A new generation of local startups rethinks how we book
If you’ve booked a hotel, car, or flight online in the last 15 years, you’re already familiar with the drill: Pull up one of a dozen travel search engines, plug in your criteria, and wait to be hit by an avalance of options.Even when you’re done digging out, you may be left wondering: Did I get the best deal?
The process of booking a vacation can bereason enough to need one.
Thanks to the success of some early entrants — and the programming talent and capital available from local universities and venture firms — the Boston area has become a hub for online travel. Kayak.com, which launched in 2004 and is now owned by Priceline Group Inc., spits out a billion searches each year. TripAdvisor Inc. of Needham hosts over 320 million reviews. Cambridge-based ITA Software, which Google bought in 2011, provides the flight search algorithms for over a dozen airline websites.
But the industry was slow to adapt to the rise of the smartphone, and now a new generation of startups is seeking to muscle its way in with services that exploit mobile technology.
These new players are developing mobile-first strategies that are quicker and savvier — easing the work load for travelers and serving them in real time with updates and the ability to change plans.
In one case, Paul English, the former CEO of Kayak.com, is incorporating another intriguing element to his new company: a human touch in the form of agents who help customers throughout their journey via text.
“It was a real moment in time,” Joel Cutler, a partner at the venture firm General Catalyst, said of the first wave of travel startups. Culter is a common denominator among many of the standard bearers in the industry, having backed Kayak.com and ITA Software. He’s also funded several local newcomers, and says that the nexus of travel-savvy venture capital firms here attracts eager young startups looking for funds.
Culter notes that startups are often more agile when moving into the crowded, yet extremely lucrative online travel space, which has revenues of about $350 billion annually worldwide.
“The concentration of really smart people doing really good work leads to next generation,” he said.
The research firm eMarketer has predicted this year will mark the first time that travelers will use their smartphones more often than their desktops to book travel online.
The Cambridge-based startup Hopper is one such company that’s relying on mobile and text-messaging to communicate with its users. Travelers can plug in the dates and destination of their travel via a mobile app, then the company sifts through billions of flight prices a day to calculate the best time for them to buy their ticket. When the price is right, the user gets a text telling them to buy. Founded by former staffers from TripAdvisor and Expedia, the company has sent over 32 million push notifications to users since they launched the app in January of last year.
“We took this step forward to provide all these self-service [booking] tools to users, but lost sight of the fact that was some benefit to working with an agent,” says Patrick Surry, Hopper’s chief data scientist. “The model with mobile is that we can do a lot of the work for you.”
Ethan Bernstein is another flush young founder whose company, Freebird, is thinking mobile-first, and trying to tap into a newer category of apps that can serve travelers mid-trip. Just a year ago, Bernstein traveled to Breckenridge, Colorado, with his Harvard Business School classmates for a ski weekend. When foul weather upended the return flight home for his friends, the Expedia alum came up with a business plan.
Freebird now provides an automatic flight rebooking service for travelers facing flight delays and cancellations. After purchasing their airfare elsewhere, customers pay a flat rate — $19 for one-way, or $34 for a round trip flight — to have Freebird monitor their trip. If a flight is delayed or cancelled, the user will receive a text with options to rebook. Freebird then covers the cost of swapping tickets.
The concept was innovative enough to attract $3.5 million in funding this past November from General Catalyst and local venture firms Accomplice and Slow Ventures. Bernstein dropped out of HBS last fall to work full time at the company.
“We’re helping people get to where they want to go, and helping to buy last-minute tickets so airlines are happy,” Bernstein said.
Even the more pedestrian forms of travel, like bus and train bookings, are getting an technological overhaul. In 2013, Babson graduate Polina Raygorodskaya launched Wanderu, a search engine for ground travel, to fill a gap she saw in the market. She’s since raised $5.6 million. After launching its iPhone and Android apps last year, the Boston-based company has seen 60 percent of their bookings come in through mobile.
Raygorodskaya said the move was critical for their continued growth, as her audience is primarily millennials who don’t go anywhere without their phones.
“With the rise of mobile, every traveler is walking with a high-speed Internet connection and a super computer, so it completely changes the whole equation,” said Douglas Quinby of Phocuswright, a travel industry research agency. The fact that these companies also have that traveler’s location enables them to service the traveler on-demand, he said. And sometimes, the quickest way to do so it via text.
“The idea of commercializing conversation is going to be the next big wave,” Quimby added.
That’s certainly the idea behind Lola, the new company that Paul English is scheduled to launch next month. The serial entrepreneur has said that online travel agencies like his own Kayak have “dehumanized” the booking experience. So he’s betting that adding a human layer back into the equation will attract users who seek a more curated travel experience. Investors seem to agree, as he’s raised $20 million ahead of its debut.
Lola is currently hiring 100 travel agents in its Boston headquarters who will act as concierges throughout the customer’s trip. They’ll help book flights and hotels, and will be on hand, via text, to manage restaurant reservations or have balloons sent to your suite if its your son’s birthday.
English says the swell of new travel startups in the Boston area is a testament to the size and scope of the industry, and that’s part of the reason why developers are eager to get into the space.
“Travel is 40 percent of all e-commerce, it’s bigger than the next four categories combined,” he said.
Janelle Nanos can be reached at janelle.nanos@globe.com. Follow her on Twitter @janellenanos.
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