall winners and finalists since 2008, 18 of the companies still exist, and three are no longer breathing (RIP Wandrian, FoggLight and gliider).

That’s not a bad track record on predicting the fate of startups, given the precarious nature of starting a travel business from a brainstorm or perhaps a jotted idea.

TripIt steps to the head of the class

TripIt, a 2008 finalist which lost the overall prize that year to what-have-you-done-for-me lately iM@, a creator of destination and events mobile apps, arguably should be considered the top TIS alumnus to date, having been acquired by Concur in early 2011 for some $95 million in cash, stock and future considerations.

Interestingly, fellow itinerary management service WorldMate, which also competed in TIS in 2008 and didn’t even receive an honorary mention, was acquired by Carlson Wagonlit Travel last month for around $20 million. WorldMate, which powers Blackberry Travel, claims to have handled about 3 million travel itineraries in 2012 so its presence has been felt among consumers and corporations.

To be sure, the 130 companies showcased at the TIS startup competition in its four-year existence have raised a helluva lot of money — more than $500 million.

In addition to TripIt and WorldMate, a considerable number of the participating companies have been acquired or absorbed, either for their product or talent (Uptake by Groupon, Escapia by HomeAway, 10Best by Nileguide, and NileGuide and TravelMuse by Travora).

As the Uptake and WorldMate examples show, it’s a mistake to focus only on the TIS winners because some of the ultimately headline-grabbing companies never get called onto the stage at the end of the conference festivities.

Breaking out of the travel niche

Lots of the TIS overall winners and finalists over the years are still among us, but have much to prove. For example, airfare and hotel-rate tracker Yapta (2008 finalist) picked up some Concur funding, but seems to be teetering; activities search engine Goby (2010 finalist) has a laudable product, but is hardly heard from, and Hipmunk (among the 2011 winners) has won the hearts, minds and search affinities of the technorati, but has yet to become a big consumer brand.

The challenge for travel startups, at PhoCusWright or not, is that with the exception of HomeAway and Airbnb (neither of which has ever strutted its stuff at the TIS contest) much of the disruption in travel in recent years has originated outside of travel: Yelp, smartphone mapping, Facebook, Instagram, and Pinterest, for example.

Travel startups that position themselves as a “Facebook for travel” or “Instagram for travel” quickly fade away. Of the dozen and a half TIS presenters since 2008 that made social a key part of their product, only Gogobot has shown any legs with consumers. And it’s done this by successfully piggybbacking on Facebook rather than seeking to replace it with a travel-specific alternative.

About 30 or so companies hope to start changing the dynamic today of an industry frustrated by its lack of recent all-stars. The best will latch onto all of that disruption taking place outside of the industry, without being mere copycats, and turn it into something unique for travelers or travel businesses.

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