travel

Showing 20 posts tagged travel

Travel startups & investor baggage

I was talking to an entrepreneur this week about fundraising plans for her business. I tried to encourage her, but also set expectations about building in a category that comes with a lot of investor baggage. I know because it’s one I built a business in too: travel. 

The travel industry has all of the makings of a great market. The last major innovation in flight planning planning is 10 years old when OTAs were fighting for eyeballs using tv commercials and SEO. Kayak was a huge success for organizing all of the information transparently in one place, but since being acquired in 2013, not much has changed. Even the mass adoption of mobile phones has had little impact in shaking up the incumbents. 

In 2012, the travel market was sized at $313 billion and has only grown with the addition of millions of new consumers online. There is a lot of potential in the market, so why aren’t more businesses being funded here? 

Trips, far off destinations and photos on beaches makes travel a fun industry to talk about. The product is something people like thinking about, vs say audit software, but it’s hard to grow a mass customer base. The challenges start with high costs for search, infrequency of purchase, large incumbents spending a lot on marketing, gaining customer mindshare, and division of business v. personal travel. It’s a hard industry to crack as scale, which has left many investors burned by investments in this space. 

Even trip-planning companies that have been successful in fundraising, haven’t had break-out growth. Hipmunk emerged as a contender to the traditional OTAs, but hasn’t found it’s breakaway growth even with $40M in investment. Gogobot raised $39M in funding but pales in comparison to TripAdvisor. 

Hipmunk vs. Kayak’s Alexa Ranking:

Gogobot vs. TripAdvisor’s Alexa Ranking: 

Growth for both of these companies is good, but it’s not likely enough to push those companies to a big exit for investors. The early and late money in those companies are still waiting for growth to set them up for an IPO or a large figure acquisition. 

Investors who’ve done travel deals in the past or are currently in one of these companies are likely more skeptical of the category than anyone. 

Yes, the consumer experience for planning a trip is still broken. Yes, there are ways to use data and UI improvements to fix these problems. Yes, there are opportunities in mobile. But no, no I’m not investing in travel. Even the smaller travel companies who have exited, they aren’t the 3x+ investors are looking for. The market is still out on what these companies are worth. 

So what will change investors minds? A good comp in the market helps. Yes, there are photo sharing apps that still get funded, largely because Instagram’s exit at $1B is a good comp. If you’re an investor who places a few small bets and one of them even has the potential to be worth $1B, that sounds like an attractive deal. Is that rational, no. Is that the way to make smart investments, likely not, but the facts add up. There is a market (and an exit strategy) for photo sharing apps. 

Travel doesn’t have that luxury, or at least not yet. 

The big company that may change people’s minds is AirBnB. Now AirBnB fits in the travel category of accommodations, but it’s business model is far from the average travel planning site. Instead of being a superior way to route customers to hotels, AirBnB is the new way to build hotels. They are utilizing real estate and the sharing company to compete with hotels, not just send traffic their way. So if they aren’t exactly a travel company, how does that help the sector? 

When AirBnB goes public, it creates a new player in the “travel industry acquisition” game. A Himpunk with a large valuation may be a small cost for AirBnB to better compete with OTAs earlier in the booking process. The tours, activities, and things to do component of Gogobot may fit into their extended hospitality services, and they could buy instead of build. If the largest players get acquired at large numbers, there will be a resurgence of interest from investors to find the next thing to disrupt the travel industry or sell to the incumbents who now feel threatened by AirBnB. 

AirBnB is not far from Kayak’s traffic:

The size of the travel industry will continue to attract entrepreneurs and investors, but it may take a few big exits to help former travel-investors to get back into the game. 

My advice for travel entrepreneurs, is to think about ways to serve specific markets, like the breakouts in the Indian and Brazilian markets; monetize early to rely less on investors; and serve a market need so well that people are willing to pay a lot of money for the service (not just affiliate fees). I’ll save my ideas on open opportunities for another post. 

