Many travel sites such as Priceline, Hopper, and Trip.com tap technology from Gordian Software to help upsell travelers buying airline tickets by merchandising extras such as seating assignments and checked baggage. The Seattle based travel startup has managed to raise some money on its own, closing a $25 million Series A round of funding, Skift learned on Tuesday.
Investors such as Accomplice, Vinyl, Kinnevik, DST Global Partners, and Latitude, participated, placing a $200 million valuation on the company, a graduate of the Y Combinator incubator.
The startup said its annualized revenue run rate had more than tripled since January.
“Since integrating Gordian’s airline seat map solution, we’ve been able to offer our customers a more seamless purchasing experience through our app,” said Dakota Smith, chief strategy officer at Hopper, the mobile-first travel booking agency. Hopper uses Gordian to offer seat selection as a paid upsell after customers book tickets.
More than 100 online travel companies and sites are customers of Gordian’s APIs [application programming interfaces] for travel websites.
The company’s approach to building the data feed enables online travel sellers to use a fraction of the resources than if they attempted to build the product internally, it said. The feed lets sites consume upsells from upwards of 100 airlines, including Air France, American Airlines, British Airways, China Eastern, China Southern, Delta, Emirates, Etihad, Finnair, Ryanair, Singapore Airlines, Qantas, and United.
While many other tech vendors have focused on helping airlines with the shopping and booking parts of airline sales, Gordian has concentrated on the post-booking part, where it fine-tunes the upselling.
Low-cost carriers such as Ryanair, Spirit, and AirAsia have for years generated roughly a third to nearly half of their top-line revenues from the sales of extras such as reserved seats, priority baggage, and in-flight meals. But they also typically do much of that upselling directly via their websites and mobile apps.
Larger airline groups are still playing catchup in both offering ancillaries and in selling them across channels.
“The moment when I knew that Gordian had legs was after I had cold-emailed several airline people at the senior vice-president level who I didn’t know,” said Gordian CEO and Co-Founder Stephen Grabowski. “I expected that these people wouldn’t respond to cold emails. But I got a 70-ish percent response rate and was landing meetings with these folks.”
Airlines often haven’t been getting any upsells in these online channels because the agencies weren’t offering them. So any gain is flowing directly to their bottom line. As a result, ordinarily bureaucratic carriers found ways to prioritize the integration.
“Airlines are large enterprises that usually take months to give access to outside developers to their technical systems,” Grabowski said. “But one major carrier gave us production access within two weeks.”