For many online travel companies seeking venture capital in the past year, the well has been dry.
The situation appears to be improving, although very slowly. Two travel Web companies—WorldRes and Travelago—announced yesterday that they have received funding.
WorldRes.com, an Internet-based hotel reservation and distribution network whose Internet channles include PlacesToStay.com and BedandBreakfast.com, has secured $7 million in financing from key strategic and financial investors. the company said it will use the capital to continue expanding its global hotel reservation and distribution network.
While far less than the $30 million it was seeking last fall, it puts the company on a solid path toward profitability, according to CEO Greg Jones. With this round of funding, the company expects to achieve profitability in early 2002, Jones said. But while getting on that road to profitability, there were casualties and for Jones, its success is bittersweet. In the past year, the company reduced its staff from 250 employees to about 110 employees—something that Jones said was personally emotionally difficult.
“I can’t imagine a worse year than WorldRes had to go through,” he said.
Despite a troubled year, WorldRes growth in all major business indicators in 2000, including expansion of its network, increases in reservations and growth in revenue. WorldRes processed $147 million in gross value of hotel bookings during 2000, representing 1.3 million room nights sold on behalf of its hotel clients.
Its growth pattern is continuing in 2001 with more than 100% annual growth in reservations, more than double the industry average growth rate. WorldRes.com has 1,500 distribution partners and 18,000 properties, with additional contracts to add 20,000 new properties to the system over the course of this year.
The company received the funding lead by European hospitality company Accor, with strategic partners including the Boston Consulting Group, Starwood Hotels & Resorts, Sandler Capital, Walden VC, Technology Funding Inc., Fayez Sarofim, WorldView Technology Partners and Piper Jaffray Technology Capital.
Travelago, provider of streaming video destination guides for business and leisure travel, said it has received $5 million in bridge financing led by Barnard & Co. with participation from Southeast Interactive Technology Funds. Funds will be used for content acquisition, information technology, marketing, and working capital. Southeast Interactive and Barnard are both return investors from the company`s $5 million Series A.
In addition to its funding, Travelago has entered into a content distribution agreement with Yahoo! Travel.
Under the agreement, Travelago is providing Yahoo! Travel with more than 1,700 videos that describe in vivid detail the features of more than 770 destinations around the world. The videos include information on hotels and resorts, restaurants, attractions and activities, as well as information about continents, countries, states, islands, cities and towns. The video content will be delivered through Yahoo! Broadcast Services.
“We are committed to providing the most compelling travel experience available to our large base of consumers,” said Neda Nazem, business development manager for Yahoo! Travel. “Rich media enables travelers to truly experience their destination—before they book it.”
Travelago, which was founded in 1999 as a travel planning resource, already had deals in place with with AP Travel Service, Accu-Weather, RLM Software Flight Tracking and MapQuest. Travelago`s current significant business relationships include Travelocity, Expedia, Priceline, New River Technologies, Hotwire, eBookers, World Choice Travel, BizTravel, Apple Computer, RoadRunner, CAIS, Ocean Drive Magazine and InternetWire and prnewswire.
“This agreement with Yahoo! adds tremendous power to our current worldwide content distribution network,” said John Bobel, co-executive officer and president of Travelago. “Our travel planning content now reaches even more travelers who want the latest information on hotels, restaurants, attractions and activities in key U.S., North American and international destinations.”