It is time that the aviation system and its government overlords begin paying attention and start listening to the American public. But is there anything to listen to? Is there a problem? So far the attitude has been: we aren’t getting complaints about privacy and travel, therefore there must not be a problem.

The post Will DOT finally take traveler privacy issues seriously? appeared first on Skift.

Read the Complete Story...

Earlier this week, a New York City judge likened an apartment rented out through the online service to an “illegal hotel” and fined the offender, Nigel Warren, $2,400. But what about everyone else? Do New Yorkers who planned to make a few bucks this coming holiday weekend risk getting into trouble also?

A New York state law does indeed forbid rentals for less than 29 days unless the tenant is living there at the same time. But rather than acknowledging this very real challenge to its business model, Airbnb continues to operate in denial. Even more dangerously, it’s asking that of customers. Consider this email the company sent users yesterday:

…this points out with absolute clarity that the laws in New York need to be changed so this can never happen again. While there is universal acknowledgement that hosts like Nigel were not the intended target of the law, that provides little comfort to the few who find themselves subject to these fines.

The bottom line of yesterday’s news is that the judge’s decision simply creates even more confusion around an already confusing New York law. As always, we urge our hosts to learn about and obey all of the local laws in their cities. But it is often hard to predict how individual city administrators will interpret laws like this, and that needs to change.

Translation: Figure out the local law in your city. If that city is New York, the law is unclear. Well, it’s kind of clear but we don’t like it.

Airbnb has no shortage of supporters who say regulators will have to come around and embrace the so-called sharing economy. Wired wrote yesterday: “…even the most stubborn pencil pushers won’t be able to resist change for long. After all, even bureaucrats have extra bedrooms.”

But Airbnb has bigger problems than a chilly reception from city governments around the world. Instead of targeting the arcane short-term hotel law, it might want to look at the more widespread rule being flouted around the world. Check out this standard lease agreement from Michigan:

Subleasing, Sharing, Assignment and Guest at Premises: No subleasing, sharing of Premises, or assignment of agreement is permitted…

Here’s another from Ontario:

The Tenant shall not assign or sublet the premises without the prior written consent of the Landlord.

If not expressly prohibited by the landlord, the tenant may sublet or assign the premises with the landlord’s prior written consent…

A letter from your landlord saying it’s okay to make a few bucks for the weekend off a total stranger? Good luck.

But Airbnb functions under the premise that those inhabiting an apartment have the right to let it out. As the leases above show, the reality is that most people do not. Hosts on Airbnb know this. Airbnb knows this. (That’s why it dodges the frequently asked question on on its website: “Do I need to be there with my guests? It’s up to you! Airbnb does not require you to be present while guests are staying in your space.” Then the perfunctory: “rules and regulations differ from place to place…”)

Ignorance, real or feigned, has been critical to Airbnb’s success.

But the timing couldn’t be worse for Airbnb, whose looming IPO is one of the most anticipated of the year. It’s been an investors’ darling with valuations touching the $2.5 billion range and some fervent believers predicting annual revenues could top $1 billion.

In an interview with Skift earlier this year, Airbnb’s public policy head David Hantman actually said, “We can’t possibly keep up with the law in all the cities. … What we’d like to do is figure out a way to make New York the model city.”

The real estate sector, in which Airbnb operates, is infamously corrupt—everyone looks the other way to get around the rules. I’ve done it, too. Years ago, when I got a new job hundreds of miles away from my apartment, I slipped the superintendent $200 and told him to tell anyone who asked that I lived there on weekends so I’d be in compliance with our building rules.

Airbnb is doing the same—on a massive scale. I asked the company to comment and it referred me to this blog post by Hantman, referring to the New York ruling and Nigel Warren’s case:

We believed, and still believe, that as long as a host is present during a stay, the stay is legal. That is why we intervened in this case.

As expected, the company is being called on its duplicity. A commenter named Alex wrote:

Also… if you seriously believe “so long as the host is present during the stay, the stay is legal”… Then why is there an option to select “Entire home/apartment” when searching for a place to stay in NY? … I don’t think you’re going to be able to BS your way out of this.

No time like pre-IPO to keep up with the law—and cut the BS.

This story originally appeared on Quartz, a Skift content partner.

Additional links from Quartz:

• The UK’s fastest growing tourist group endures the slowest visa process
• Something is wrong when a country says it’s 40 million rolls short on toilet paper
• Tesla’s next model: a $450 million convertible (debt) offering

The post Can Airbnb really hide behind its murky understanding of the law until its IPO? appeared first on Skift.

Room 77 employees take a break from "turning hotel search inside out" or whatever else they do at company headquarters. New CEO Drew Patterson (center, on the couch) thinks these are very early days for hotel metasearch. / Room 77

Drew Patterson, who recently became Room 77′s first CEO, does a perceptible double take at the seeming absurdity of the question.

“How is Room 77 going to meet the challenge of being relatively late to the party?” he’s asked.

After all, the first crop of travel metasearch sites, including FareChase, SideStep and Qixo, are now distant memories of a bygone Travel 1.0 era, and notable players such as Skyscanner and Kayak have each been refining their products and building traffic for about a decade already.

