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.

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.

To accelerate our growth, we have raised an additional $1.1 million in our seed round, from a great list of seed funds and mix of new angels and some previous angels. We are using this funding to double on our staff (from 5 so far to 10, in a month), build out the initial sales infrastructure, and continue building out our data services.

This new funding is led by Lerer Ventures and includes Ironfire Angel, MESA+, Advancit Capital, Growlab+LX Ventures (investing together). New angels investing in this round include Jason Calacanis, Michael Cunniff, Duncan Jennings, Sean Keener, Shakil Khan, Martin Nisenholtz, Paul Noglows, and Michael Yavonditte.

These investors join a previous group of media-tech angels, all of whom are listed in the factsheet below.

The full funding factsheet — including our progress so far — embedded below:

Download (PDF, 176KB)

For more on Skift’s vision, see “Building a Business Information Brand in 2013” presentation our CEO gave as a keynote tob the American Business Media Association’s 2013 annual conference.

The post Travel information brand Skift raises an additional $1.1 million in seed funding appeared first on Skift.

The Vancouver-based company, founded in 2006, intends to use the funding infusion to continue its international expansion and to add resources, including hiring an additional 20 people to bolster its staff of 145, QuickMobile says.

“We recognized a void in the marketplace for an enterprise-grade mobile event technology platform that allows companies to develop fully customized, fully branded meeting apps for any and all of their events,” says Patrick Payne, QuickMobile’s CEO. “QuickMobile’s multi-event platform allows organizations to connect with their employees, customers, partners and other stakeholders in new and engaging ways. Our investors recognize this and fully support our innovation and expansion plans.”

The company says more than 25 Fortune 1000 corporations have purchased its multi-event platform, launched in November 2012.

QuickMobile has raised $9.1 million in funding to date, including equity investments.

The post QuickMobile closes $3.2 million funding round and is hiring appeared first on Skift.

Probably not, but TripAdvisor has acquired CruiseWise, an online cruise-booking startup that was founded in 2010.

And, TripAdvisor plans on integrating CruiseWise’s tech talent and some of its content into TripAdvisor’s CruiseCritic unit, a leading cruise news and user generated content site.

You can expect that a major overhaul of CruiseCritic’s user-interface and back-end, which uses outdated forum-related software, would be on the agenda.

TripAdvisor states that it acquired “key technology and talent from CruiseWise, Inc. the former online cruise booking agency.  The team and non-transactional functionality will be integrated into the leading online cruise guide, Cruise Critic a TripAdvisor brand.”

Labeling CruiseWise “the former online cruise booking agency” certainly sends a signal that TripAdvisor isn’t interested at this point in getting into the cruise-booking business.

This is the latest of several travel acquisitions by TripAdvisor over the last year as the public company stated in its annual report that competition may force it to “purse the acquisition of travel-related content directly from consumers.”

TripAdvisor;s acquisitions over the last year or so include Wanderlfy, Jetsetter and now CruiseWise, among others.

San Francisco-based CruiseWise, founded in 2010, had raised some seed funding from New Enterprise Associates, Index Ventures and SV Angel.

It enabled users to compare ships and cruise line, to review deck plans, and to book sailings online or over the phone.

The site has been in hiatus — shut down — over the last few months, with the headline on the homepage, “CruiseWise is Undergoing a Dry Dock!”

And there was a statement: “Thank you for visiting CruiseWise! We have temporarily taken the site down to introduce some major changes in the way we work. We apologize for any inconvenience and expect to be back shortly.”

CruiseCritic, a leading site for cruise news and user-generated content, likely could use the CruiseWise team to work on its forum and review technology, and could utilize some of its ship- and cruise-line-related content.

CruiseWise didn’t succeed as a business, but the site featured an attractive user interface using open-Web software, and its small staff showed their tech acumen.

For example, CruiseWise offered a port calculator on a Google Map that enabled users to view how many ships were located in a given port in real-time, and cruisers could also calculate how many ships would be around when they sailed to that port.

Consider this mostly an economical acqui-hire for TripAdvisor, and its Cruise Critic site will be the beneficiary.

“The cruise industry continues to grow in popularity and we are delighted to be able to further strengthen our Cruise Critic business with this move,” said Steve Kaufer, co-founder and CEO of TripAdvisor. “By integrating key elements of CruiseWise and the in-depth knowledge behind it, we will enhance our ability to help travelers find their perfect cruise at a price that suits them with seamless links to our booking partners.”

A spokesperson for Cruise Critic declined to comment on the acquisition.

The post TripAdvisor acquires cruise online-booking site CruiseWise appeared first on Skift.

In response to questions from Skift requesting more details on the startup’s round of funding, Kalanick responded:

The Reuters story is completely false and the product of extremely poor reporting and journalistic ethic.

This company has not pitched a single investor since November 2011 and has not sought any funding whatsoever since then.

Thanks,

Travis
CEO, Uber

Kalanick did not comment on the $1 billion valuation.

Uber was approved on Friday to be the first e-hail app participant in New York’s one-year E-Hail Pilot Program.

The post Uber CEO calls Reuters funding scoop “completely false” appeared first on Skift.

If the company succeeds, it will join an elite group of start-ups that command 10-figure valuations. The situation underscores investors’ desire to pay premiums for any company they think might become the type of outsized success story along the lines of business network LinkedIn or software company Workday.

Uber allows customers to quickly find rides among for-hire car services, such as limousines, by using an app on their phone. It has proven popular in areas where cabs can be hard to hail, such as its home base of San Francisco.

The service, which launched in 2010, has grown rapidly on word of mouth. At the Disrupt NY technology conference on Monday, existing investor Bill Gurley of Benchmark Capital called Uber “probably the fastest-growing company that we’ve ever had,” saying Uber was growing faster than eBay – another Benchmark portfolio company – did in its early days.

The company got some good news last week when it won approval to operate in New York City. Besides major U.S. cities, it operates in some international hubs such as London, Paris and Singapore.

But Uber faces several challenges, including needing to win regulatory approval, build customers, and build supply on a market-by-market basis.

And for traditional venture investors, who seek to win back at least three times their money, a valuation of more than $1 billion now means they must believe the company will eventually be worth more than $3 billion.

Many companies that have won valuations of more than $1 billion recently have turned at least in part to nontraditional backers such as private equity.

They include SurveyMonkey, recently valued at $1.35 billion; online bulletin board Pinterest, recently valued at $2.5 billion; and payments company Square, recently valued at $3.25 billion.

Uber did not immediately respond to a request for comment.

[UPDATE: Uber CEO calls report "completely false"]

Reporting By Sarah McBride. Editing by Tim Dobbyn. Copyright (2013) Thomson Reuters.

The post Uber joins $1 billion valuation club with eBay-like growth appeared first on Skift.

Yongche’s investor this time round is China Broadband Capital Partners. The funding amount hasn’t been revealed, but it’s believed to involve tens of millions of dollars. Yongche’s series A round came in August 2011, and was in a similar range.

The post Beijing car rental startup brings in new funding thanks to taxi-finding app appeared first on Skift.

Read the Complete Story...

This week’s SkiftSeedlings looks at five startups that are using mobile devices to make the travel experience easier, whether that means skipping the line at your favorite restaurant or paying less to keep your home cell number while abroad.

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