Oral History of Online Travel: How Hostelworld Backpacked Its Way to Success

Skift launched its largest and most ambitious project yet, The Definitive Oral History of Online Travel, on June 1. In nearly 40,000 words founders, CEOs, other executives and insiders tell a story in their own words about the creation of Internet giants such as Expedia, Priceline, Travelocity, Orbitz, TripAdvisor and more. Not all of the interviews fit into the big story so we are publishing standalone stories that offer deeper insight into information we collected during the three-month research process. Read the Definitive Oral History of Online Travel Feargal Mooney, who currently is CEO of Hostelworld Group, the largest standalone hostel-booking platform on the globe, joined the company as COO in 2002 when he says "there were 12 people working out of a bedroom or two or three bedrooms in a house" in Dublin. The company, founded by software developer Ray Nolan, brought hostels online by offering them free property management system software and only charged them 10 percent commission. Hostelworld developed a business model that niftily resolved commission payments and collection by making consumers prepay 10 percent and forking over the rest when they got to the hostel. Nolan tells Skift about the founding of the company in Dublin. "I’m a coder, had written the in-hostel software used by hostels in Ireland, and saw that connectivity with the Web was the only way forward. The business model was entirely my creation. And it was the 10 percent deposit-based business model that was most important: We could grow without having to build administration systems to repatriate money to hostels, and of course they would never worry that we be slow payers. It was in place from the first booking and never changed." Nolan adds: "The first booking was made August 3rd, 1999. Coding began in February of that year. I know because I sold 10 percent of the company for 30,000 Irish pounds to fund my wedding on April 16th that year. You don’t forget stuff like that." Along the way, in late 2002, Hostelworld offered by fax to acquire a rival, San Francisco-based Hostels.com. After the offer was accepted -- again, by fax -- the team went out and celebrated an extended Christmas and New Year's holiday, and when they returned to the office in the second week of January 2003, they realized they neglected one little detail -- they didn't have the money to pay for the acquisition. Skift spoke with Mooney as part of Skift's The Definitive Oral Histor