One of the pioneers of online travel booking is back with a new startup that seeks to bring a bit more competitive pressure to the industry dominated by Priceline Group Inc. and Expedia Inc.
Jay Walker, one of the founders of Priceline.com, has raised $50 million for Upside.com, a website that tries to find discounts for small business travelers by suggesting alternative travel routes and accommodation and bundling flights and hotels together. The financing values Upside at more than $200 million and includes investments from marketing tech company Red Ventures and investment firm Leucadia National Corp.
When travelers book on Upside, the company’s algorithm offers six different combined flight and hotel options that ask the customer if they’re OK leaving 30 minutes earlier or later, connecting through a different city, or staying at a hotel three blocks further away than they’d requested. If the traveler is fine with the change, Upside rewards them with a 10 percent to 15 percent discount and a gift card from retailers like Amazon.com Inc. or Nike Inc.
“You have these small different levels of flexibility,” Walker said in an interview. “Nobody has ever shown you the value of that flexibility.”
Online travel is all about finding the most efficient ways to push customers to specific booking sites or hotels. When Upside suggests an alternative, it’s usually with a hotel they have a deal with, and that’s how the startup makes money. Walker has agreements with 1,200 hotels, but he declined to say which brands.
Walker is targeting small-business travelers, who may be more willing to be flexible in order to save some money and score a free gift card, but he expects the model will soon become popular with larger businesses, too, as they push their employees to be more frugal.
The practice of bundling flights and hotels together or trying to push customers to particular accommodations isn’t new in the travel industry. Walker was part of the team that came up with Priceline’s name-your-own-price model, where customers could say what they wanted to pay and the website would find a suitable combination of flights and hotels that would meet the traveler’s price while still leaving enough for Priceline to take a cut.
The company originally planned to take the structure to other industries but the focus remained on flights and Walker left Priceline soon after it went public in 1999, well before it acquired Booking.com and became the $75 billion giant it is today.
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