How, then, are travel startups such as Room 77, which only debuted its hotel-metasearch business about a year ago, and Hipmunk, founded in 2010, going to compete against the bigger and and more-established players?

It may be late, but it’s still early

Patterson believes it’s actually early rather than late.

“It’s the very early innings of the shift to mobile,” Patterson says, noting that a massive shift in consumer behavior is under way as travelers reach for their smartphones and tablets, often even when the desktop is within easy reach.

“Mobile is the catalyst,” Patterson adds.

Patterson argues that travel search is a great fit for mobile as travelers won’t need a plethora of apps, they may be on-the-go searching for a hotel, and can benefit from streamlined side-by-side comparisons “when there’s no keyboard and screen real estate” is scant.

In some ways, as relatively new and funded travel startups, Room 77 ($43.8 million) and Hipmunk ($20.2 million) find themselves in similar situations. How are they going to break out of the pack in the battle for global traction, and site and mobile visitors?

“It all starts with the right product,” Patterson says.

Is Room 77 different enough?

In that regard, one can make an argument that Room 77 currently has a more differentiated product than Hipmunk’s.

Sure, Hipmunk has its much-touted and attractive user interface and Agony index, and can adeptly enable users to search for hotels based on the location of their business meetings, too.

But, consider some of Room 77′s differentiators:

• Room 77 offers simulated room views for around 1 million rooms at hotels that are three stars and above, and also features insider tips for choosing specific rooms, hotel floors, or vantages (pick a room facing E. 33rd Street) at around 16,000 hotels.

• You can book about 200,000 hotels on Room 77 without having to navigate to another hotel or online travel agency website, and many of these properties enable guests to delay payment until hotel checkout, a spokesperson says. Customers can also book hotel stays from the Expedia Affiliate Network and Getaroom.com without leaving Room 77.

• In addition to displaying rates from various online travel agency and hotel websites, Room 77 also shows AAA, senior, government and military rates.

• At four- and five-star hotels booked on Room 77, you can indicate your room preferences and Room 77′s Room Concierge service will attempt to get you a specific room type or location to match your likes and dislikes. During the booking process, guests can also give hotels special requests such as putting flowers in the room for an anniversary etc.

The tortoise and the cheetah?

Patterson argues that Room 77′s site speed is a differentiator, too. Around the Skift office, we informally gauged the pace of Room 77′s loading of hotel search results against those of Hipmunk and Kayak. Room 77 may have been a tad quicker, although this was far from a scientific study, and the contest was close.

However, the speed of TripAdvisor’s hotel metasearch results seemed like a tortoise compared to Room 77′s cheetah.

Breaking into seeming talking points mode, Patterson says Room 77′s “speed, intelligence and relevance is second to none.”

Founded in 2009 by Brad Gerstner, a former co-CEO of National Leisure Group and avid travel industry angel investor, who serves as Room 77 chairman, the company first focused on its room view technology after having acquired OpTrip and TripKick for their tech and talent.

Changing views about the business direction

Room 77′s room views, created by plotting a room’s latitude, longitude and altitude, and then marrying them with Google Earth, are still part of the site, but they are relegated to the lower portions of the page. Many hotels weren’t exactly enamored with the idea of giving consumers the option to book a specific room, which was Room 77′s ultimate intent, although there is indeed some of that going on in the hotel industry today.

At the time, Room 77 enlisted hotel guests with its iPhone app and spent a lot of energy in the early days collecting hotel floor plans to build the world’s largest database of hotel rooms.

That process may be ongoing, but Room 77 pivoted toward hotel metasearch and got into it in a meaningful way about a year ago.

Independence, with a few dependencies

With 38 employees, Mountain View, California-based Room 77 has implemented a different funding strategy than its Hipmunk competitor and neighbor in nearby San Francisco.

In January 2013, Expedia, Concur, Sutter Hill Ventures, General Catalyst Partners, Felicis Ventures, and a bunch of angels, including Rich Barton, Erik Blachford, and Spencer Rascoff, participated in a $30.3 million Series C round, bringing Room 77′s total funding to $43.8 million.

With its $20.2 million in funding from the likes of Institutional Venture Partners and Ignition Partners, not to mention Ashton Kutcher, Hipmunk doesn’t have Expedia- and Concur-like strategic investors, and Hipmunk CEO Adam Goldstein argues this gives Hipmunk a competitive advantage with potential partners because it is “independent.”

Investments from Expedia and Concur send a signal about Room 77′s direction and strategy, Goldstein argues.

In fact, Goldstein says: Hipmunk is “one of the last independent metasearch companies in the U.S.,” and “one of the fastest growing.”

Patterson of Room 77 isn’t buying Goldstein’s analysis, saying: “I’m not sure they [Hipmunk] could make up more asterisks on what they are number one in.”

Patterson says Expedia and Concur are “passive investors” in Room 77, and they don’t have seats on Room 77′s board.

Still, Patterson says, “we are in active discussions with those guys.”

Expedia, Trivago and Room 77?

It may not be too far-fetched to speculate that one day Expedia, which recently poured $632 million in cash and stock into German hotel metasearch site Trivago, taking a majority stake, could one day consider acquiring Room 77 outright. If it paired Trivago in Europe with a growing Room 77 in the U.S., then Expedia could build a base to begin to challenge Priceline-Kayak in the global online travel battle.