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Looking for something to do over Memorial Day? Although sometimes stereotyped for it’s rainy weather, Oregon provided a beautiful place that kept us wanting to spend all day outdoors. Rainstorms were frequent but they never lasted more than 20 minutes, nothing an anorak and comfortable shoes couldn’t handle. 

Last Memorial Day, Neal and I spent 4 days and nights in Portland and the Oregon Coast. We originally planned to spend more time on the Oregon coast but kept it abbreviated in order to explore more of Portland. Looking back we did a lot in only three full-days but it didn’t feel like we were rushing from one thing to the next. 

The itinerary from our trip: 

Thursday: Leave NYC after work > Portland
Friday: Portland > Astoria > Cape Disappointment > Cannon Beach
Saturday: Cannon Beach > Tillamook > Dundee Wine Country > Portland
Sunday: Portland
Monday: Portland > Back in NYC afternoon

Thursday

New Yorkers can hop a 5:45pm Delta flight from JFK that gets you into PDX at 9pm. It’s a twenty-minute cab ride from the airport to a number of hotels in the heart of downtown . Being Starwood loyalists, we chose The Nines hotel.

Drop your bags, grab your rain jacket and head towards the neon donut sign.Voodoo Doughnuts has become a Portland landmark known for it’s pink doughnut boxes and decadent flavors. During daylight hours they attract a line for blocks so take advantage of their 24 hour hours and beat the crowd. We tried the famous Maple Bacon Bar, rectangle doughnut with maple glaze and two slices of bacon on top, and a Dirt one, yeast doughnut topped with vanilla icing piled with oreo cookies.

Ride out the sugar rush out at a local brew-pub. Portland is known for micro-brews with specialities in IPAs and dark beers. Try to find one where you can see the brewing tanks from the bar. We visited Tugboat Brewing Co. which offers a few of their own beers and a handful of other local brews. It’s a low key spot offering board games and an extensive collection of books lining the walls.

Friday

If you ask anyone about breakfast in Portland, Mother’s is always mentioned. We tried to leverage our EST jetlag to get in before the crowds. Peppery bacon, tableside french press coffee and local made jam on fresh biscuits are not to be missed. Food was excellent and more than enough to keep you full past lunch. 

Grab a rental car and get out of town. (Pro-tip: You’ll want a low-set fun car, more on this later). Head about 35 minutes east towards Mt. Hood to reachMultnomah Falls. Enjoy the beautiful views along the highway and look out for the left-hand exit to the Falls parking lot. Views only improve as you make your way up the trail in front of the falls. Make sure to wear walking shoes and bring a rain jacket, the 1.2 mile hike to the top of the falls is paved and provides close encounters with the waterfall spray near the base.

After a nice warm-up, head Northwest towards the coast. It’s about two hours to Astoria, Oregon which sits at the mouth of the Columbia River into the Pacific. The city dates back to Lewis and Clark and feels a lot like a smaller San Francisco. Get some fresh seafood as you look north to Washington. Try a few microbrews in a beer flight at Wet Dog.  Rent a bike to explore town or walk around to take in the local coffee culture.

If the weather is on your side, drive North towards Cape Disappointment, Washington. Confession: We saw it listed on foursquare and with a name like that, we were curious what it was all about. This area experiences about 106 days of fog a year. If it’s a clear day, hike the short trail up to the lighthouse. Look for the secret beach along the way.

Head south about 40 miles to Cannon Beach, OR to catch the sunset into the Pacific. We only wanted to spend one night here although most hotels required a minimum of two nights. We landed at the Wayside Inn which provided excellent access to the ocean and town.

Although not the sunshine and swimsuit weather assumed with East Coast beaches, Cannon Beach is one of the most beautiful places I’ve ever seen. The backdrop of green forests rolling into the sand paired with the massive Haystack Rock and Needles sticking out in the ocean is just breaktaking. As the lighting changed with the sunset and moving clouds, we kept mumbling “wow!” and “it’s so beautiful” over and over again. You may experience Goonies flashbacks as parts of the movie were filmed here. After sunset, dine at Newman’s 988 for local seafood in a historic house near the beach.

