Insight Bite

Corporate finance continues to back travel technology companies that streamline holidaying for consumers, whether in terms of booking hotels and flights or just so that users can have a better experience when travelling. The belief among most venture capital firms is that as consumers travel all over the world, they are constantly looking for new and innovative options to help them, the money will flow. This marketplace is already fairly crowded, with marketing expenditure high by the dominant firms, such as Expedia, Kayak and TripAdvisor, but business transfer agents are taking on new start-ups all the time, especially those looking to crack the mobile market, which increasingly has an influence on the global digital travel scene. A major brand may be dominant on the desktop, but not all are able to transfer successfully to the smartphone. Start-ups are certainly hoping to deliver an entirely mobile-focused experience, and have the potential of experimenting as an edge over the established brands.

Travel services remain largely regional, with consumers having various demands from digital platforms depending on their location. As a result, venture capital has flowed freely across the entire globe, with financiers focusing on urban and high-density consumer hotspots. Unsurprisingly, global platform Airbnb, Germany’s Wimdu, China-based 17u.cn, Russia’s Ostrovok, the UK’s HouseTrip and Brazil-based Hotel Urbano have seen some of the strongest fiscal inflows over the past year or so. The big development stage in the segment is set to focus on features that can ease the booking experience and converge various platforms for quick and direct transactions. Combining this ability with a mobile operating system is key to unlocking future growth. Some of the more innovative start-ups are already seeing growing attention from VCs.

For example, Rocketmiles is a Chicago-based start-up that lets travellers earn air miles by booking hotels through its platform. The focus on cost savings and rewards promises considerable potential for the firm, whose revenue model focuses on small margins on every hotel bookings. The founders are experienced entrepreneurs with experience in partnership building with airline customers. Another solid and more established offering is HotelTonight, a free mobile app that offers daily hotel deals in markets across the globe. Similar to desktop service lastminute.com, the service offers specialised discounts on same-day bookings. The start-up has already seen a strong investment from the founder of Starwood Capital Group, Barry Sternlicht, who specialises in hotel-based investments.