Patterson doesn’t touch that speculation, but says Room 77 is “well-capitalized,” which gives the company “enormous flexibility.”

Room 77 is experimenting with online marketing through different channels, although the key would be to find the right ways to engage consumers, and not just buy traffic, Patterson says.

“Having that kind of dry powder,” Patterson says, referring to Room 77′s funding, “creates flexibility. Do we want to go offline [with advertising]? We have the capital to do that.”

Hotel metasearch is a crowded field with intense competition. Search engine marketing is very expensive, and titans of metasearch, such as Kayak, undoubtedly command better unit economics than startups like Room 77 and Hipmunk because of their much smaller footprints.

And, let’s not overlook TripAdvisor, which will undoubtedly play a huge role in shaping the market.

However, even with those disadvantages, amply funded travel startups such as Room 77 and Hipmunk are currently focusing mostly inward on their products, and aren’t in a huge hurry to play the big, paid-marketing game.

After all, if you believe Room 77′s Patterson, these are the early days.

“The smartest investors in this category see huge growth to come in search,” Patterson says. “We are playing with where the business can be five or six years from now, and not the next quarter.”

This is the second of a four-part series on funded travel startups, looking at where they started and their strategies for breaking out of the pack.

Part 1: The real-world challenge for travel startups, as mirrored in Hipmunk’s story 

The post Will Room 77′s deep pockets and strong hotel product get it a seat at the table? appeared first on Skift.

Tablet Hotels CEO and co-founder Laurent Vernhes. / Tablet Hotels

The online hotel booking market is relatively packed, and standing out from the pack is difficult for any brand. The leadership at thirteen-year old Tablet Hotels, takes the position that each new entrant that may promise something new or unique is actually either a validation of its model or an opportunity to further evolve.

Tablet Hotels features a limited number of hotels in nearly 900 destinations around the world. In a market like London, for instance, you’ll find fewer than 60 properties, as opposed to over a thousand on Booking.com. The promise of Tablet is a specialty property at the lowest possible cost, and it has a history of delivering.

In addition to the listings, Tablet’s site also offers a magazine and a series of travel guides that offer a mix of inspiration and information that it hopes will help guests make smarter decisions before and after booking.

Skift sat down earlier this month with Tablet Hotels CEO and co-founder Laurent Vernhes in the company’s New York office.

Skift: Can you talk a bit about the origins of Tablet Hotels?

Laurent Vernhes: I got the idea to create Tablet out of need. I spent about ten years working as an expat in various parts of the world, but mostly Asia.

I was traveling every week to a new location. Some consultants in the U.S. will go to Cincinnati for three months, and then to Cleveland, and then to Kansas City, or something.

In my case, it was Bangkok, then Kuala Lumpur, Bombay, Jakarta. I was living in hotels, literally. When I decided to have that kind of career, my fantasy was to have a life like James Bond. I would have women all over in all of the cities

Very quickly, I realized it was not going to be like that.

Traveling for business is not that exciting. You have to work very hard to make it exciting. It’s hard work. I didn’t give up. I tried very hard to make traveling for business as a life exciting.

I realized that part of that was picking your hotels carefully because the of region. Basically, there are two types of hotels. There are hotels that are commodity products; it’s all about amenities, price, location. Then there are hotels that have soul, some personality, something, whether it’s design, or it’s with service.

If travel is your way of life, it’s important to find a hotel that has soul. It can be a big hotel, a small hotel. It’s not the matter of size. It’s not a matter if it’s part of a chain or not part of chain. You just need to find a hotel.

I was doing a lot of acquisitions of small companies on behalf of a very big company when I realized that I wanted to be like the guys whose companies I was buying. I wanted to be one of those people rather than CEO of a large division or large entity within the multinational thing. There was no dream there for me.

The dream was to be one of these people that had that freedom of thinking for yourself and doing something about it. I wanted to be like them. I’d say that I wanted to be an entrepreneur. The most interesting thing for me was to create the product I needed. That product was, basically, the ultimate hotel guide, which would restrict your selection to hotels that have a soul of some kind and eliminate all the commodity versions of hotels.

Skift: When you stepped in a little over ten years ago, it was pre-flash sale, pre-Jetsetter type of thing. You had legacy, stuff like Conde Nast Johansens and Small Luxury Hotels and things like that.

Laurent Vernhes: Marketing companies.

Skift: There was probably some overlap in some of the properties. But, how did you step into it and say, “I don’t want to do that marketing thing?”

Laurent Vernhes: I knew these marketing companies. There is nothing wrong with them. But I knew why I couldn’t rely on them. I couldn’t rely on them because they were charging hotels to represent them. They were marketing companies. They were also not comprehensive in terms of their selection.

There are a lot of great hotels that wouldn’t be in these books because they just didn’t want to pay these companies to be in the books. They were not entirely reliable either because their business model was built up on having as many hotels in the book as possible. So they were trying to find this balance.

As a traveler, that was not getting me the answer I was looking for. In fact, their business model was not marketing to travelers but marketing to travel agents. That’s what they do. They go to travel agents and say, “We have this collection of hotels why don’t you…we have this seal of approval.” That’s what they do. They were not meant to be catering to travelers directly.