Saturday

Take an early morning walk or run on the beach and look for wildlife in the low-tide pools. Giant orange and purple starfish hold tight to the bottom of the rocks and sand dollars scatter over the beach.

Pack the car and head to the popular Lazy Susan Cafe for breakfast. Put your name on the list then pick up some Salt Water Taffy at Bruce’s Candy Kitchenwhile you wait. It’s some of the best so feel free snacking on a few pieces before breakfast.

Head towards Tillamook but be prepared to stop to take in the stunning views of the Oregon Coast at the numerous lookout points. Grab some ice-cream at the Ikea-sized Tillamook Cheese Factory or pick up some road-side raw oysters. Continue south to pick up Highway-22 that takes you into Portland wine-country. You’ll be thankful for a low-centered car on these windy roads. We had a VW Golf that proved a lot of fun for driving an empty, curvy highway carved into Oregon’s forests.

Sokol Blossmer Winery sits in a region known for their Pinot Noir. A tasting event was setup for Memorial Day weekend which had local artists, BBQ and chocolate vendors alongside a sampling of their wines. The ‘09 Pinor Noir was my favorite that I’m keep an eye out for in NYC. The lamb burger from Ribslayer (ribslayer.com) was one of the best I’ve tried. If they aren’t paired with an event at the winery, you can pick one up down the road at their store in McMinnville.

It’s about an hour back to Portland from the Dundee winery area so could be done as a day-trip from the city if you don’t have a night to spend on the coast. Enterprise offers a few locations downtown to easily rent a car without a trip out to the airport. We returned to The Nines and set out to explore one of the other Portland neighborhoods. A twitter recommendation from Raphael and Rick tempted us with a promise of a great burger from a Sushi place.

It was about a 10 minute cab ride but well worth the trek. Yakuza has great food and gives exposure to some of the active neighborhoods outside of downtown. We didn’t make it to the Mississippi neighborhood but got a quick tour in a our taxi after dinner. It’s known for it’s art studios, local eateries and, according to our taxi driver, one of the best barber’s in the world. We grabbed drinks in the Pearl district which has tons of different options from gastropubs to nightclubs.

Sunday

Have you ever had an oyster omelet? Try one at Bijou cafe. Located next to the original Stumptown coffee house, there is normally a wait on weekends but counter space is first-come-first-served so keep an eye out if you don’t need a table.  

Oogle all of the stylish outdoor gear at Tanner’s as you walk towards the Arlington Heights parks. It’s about a mile walk or bike ride to the foot of the park. Rain or shine, stop by the award winning rose gardens and try to spot the top of Mt. Hood from the city-overlook. Pay a small fee to enter the Japanese Gardens to be transported to another world. 

Head back into town to the Rogue Distillery. Ask for their beer bible to custom build your own sampler. I highly recommend the Rogue Dead Guy Ale.

For a light snack, head to The Parish for their oyster happy hour. With their access to the Northwest coast, you can’t go wrong with their raw or parmesan baked oysters. If you’re in the shopping mood, continue to explore the Pearl District shops and don’t forget to check out the massive Nike store in downtown. Realize that 80% of people on the streets of Portland are wearing something Nike as the company’s corporate headquarters are just next door in Beaverton, OR.

Make a reservation at Wildwood for dinner. It helped start the movement of locally sourced food in the Portland food scene. From game to seafood, there is something on the menu for everyone.  Head to Departures to enjoy panoramic views of portland from their outdoor roofdeck. 

Monday

Take the 7:00am flight back to NYC for a 3:15pm arrival.

Apps that made the trip:

Being a Starwood loyalist was great but there are plenty of nice downtown hotels worth exploring. I’m a big fan of Kayak (web or mobile) and of course Foursquare and Twitter for getting recommendations from the real locals. 

On the ground, in order of importance: Google maps, Foursquare, Instagram, Twitter and Yelp. 

