Last year, the online travel market played its own version of “Survivor,” and with more than 20 million consumers expected to purchase more than $20 billion in travel online this year, the reward for those who are standing can be great.
Despite a sinking market that began last spring, many travel dot-coms continue to do remarkably well. And as consolidation continues and more companies die off, the strong will just keep getting stronger.
“[Last year] was a shake-out and a reality check,” said www.LastMinuteTravel.com CEO and Founder David Miranda. “The revolution is over and the evolution started in 2000 ... [In 2001] there are going to be fewer competitors that are more focused.”
LastMinuteTravel.com is claiming success as it inches toward profitability. Miranda believes its business model is one that can endure the ups and downs of the market. Miranda said he expects his company to become profitable within the next month or two.
“There is always the need to fill empty seats,” he said. “We’re sticking to the original plan. We’re lucky we didn’t get into a lot of venture capital money ... Our goal was not to go public it was to make money.”
For www.Travelnow.com, which has one of the largest travel affiliate programs on the Web, 2001 also is looking better than ever. Hotel Reservations Network, (HRN) has acquired the five-year old company for $4.16 per share in cash. Because of its long history, TravelNow didn’t have the same sort of cash concerns that other companies had, explained TravelNow CEO Jeff Wasson. Selling the company seemed to make sense as a way to secure and eventually maixmize its assets.
“I think that in general the market has obviously changed dramatically and it makes sense for lots of companies to secure the work that they’ve done and selling the company has been one way to do that,” Wasson said. “This gives us the ability to expand upon what we’ve done.”
Even as the venture capital market tightened in 2000, there’s been some funding for good ideas. www.Site59.com, which specializes in spontaneous travel and entertainment, concluded its Series B investment round of $10.5 million in October from a group of strategic investors. Accor, Bass Hotels and Resorts, and National Leisure Group all participated in the round, along with iFormation Group, a company formed by The Boston Consulting Group, Inc., (BCG), General Atlantic Partners, LLC, and The Goldman Sachs Group.
Site59.com vice president of marketing Colleen Challenger says Site59`s profitable ASP model and consumer-friendly site is just what the market needed. “Consumers are looking for great price but they’re asking to not have to bid for it for 15 hours to get it,” she said.
Amisto.com wasn’t so fortunate. After launching in March, the adventure travel Web site folded in November when it couldn’t secure a second round of funding.
“It’s an ideal time for people like Expedia,” said Amisto.com founder Monique Elwell. “It used to be [that online travel companies] were spending so much money because anyone could raise money to compete with them.”
Even some heavily-backed companies were unable to make it in this market. www.Buytravel.com, the joint venture between Internet superstore www.Buy.com
and United, closed up shop in November, just two months after retailing giant Wal-Mart decided to drop its Amadeus-backed travel after only nine months in operation.
Meanwhile, in November, while several Internet travel companies were struggling, one travel site got a big push. Amadeus along with Barcelona-based Internet company Terra Lycos, acquired a 55% equity in travel Web site www.OneTravel.com. The investment represented a further step in a strategic partnership Amadeus and OneTravel.com entered into last April. With less competition from start-ups, corporate-backed companies like OneTravel.com, Microsoft’s Expedia and Sabre’s Hotwire, founded by American Airlines, America West, Continental, Northwest, United, and US Airways, launched in October with its model replaces the “name-your-own-price” model in favor of allowing consumers to shop for a discount fare or rate based on unpublished bids from suppliers wanting to reduce excess capacity.
Orbitz, the controversial site started by American, Continental, Delta, Northwest and United Airlines, put off its early 2000 launch and is looking at a June 2001 launch promising to be “first Web site to offer travelers a comprehensive, unbiased view of fares, schedules and rates for destinations around the world.”
So the online travel version of “Survivor 2” begins and its sure to be an exciting game. The ones left standing at the end of 2001 will be those who know how to play the game, and as we learned last year, experience counts. For newer players, it`s going to be more difficult. It will take more than just a good business model, it will take a good strategy and the ability to make the most of their resources.