As a traveler, I wanted a guide that had total integrity in terms of the selection. Therefore, it couldn’t charge hotels for being in the guide. Otherwise, you defeat the whole idea. It couldn’t be funded by advertising because who is going to advertise on your site? It’s going to be the hotels. If you do that, then it’s the biggest possible conflict with your editorial mission.

That’s why we became quite innovative actually at the time. Since then we have a couple innovations. The innovation was to merge editorial and commerce. In our case, we are a hotel guide merged with an online travel agency, and that was really new. Only the Internet could allow that, and there is no conflict. You sell what you recommend.

In our case, if our users tell us, “This thing is going down. You should remove it,” we’ll remove it. The hotel didn’t pay us to be on the site, so we’re completely free to do that. We just sell what we think is great, and our users confirm our work, members or travelers confirm it’s great.

Skift: How do you keep that pure because that’s the challenge, right? You guys have a financial incentive to include as many things as possible, so how do you always come down on the side of the consumer?

Laurent Vernhes: No, but it’s not. The financial incentive is not to add as many hotels as possible. The financial incentive is to take as many bookings in these hotels as possible. It’s a big difference.

Skift: You talk about removing something. How often do you need to remove something?

Laurent Vernhes: On a regular basis. Currently, it’s around 1,800 hotels on the site. Over the past 10 years, we’ve probably removed over 300 hotels. Hotels go through — just like anything else in life — they go through changes.

Skift: You’ve been around for ten years. What’s been the key to your survival during that period? This industry has changed dramatically since when you started. Other people have come around and gone away.

Laurent Vernhes: The key to survival has been that integrity I was talking to you about. The soul of the curation was that we wanted to be the best hotel guide we could be.

Now the word “curation” is a big buzzword — curation, curation. We’ve been doing curation from the beginning. That’s what it was all about. I used to call it “editing,” being an editor, editing a guide. Now Jetsetter, in particular, uses that buzzword of “curation.” What’s new about that? Nothing is new, except they are pushing it because they are not doing it.

If you look at the hotels there, half of them are great, the other half…

Skift: Need to fill the rooms?

Laurent Vernhes: …are hotels that agreed to do these crazy private sale things. Because they are cold calling hotels, “Do you want to do this?” “Do you want to do this?” In that case, they need to supply a never-ending stream of private sales.

In a way, that’s the difference between copycats and the company that they are imitating. Often the company they are imitating has the soul, and the copycats don’t. It’s just opportunity. Often companies that are the true pioneers disappear because they don’t manage to turn that soul into a sustainable business at the other end.

That soul kept us going and kept us relevant to people. Then the question is how do we maintain our competitiveness as a business? Are we going to increase our competitiveness?

A couple of things. One is, in terms of features, people like private sales, so let’s give them private sales. Except we give them private sales just in the hotels we cover. We’re not going to go desperately looking for private sales from any hotel that will do it because that’s not our main business model.

We follow the trends. Now HotelTonight, I think, is very interesting, and we’re hoping to launch Tablet Tonight in the next couple of months — Tablet Tonight, Tablet Tomorrow, why not? We can. Now we have. The reason why we can do this is because, in the process of all these 10 years, what we’ve developed is something that’s not visible but critical, is the technology.

We have so much technology. It takes a lot of technology to make technology disappear. In other words, to make your user interface ever more easy to use, you need to build a lot of technology. A lot of this technology is creating ever more efficient ways to have access to the best availability and the best rates in the hotels we want. That’s the role of technology, to make that seamless, to make that easy for the hotels, to make the data easy to use from a user interface for travelers. It takes a lot of technology.

If you are creating “Tablet” now, we wouldn’t be able to…we would have to invest a very large amount of money in technology to just match the user experience. That’s something we didn’t have in the beginning. Now we connect the extranet, direct connects with all kinds of sources of inventory, they push inventory to us, all this stuff. If we hadn’t built that, we would be dead by now.

Skift: Have you guys built your own inventory system that the hotels tie into?

Laurent Vernhes: That’s what’s enabling us. Now, like this Hotel Tonight thing is really interesting. It’s giving a way for hotels to get rid of inventory. It’s great. Everybody loves it. Can we do it? Yes.

Skift: Are you taking the same approach that you took with flash sales where it’s: We see a trend, people like these deals, but we’re going to continue working with our core of recommended hotels? It’s the same thing where it’s like, people want to do it now, we’ve got the hotels and the relationships, just add the element of time…

Laurent Vernhes: We are doing it in the hotels we are selecting. It’s still within our universe of being a hotel guide, and we only features hotels we believe in because they are our hotels. They are unique and they have a soul. Within that, we stay within the guide, but we need to add all these features that help people get better prices and get what they want basically.

Skift: Your relationships with hotels, I’ve probably, over the past five years, I’ve probably booked through you guys, or my wife has, at least eight or nine times and whatnot.

Laurent Vernhes: Thank you.

Skift: I would say in almost all the cases, if not all the cases, we received an upgrade. We’re not Tablet Plus members or anything like that. What do you guys do? How are you delivering customers in a way that makes them want to give me an upgrade even though I paid a pretty cheap rate?

