Global Entrepreneurship
or private transportation, consumption will become collaborative. Companies who have optimised business models based on being individual patterns of behaviour will find themselves disrupted by new companies with more flexible cost structures.
Whether motivated by a real concern about survival or just the pursuit of growth, the end of 2012 saw two large deals in the travel space. Expedia took a 61.6% equity position in Trivago, a German meta-search company in a deal valued at €477m. Two months earlier, Priceline paid $1.8bn to acquire US meta-search equivalent Kayak. Both transactions said a number of similar things about where the action in travel and leisure space would be in the future. Both Trivago and Kayak are the first call for independent minded, digital natives who look for spontaneity and authenticity in travelling. While Expedia and
Booking.com do an excellent job for a certain profile of traveller, they are just too clinical for travellers who expect the booking experience to have personality, like the social travel site
Gogobot.com.
While AirBnB gets the attention for pioneering the space, Bobbie Johnson of GigaOm had a very revealing interview last October with Arnaud Bertrand, CEO of one of their competitors HouseTrip. In parts of Europe HouseTrip is beating AirBnB, mainly as it appeals to families looking for a vacation rather than urban travellers on a short break. Worth quoting in full, however, is his forthright opinion on Europe as being the place where opportunity and expertise is: “When you look at most of the big travel companies, they’re European-based,” said Arnaud, “By far the biggest is
Booking.com, which is a Dutch start-up.
“Travel is different maybe because that’s our DNA in Europe - most of the market is European and most of the schemes for decades have been European. We invented the hospitality industry.” So while US companies such as Homeaway have been the ones that are buying European companies up until now, Bertrand clearly thinks that once Europe awakes, that situation will reverse.
Booking.com was acquired by Priceline in July 2005. In Tnooz, Sean O´Neill recently scrutinised the deal and highlighted that it was one of the deals that brought Priceline from a profit of $10 million in 2003 to a profit of $1.1 billion in 2011. “No other acquisition in the digital travel space in the 2000s has proven as profitable” he concluded. Digging deeper, he found that international operations now account for four-fifths of Priceline’s consolidated operating income. So much so that analysts joke that the company should rename itself
Booking.com altogether. Even Priceline executives admitted that
Booking.com was “an unexpected cash cow.”
Europeans have more holidays
than Americans and what is more, they actually take them. Also, the European model is far more fragmented, with far fewer hotel chains and far more independents. Throw in that in terms of GDP, the European market is bigger than the US and has double the population (739m v 311m) and perhaps they shouldn’t have been so surprised.
22 entrepreneurcountry
Although teased by some as nutter talk about robots taking over the world, it’s arguable that science is progressing at a rate that machines will soon become so powerful that they rival human intelligence (the ‘Singularity moment’). Whether this happens in the year 2030 or 2045, already we are seeing new approaches to old problems. Academic and entrepreneur Vivek Wadhwa expects this decade to bring dramatic improvements to energy, education, water, food, and health as small teams to do what was once only possible for governments and large corporations. If we try to determine what sectors will benefit from these improvements, travel has surely to be among the leaders. Taken individually, each of these five sectors can be seen as inhibitors to travel. What if healthcare was better everywhere? What if education standards start to level? What if technology can solve problems from money transfer to phoning home?
Brian Chesky of AirBnB calls travel the most underrated market in the world. Estimating it at $2 trillion, he notes that it is half the size of oil at $4 trillion. For entrepreneurs looking for their next idea, it would seem a sector worth looking at. For consumers and venture capitalists alike, there would seem be to value out there. For incumbents, though, the story is a bit different. My advice is to get someone working on modelling the sharing economy immediately.
Hire people not who think linearly or who
focus just on the 18 months ahead. Instead, look at how the world might be in 5 or 10 years’ time and don´t be as data driven about decisions you make about the future as the ones you make about the past. I hope to see some great European companies emerge and even acquire their US equivalents. Competition is great but let´s reverse the trend, let´s not let the Americans make all the money.
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