We've seen it over and over again by now: Given the vast marketing resources of major players in the hotel booking arena, it is extremely hard for startups to build their brand with consumers. Building a business-to-business company is somewhat easier but Stayful's pivot might have come too late.
Stayful, a four-year-old San Francisco startup that specialized in enabling consumers to book boutique and independent hotels at negotiated rates, wound down operations, and WorldVentures Holdings of Plano, Texas acquired its technology and what remains of the business, Skift has learned exclusively.
The Better Business Bureau of North Central Texas describes WorldVentures as a “multi-level marketing” company where individuals pay a fee to sell its travel products and, in theory, earn a commission, which can be used for future travel. The Better Business Bureau, which gives WorldVentures a C+ rating, said in 2012-2013 the vast majority of its “independent representatives” didn’t earn any commission.
Companies similar to this are widely disparaged in the travel industry as card mills for falsely portraying members as travel professionals and allowing them to take advantage of travel agent perks, although WorldVentures has an FAQ arguing why its “leisure travel consultants” are distinct from travel agents. It specifically argues in its FAQ why it is not a card mill or pyramid scheme.
WorldVentures didn’t respond to requests for comment regarding its plans for Stayful. The hotel-booking site, Stayful, is still taking bookings.
After Skift got a tip about Stayful’s demise, travel industry veteran and CEO Cheryl Rosner, who co-founded the startup in 2013 with Shariq Minhas, indicated that WorldVentures recently acquired Stayful’s technology and business.
Stayful informed investors of its demise earlier this week, and its hotel partners were finding out about these developments today.
Stayful had raised some $6 million in funding in several rounds, including a $2.4 million seed round in 2013 led by Canaan Partners. It is isn’t clear if any subset of investors recouped any or some of their monies in the WorldVentures sale. Several people close to the situation said it was laudatory that Rosner was able to sell the assets at all.
“At least there was some kind of business there,” said one early investor.
With nine employees, Stayful enabled consumers to book discounted stays at boutique and independent hotels, and over the last year supplemented that with check-in and messaging services for hotels.
On the business-to-business side, Stayful provided mobile check-in, mobile checkout and concierge services during guests’ stays to independent and boutique hotel partners for free in exchange for the hotels encouraging their guests, including those who have booked the hotel directly through the hotels’ own channels, to download the Stayful app.
In addition to providing these free services to hotels, many of which don’t have their own apps, the hotels could earn commissions from Stayful whenever their guests booked a different hotel, whether it is on the other side of the city or across the country and beyond, through the Stayful app.
Given intense competition, including the marketing clout of a variety of big players among online travel agencies and metasearch engines, along with other technology companies and even hotels offering mobile solutions that overlapped with Stayful’s, the startup couldn’t break through with consumers.
“As you know, for a sub-scale business in this space, breaking through is super hard,” said Rosner, pointing to the “changing landscape” typified by Google prioritizing its own travel products over those of competitors.
Referring to the marketing efforts of large companies such as the Priceline Group, including Booking.com, and Expedia and its brands, Rosner said “the amount of money the big guys spend on marketing on a daily basis is significantly higher than what we even raised.”
Rosner said she is proud of her nine-member team and the technology Stayful created.
Privately held WorldVentures Holdings didn’t respond to requests for comments about Stayful so it’s unclear what the Texas company’s plans are for the hotel-booking business and it technology.
[Update: A WorldVentures Holdings spokeswoman, Laura Wards, said this article’s characterization of the company is “very one-sided and it also contains inaccurate information.”
“For instance, WorldVentures Holdings is the parent company for several brands, products and services, including a travel agency where the technology is to be used. WorldVentures Marketing is a direct selling company who’s product is a travel and lifestyle membership club — it is not a travel agency, nor does it procure travel.”
The WorldVentures travel agency Wards referred to, and that would likely use Stayful technology, would be Rovia.]
One observer, who’s worked in various online travel business over the years, said Stayful’s pivot over the last year to becoming “a market network for independent hoteliers made sense but there was no marketing at all to drive the business.”
Photo credit: Stayful had a mobile app that enabled consumers to book boutique and independent hotels at discounted rates. Stayful