Laurent Vernhes: It’s a few layers, actually. We approach these hotels as partners because we are in there for the long-term with them. If you approach hotels as a commodity product, they are interchangeable. If it’s not this one, you say, “OK.” Put yourself in the shoes of Expedia. “OK, Starwood. You don’t want to do a deal with us. It’s OK. We’ll do this other chain. Same thing. What’s the difference? We don’t care.” That’s the way that they negotiate.

We don’t negotiate this way because we like this hotel because it’s so unique. We’re not going to tell them, “Tough luck. Let’s do a deal with the other one. We don’t care.” Because we care. That’s the whole idea.

Skift: There’s only one that you love.

Laurent Vernhes: We love this one, so we’re going to work harder in creating that working relationship. What I’m going to try to squeeze them at every opportunity. We think of it as a partnership. We have a good relationship with hotels, Where Expedia is just completely ruthless about the whole thing.

I think Booking is smarter. They do it in a more sophisticated way, but basically they are completely ruthless.

There’s nothing wrong with being that. But that’s not very consistent with what we are trying to do which is we pick these hotels because they are great. We need to think about it as a partnership not as, “Well, if it’s not this one, it’s the next one.”

Second, we want to be not just the best place to find the best hotels, but the best place to book these hotels. What do we do about the booking portion that means that you’re going to get treated better when you book through us than when you book through the same hotel on Expedia? Obviously some hotels are a mini-travel agent, online travel agents. What can we do to make sure the hotel is going to treat our client better”

The initial premise is that we don’t try to squeeze the hotel, and this goes a long way actually. The second thing is that we increasingly are doing proactive customer service. We are calling these hotels and telling them, “We have this client coming. It would be good if you did this and that.”

Our ambition is to be the best place to book a hotel, even better than booking the hotel directly with the hotel.

Skift: You mentioned Booking.com. How do you guys go about customer acquisition online. Booking.com spends a little bit of money. Priceline spends some money on search engine marketing.

Laurent Vernhes: Not as much as Expedia.

Skift: How do you guys go up against that and get discovered?

Laurent Vernhes: We can’t match their marketing money, unfortunately. We have something that they don’t have which is a high level of loyalty and that goes back to our product and our mission.

It’s fair to say people don’t have a personal relationship with Expedia. They feel more often like they have a personal relationship with Tablet.

We’re not a commodity site. We don’t write marketing copy about the hotel. When we write the descriptions, it’s not the typical description you would read on an online travel agency site.

There is one hotel that we put on the site, if they disagree with the description and we tell them if there is anything factually wrong about the description, let us know, we’ll correct it.

There is this hotel and they were unhappy with the way we were talking about their hotel. There was nothing factual about it. They just didn’t like the tone. This is our site. If you don’t like it, then we won’t talk about you. If you disagree then we shouldn’t display your hotel because clearly there is a disconnect here. So we removed the hotel from the site. That kind of integrity is what’s creating the loyalty. It’s helped us a lot and people see that in us.

Skift: What have you learned especially in the last year with last-minute bookings that has caused you guys to say, “OK, we need to do Tablet Today?”

Laurent Vernhes: We used to have a last minute section of the site. We dropped that. We dropped it for reasons of pure programming because that portion of the site was killing the site itself because the programming was so bad. It was doing well. So we had to remove it because it was diminishing our ability to scale the site. Now we’re coming back to it. For sure, last-minute bookings are a very significant portion of bookings. It’s a key battlefield in terms of prices and availability. We need to offer hotels, tourists, to give us the best availability and the best rates for last minute bookings.

In fact, if you think of bookings for today and tomorrow, already it’s about 12 percent of all of our bookings are tonight and tomorrow already. The behavior of travelers is strongly biased towards last-minute bookings already. It’s something that we haven’t done enough in terms of getting hotels to give us even better rates for that portion of the supply.

That’s what we’re building now.

Hotel Tonight has done that very effectively and very well. We need to match that or exceed that. In fact, so we’re going to do it for tonight, for tomorrow, and for the next 14 days.

Skift: What’s the launch on that?

Laurent Vernhes: I hope June. We launch about June-ish.

Skift: What percentage of your users are Tablet Plus members?

Laurent Vernhes: The percentage that’s interesting is what is the percentage of bookings made by Tablet Plus members, and it’s over 20 percent. That’s significant.

Skift: What’s your rate of keeping Tablet Plus members?

Laurent Vernhes: It’s over 80 percent. We’ve made great progress on that. Tablet Plus is where we experimented with a lot of proactive customer service. We email people before their stay. It’s unprompted. It’s gone a long way.

Skift: You guys survived the flash sale onslaught.

Laurent Vernhes: We did, and the flash sale flameout.

Skift: Was there a period during that when you guys were panicking or like, “How are we going to do this”? People weren’t talking about you as much as they were talking about everybody else.

Laurent Vernhes: We launched our flash sale too, so we got a bit of traction from having that too. We were not panicking because we were growing. I always thought private flash sales were a great marketing tool, more of a marketing tool than a production tool. As a marketing tool, it served us too.

But I was looking at these companies doing just that, and to me, the only way they were going to survive was if they ended up copying us or trying to. What I mean by that is, have something for everyday, not just be flash sale, but be a good online travel agency.