Staying private in a public place

I always think about the socks I wear on the days I go to the airport. Exposed toes aren’t a great impression for the strangers who are sizing you up.

image

Nice black socks on, I arrived at SFO at 5:32am. Ten minutes later, it didn’t matter. My shoes and coat kept on, my laptop still safely in my purse. My flight was still on time and I had no fear of missing it.  It 5:39am and I was already at my gate. No, I didn’t sneak in a secret entrance or get an invitation on a private jet. I simply traded my personal data for a better deal with TSA.

Save your privacy by giving more away

From NSA to Google Ads, data privacy has been a hot topic this year. At USV, we often discuss the push to share more data, not less, as a remedy to privacy. The thought is, that by providing more information we can actually devalue the data so there is less to gain from a third party obtaining it.

For example, in some european countries salaries and income are public information. Everyone has access to everyone else’s data. That means that services in the US like GlassDoor or Salary surveys that charge money to gain access to that information, would go out of business. There is no financial incentive to discover the data or find ways to gather it because it’s already in public domain. More income data brings the cost of selling income data down to zero.

Albert has written extensively about more data transparency and the risks of a crypto’s arms race. Fundamentally, I can rationalize the value in a more transparent culture, but the thought of the long cultural transition is uncomfortable.

In the US, the cultural norm is to keep medical records private. Insurance and employers (illegally), have created financial incentives for any individual with less than pristine medical history to keep that information private. Although these individuals may readily share this information with family or doctors, so the information isn’t intentionally private, exposing it too broadly could present financial downside in the short term. However, in the long run, if everyone shared their medical data it could help predict or prevent diseases in the first place and actually save insurance more. Making the transition from private to fully transparent would generate short-term costs throughout the length of the transition, however long it takes.

So how do we make any strides in data transparency when we know there will be costs in the transition? A good case study may start at the airport, TSA Pre-Check.

Travel transparency goes beyond the x-ray

I first learned about TSA pre-check after a few trips with my boyfriend. He kept being directed to a super fast line at security. He would try to bring me along with him in the line but I was sent back to the regular security line. I attributed the special line to his status on Delta so wasn’t sure why I wasn’t getting special treatment too.

My growing impatience with TSA lines, shoe removal and laptop take-outs, drove me to investigate further. TSA Pre-check granted the access and could be obtained through a few different channels.

Some carriers do auto-enroll members with a certain level of status into the TSA pre-check program.

Alaska Airlines, American Airlines, Delta Air Lines, United Airlines and US Airways are contacting eligible frequent travelers with an invitation to opt-in. Once the passenger opts-in, the airline identifies the individual as a TSA Pre✓™ participant when submitting passenger reservation information to TSA’s Secure Flight system.

If you’re not a frequent or loyal traveler, you still have options. The options you have are : “U.S. citizens currently enrolled in CBP’s Global Entry, SENTRI or NEXUS Trusted Traveler programs are automatically eligible to participate in TSA Pre✓™. Canadian citizens who are members of NEXUS are also qualified to participate in TSA Pre✓™.”

I enrolled in the Global Entry program, which cross-enrolls you in TSA pre-check. The benefit of Global Entry is you can skip the line when re-entering the United States by simply swiping your passport.

All programs require sharing past travel history, passport number, address, birthdate and photo. I readily provide that information to airlines and foreign visa applications so I see it as a reasonable ask. The output is what’s called a Known Traveler number. Given the amount of time and investment put into physical security screening, it was a bit surprising that a Known Traveler program wasn’t implemented sooner. If individuals want to opt in to sharing data in return for less physical inspection, they have more options besides refusing to fly. 

On both legs of my JFK - SFO trip, I skipped long lines by utilizing the TSA-Pre-check status. I was through security in under 10 minutes without the need to take off my shoes, coat or take my laptop out. Finally, TSA feels like a civil process. 

Trade in to trade up?

The GOES application will cost you $99 for an 8 year membership and require a trip to a local enrollment center for an interview. If you plan on flying at least a few times in the next few years, it may be well worth it to you. On 4 round-trip flights I’ve already saved a few hours in line and fewer rounds in the full body scanners. I think it’s well worth the price and the data cost.

What do you think? Have you enrolled? Please share in the comments below.