right technology as among the keys to success for travel start-ups. Lee Hayhurst reports
Firms ‘can avoid future shocks by helping start-ups’
Becoming involved with and assisting start-ups is vital for legacy businesses to pre-empt future shocks to the industry from new entrants.
Travelport’s Simon Ferguson
cited the impact Airbnb is having in hospitality and Uber in ground transportation. He said neither company
responded to any specific emerging customer demand but both had the creativity and ingenuity to do something different. Ferguson said: “Customers
actually are not very good at saying ‘I want something completely different’.” “Unless you have a particularly
revisionist view of history, none of us said ‘I would like to be taken home by an unlicensed minicab driver with no more navigation device than I have in my pocket’. “The same with Airbnb. With
“Customers are not very good at saying: ‘I want something completely different’”
them, it’s about their authenticity. ‘Live like a local’ – that’s incredibly powerful.” Ferguson said the reason why
Alta Vista, the original internet search engine, did not become Google was because its owner, Digital Equipment Corporation, could not see a benefit to its core business of selling hardware. Travelport has established an
innovation lab based in Denver, which travel start-ups can apply to join so they can access the support they need to get their ideas off the ground. Ferguson, Travelport’s managing director for northern
FERGUSON: ‘Innovation is hard to cultivate in large companies’
Europe, said firms must commit to physically moving resources to the lab for four months. He said there were two
main reasons why Travelport established it, adding: “It is altruistic, in that it’s great to be fostering and growing innovation, but it is also a response to the fact that we are a legacy business and one of the ways of dealing with that is to harness ideas. “The reality is that innovation
is hard to cultivate in very large companies. Large organisations inevitably are focused on keeping people on their day jobs and the legacy is like an umbilical cord.”
Right technology ‘key for new businesses’
Getting the right technology in place can be one of the toughest challenges for any travel start-up. Stewart Baird, chief executive of Stone Ventures,
which established travel-focused investor Pebble Travel in 2014, said: “Technology is probably my biggest headache in almost every business. “We tend to look at businesses more on the niche
side, where the intellectual property or the knowhow is what the consumer is paying for. “I really struggle to understand why technology companies have made it so difficult for us to create tailor-made packages. It’s just hard work, it really is. “In every business we’ve invested in, we’ve had to
replace the systems – booking, distribution, web front- end and CRM platform – all generally in the first year.”
Sam Bruce, co-founder of Much Better Adventures,
said the firm took a long time to find its own in-house chief technology officer. “We were outsourcing our tech and it cost us six months. We had an agency that would send us the work back two weeks later, by which time we didn’t need it,” he said. Bruce said it was vital that the firm’s technology was simple to use by its small, in-destination suppliers. “A lot of technology for these businesses is very
convoluted. They have an off-the-shelf system and use about 1% of it. “We want our technology to get to the point where
a host could be on a ski lift and confirm a booking in one tap.”
Regulations are easing for new firms, says Baird
Regulators’ more permissive approach is making it easier to set up travel businesses, the summit was told. Stone Ventures chief executive
Stewart Baird said it was “our job as investors” to “unlock the energy and passion and don’t let things like Atol or management accounts get in the way”. “That stuff should happen on
the side and investors should take that away so you can get on and build a brand and build a business. “The regulator can make barriers to entry quite hard, but trust funds and insurance-backed schemes mean it’s become easier to open travel businesses.” Much Better Adventures’ Sam
Bruce said his firm was coming up against regulation as it grew. “We are not bonded; we are the
market and are connecting people. We say: ‘These are the risks, pay with a credit card, get insurance.’ “If you make it too difficult for
small businesses they won’t exist anymore and that’s not good for local economies or travellers. There needs to be a bit of leeway.” Howzat co-founder Hugo Burge added: “We are fortunate companies like Google and Facebook have created global marketing channels. This is an incredible opportunity to grow businesses. We will look back on this era as one of incredible change and opportunity.”
Stewart Baird
2 June 2016
travelweekly.co.uk 71
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