You’ve got to be able to turn that marketing gimmick into becoming a true online travel agency, a good one. It looks like they were not successful at making that transition because it’s actually more difficult to be a good online travel agency than to run a flash sale operation. It’s a lot more difficult.

Jetsetter, they had a ton of money, and they burned and burned and burned. I could see they were trying to switch to basically full-on copying us, but for some reason, they underestimated what it takes.

I had to calm down some of my colleagues because they were looking at this and thinking, “Oh my God. They are going to take over this whole thing.” I had to tell them, “Look, it will only survive if it’s a real business. Right now, all we know is that they are really good at spending a ton of money. The jury’s still out on whether or not they can build a sustainable business.” Frankly, when I was looking, I didn’t think they were.

If you’re patient enough, it’s a matter of survival. The question was how much more money they had to spend to make it to a level of sustainability. The problem with VCs is that the more money you spend, the less patient you are, the more you want your site to be dramatic.

Even if you get to some level of where it actually makes sense, but if it’s not comparable to the vast amount of money you spent, you let it go. I’m very familiar with these dynamics. I’ve done Tablet the hard way. No VCs, completely independent.

We never had that money to spend before. Now we have more money because we are a bigger business. Obviously, as you grow, you get the means to do things on a bigger scale, but we never had that “Oh, we have five million to spend on getting the word out,” ten million or whatever it was. They’ve gone through a lot more than that, but I don’t know how much was for marketing. Who cares? [laughs]

I know because I used to buy companies. I know about building a business, a real business. I know it’s not easy. You don’t do it just like that. It’s not as easy as just throwing money out there to get the word out.

Skift: You’re self-funded, no VC money. What’s your endgame? Do you want to retire and pass Tablet down to your children or is it something where you want to sell?

Laurent Vernhes: No. It’s a good question. Somehow, I bumped into creating a family business. That was not the objective. I mean family as in the family of people who started this business. I don’t mean the family with children.

Since we don’t have a large outside investor, it’s become a traditional family business, so the option is there to actually keep it that way. I don’t want to load my kids future with that future. “This is the future. Good luck with it.” No, I think they have to create their own future.

The post Skift Q&A: Can an independent hotel booking site survive and thrive? appeared first on Skift.

Hipmunk CEO Adam Goldstein, left, and co-founder Steve Huffman. / Hipmunk

Hipmunk co-founder and CEO Adam Goldstein, 25, believes his flight and hotel metasearch company can one day be larger than Kayak, and with $20.2 million in funding and revenue that has trickled in from the moment Hipmunk debuted, he thinks he has the time to prove it.

“We think we can be bigger,” Goldstein says, referring to Kayak. “We think we can do it.”

With Priceline closing today on its $1.8 billion acquisition of Kayak, you can picture the Kayakers reading Goldstein’s boast, and breaking out in giggles as they pour their champagne (or whatever the favorite libation is over there).

After all, in the first quarter of 2013, nine-year-old Kayak reported more than 357 million user queries from desktops and mobile devices, 3 million app downloads, and $82.3 million in revenue. And, Kayak was in the black, wrangling net income of $2.1 million.

As a private company, founded in 2010, Hipmunk doesn’t break out a lot of numbers, although Goldstein says the overall business, including searches, bookings and revenue, has been “more than doubling every year since we started.”

Although these sorts of measures can be notoriously unreliable, Compete’s U.S. numbers peg Hipmunk’s monthly unique visitors at a fraction of Kayak’s, and even show Hipmunk trailing rival Room 77, which debuted its core hotel-comparison shopping product in late 2011, more than a year after Hipmunk burst on the scene.

Debatable

It’s hard to debate Goldstein’s premise that Hipmunk can one day beat Kayak because it is an open-ended goal, there are so many variables, and anything’s possible.

Then again, it is difficult to debate Goldstein about anything because he was the captain of the MIT debate team during part of his 2006-2010 stint at the school, although he doesn’t try to aggressively score points when recounting Hipmunk’s journey.

Goldstein was in charge of arranging the debate team’s national and international travel, and he found that it took so much time and was so frustrating that it led to what he calls an “aha moment” during his senior year about working on a travel startup.

The idea at first was to build a travel agency, one that would enable consumers to quickly make decisions based on a comprehensive array of choices, including flights, hotels, cars, trains and buses.

One of the first people Goldstein talked to about his ideas was Reddit founder Steve Huffman, whom Goldstein met during his high school years at what he describes as a “nerd conference,” Foo Camp.

Huffman, who would become Hipmunk’s co-founder, was experiencing his own frustrations about travel search as he was commuting across the country to visit his fiancé.

Goldstein says Huffman initially was skeptical, saying: “Why would we want to get in a fight with those guys?” referring to powerful, entrenched online travel agencies and existing metasearch players.

In retrospect, most people would think Huffman’s warning was on point when you consider that if Hipmunk were to aggressively engage in search engine marketing these days, it would face an uphill battle of competing for keyword real estate with hotels, other metasearch companies and online travel agencies, including Priceline, which spent $403.1 million in online and offline advertising during the first quarter.

“Suckage” and “Agony”

After graduation, in June 2010, Goldstein and Huffman were accepted into Y Combinator, and they had a three-month deadline to launch a product and pitch it to investors.

“We hadn’t written a single line of code yet,” Goldstein recalls. “We didn’t know what we were building yet, either.”

They decided to start with flight metasearch, and after a few weeks when no one would return their phone calls, they eventually struck a partnership with Orbitz as Hipmunk’s initial data source (ITA Software came later) and booking partner.

Huffman and Goldstein had come up with an attractive user interface, something that would get a lot of buzz and feature an Agony index, which would remove the pain of flight search by succinctly sorting flights based on price, duration and the number of stops.

They got Hipmunk online a week before Y Combinator’s demo day, and what was to become the Agony index was initially called Suckage.

But, the two entrepreneurs figured a lot of publications wouldn’t write about something with such a vulgar-sounding name so “literally the day before we launched at Y Combinator,” the co-founders ran a thesaurus search on “pain” and decided on “Agony” as the name for their now well-known sort option.

Approaching three years later, Hipmunk has raised $20.2 million in total funding, with a Series B round of $15 million, led by Institutional Venture Partners and with participation from Series A leader Ignition Partners, having been completed in June 2012.

Not in anyone’s pocket

With Kayak transitioning into the Priceline fold, Expedia taking a majority stake in German hotel-metasearch site Trivago, and Expedia also leading a $30.3 million Series C round for Room 77, Hipmunk finds itself as “one of the last independent metasearch companies” and “one of the fastest growing in the U.S.,” Goldstein says.

For the record, Room 77 CEO Drew Patterson says the company’s investors, which include Expedia, Concur, Sutter Hill Ventures, General Catalyst Partners, Felicis Ventures and a bunch of angels, are “passive investors,” and none sit on the Room 77 board.

But, Goldstein argues that Room 77′s investment path sends a signal, and that Hipmunk enjoys a competitive advantage as an independent force when it goes to striking hotel-partnership deals.

“The fact that we are not associated with their enemies is powerful,” Goldstein says.

Very positive reviews and loyal following

Hipmunk has garnered stellar reviews from the tech press and users for its attractive UI, ease of use, and its iOS and Android apps from their beginnings.

Recent initiatives include a revamp of Hipmunk’s mobile apps, and the option to book on Hipmunk (via Expedia in the background) instead of having to navigate away from Hipmunk and over to hotel and online travel agency sites. The mobile app for the first time features plenty of other online travel agency booking partners beyond Orbitz.

Almost everything Hipmunk does, from its flight and hotel search UIs, to its mobile apps, is pretty.

For example, take the Hipmunk Pricegraph, launched late last year and geared for consumers whose travel dates are totally flexible.

Pricegraph shows airfares over the next 90 days: Just view airfares and select departure and return dates from the graph, choose book this flight, and you can view a summation or full flight details before navigating over to United.com or some other airline or online travel agency site.

Goldstein says once people use Hipmunk, “they generally like it a lot,” and come back to use it again.

But how is Hipmunk going to get users to discover it and fight for eyeballs against larger players with much larger bank accounts?

Goldstein says Hipmunk still has much work to do in marketing, partnerships, and the product sides before it makes a decision on keyword marketing.

“While I think our product is the best in the marketplace already — and our users agree — I think we can still make it better, and we are going to do that, before we blow tens or hundreds of millions of dollars yelling it out to the world,” Goldstein says.

“It’s a little unoriginal to take that route that other travel sites have done in throwing money at it,” Goldstein adds, noting that Hipmunk may get creative in its eventual strategy.

Meanwhile, Goldstein acknowledges that Hipmunk erred in its initial focus on flights, and now most of its resources are directed toward improving its hotel and mobile products, with the latter being its “fastest growing piece of the business.”

Long-term outlook

Hipmunk can afford to hang around for a long time while it fine-tunes the user experience. It has $20.2 million in total funding, revenue coming in, and a relatively lean staff of 33 people. In contrast, Hotel Tonight, with some $35.7 million in funding, employs about 100 people.

Goldstein says Hipmunk’s financial situation is “great,” and while the company is now past its “early phase,” Hipmunk can afford to invest the “vast majority” of its resources into hotel search.

“We don’t have any need to raise money until we are ready to,” he says.

The problem, though, for Hipmunk, Room 77, Hotel Tonight, and other funded travel startups, is how do you achieve scale, and get into the position where your unit economics are so attractive that they spur even more growth.

“We are nowhere close to the size of Kayak,” Goldstein says, adding that he believes Hipmunk’s partnership deals are “competitive” with others in the industry. “There is tons of headroom and it’s going to take time to get there.”

Of course, being acquired by a larger company could always help a company keen on growth. (An acquisition can also totally screw things up.)

But, when asked what advice he would give to early-stage travel startups, Goldstein provides some hints about the preferred end-game, or at least the medium-term outlook.

He advises co-founders of travel startups to ensure they have “a common vision for what success looks like” as one co-founder may be wowed by an early acquisition offer, and the other may want to hold out for bigger and better things.

Says Goldstein, on the topic: “We have plenty of acquisition interest. But, we are interested in staying independent.”

This is the first of a four-part series on funded travel startups, looking at where they started and their strategies for breaking out of the pack. 

The post The real-world challenges for travel startups, as mirrored in Hipmunk’s story appeared first on Skift.

Game on.

Priceline says it paid $522.4 million in cash and issued more than 1.5 million shares of common stock to pay for the right to meld the travel metasearch company into the Priceline fold.

Kayak will operate as an independent company, as do Booking.com, Agoda, and rentalcars.com, within the Priceline Group.

The CEOs of Priceline and Kayak co-founders had something to say today about the whole thing.

“We are delighted to welcome Kayak as the newest member of The Priceline Group,” said Jeffery H. Boyd, CEO of The Priceline Group.  “We look forward to working with the Kayak  team as they build their business and expand the international footprint of their great products.”

“We are excited to join the world’s premier online travel company,” said Steve Hafner, Kayak CEO and co-founder.  “We believe that The Priceline Group’s expertise and worldwide reach will help us expand our business globally.”

Paul English, Kayak CTO and co-founder added, “Our focus will remain creating the best place for travelers to plan and book their travel and providing an effective marketing channel for travel suppliers and online travel agencies.”

Priceline’s acquisition of Kayak kicks off the next stage in competition among global travel companies. It has mostly focused to date on the standalone hotel business, as Expedia and Booking.com duke it out in Europe, Asia and Latin America, but now travel metasearch has been added to the mix.

The post Priceline completes acquisition of Kayak appeared first on Skift.

This week’s SkiftSeedlings speaks to that breadth of opportunity by including everything from a media company looking to launch the world’s largest consumer travel event to a small device that tracks employees’ driving behaviors.

GET YOUR DAILY DOSE OF SKIFT: SUBSCRIBE TO OUR NEWSLETTER, RSS, TWITTER OR FACEBOOK.

FOR ALL OF OUR SKIFTSEEDLINGS COLLECTION, CHECK OUT OUR ARCHIVES HERE.

The post Five startups that want to define the future of travel in five different ways appeared first on Skift.

TripIt Pro's new Seat Tracker feature sends notifications when an airline seat becomes available that matches your preferences. / TripIt

TripIt made good on its pledge and released a Seat Tracker feature in its premium TripIt Pro product.

Subscribers to the $49 per year TripIt Pro service can share their itineraries, identify their seat preferences (window or aisle, front or back of cabin, exit row or bulkhead), and then Seat Tracker alerts travelers when a seat more aligned with their preferences becomes available.

The feature also enables travelers to opt for economy, premium economy, business or first class, and they choose groups of seats, as many as four together.

Seat Tracker will be available through TripIt’s mobile offerings “in the coming weeks,” the company says, and is accessible via the desktop already.

TripIt, a unit of Concur, has been trying to make TripIt Pro more attractive in light of the fact that Delta, United, and American no longer — and in the case of Southwest, never — allow access to frequent flyer mileage-tracking apps such as TripIt Pro.

However, TripIt Pro organizes itineraries (as does the free version of TripIt), provides automated point-tracking of other airlines, and offers fare-tracking, gate-change notifications, and alerts about delays and cancellations.

TripIt says Seat Tracker edges users closer to “the perfect trip” because passengers can secure preferred seats “before anyone else on your flight.”

The post TripIt reveals preferred seat tracker details for TripIt Pro subscribers appeared first on Skift.

Speaking to financial analysts the other day at the J.P. Morgan Global Technology, Media and Telecom Conference in Boston, Kaufer said he now “takes the lump” for not moving TripAdvisor to hotel metasearch “earlier in our lifetime.”

Kaufer’s very bullish about hotel metasearch now, and it should be rolled out globally on mobile and desktops by June in an accelerated push. He points to an improved user experience, and he envisions increased booking-conversion rates for advertisers, leading to higher CPCs in more-frequent “auctions,” and meatier ad budgets to be spent on TripAdvisor.

In other words, if you think TripAdvisor is a cash cow and growth engine now, you ain’t seen nothing yet.

Along the same lines, Kaufer described why he believes companies such as Booking.com and Expedia won’t catch up with TripAdvisor on the user-review front.

They are adding reviews, Kaufer said, but in addition to reviews, TripAdvisor also shows users guest photos, room tips, reviews from your friends and “where your social set has been.”

“We are already at the next level,” Kaufer says.

“Those guys haven’t even begun to think about it, let alone act on it,” he added.

In other news, Kaufer said:

• TripAdvisor has shown a strong track record and will likely make additional acquisitions over the next couple of years.

• TripAdvisor has been “pleasantly surprised” about Google’s lack of progress in building a travel vertical despite acquisitions of ITA Software, Zagat and Frommer’s. Google “remains an unknown in our future.”

• TripAdvisor will probably implement a “book on TripAdvisor,” also known as assisted bookings, option for its hotel metasearch, as Kayak and Room 77 have done. Kaufer says it doesn’t “add a whole lot to the equation,” and may be a detriment if it makes it more expensive to book with TripAdvisor.

The post TripAdvisor CEO bullish now but takes blame for slow move to Kayak-style search appeared first on Skift.

“We have a strong service in Japan that’s driving the rest of the business. We are building brands in Singapore, Hong Kong, Korea and India. We are well along the way – it’s already a $100 million business – we didn’t enter this JV for a two-year project. Everything is always slower than what Tony (Fernandes) and I want but we have a great asset base now.”

The post Expedia: AirAsia joint venture falls short but brand-building continues appeared first on Skift.

Read the Complete Story...