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Travel hot for startups, a lot of pain points to be solved

Posted on 27 Jun 2011 at 17:36 pm by Syazanah Haniff

Travel is an old, complex industry with complicated structures and processes. This is what makes it a great industry for entrepreneurs because there are many pain points to solve. This was one of the key messages from travel's inaugural session at Echelon 2011, the digital start-up conference in Singapore. 

And what's hot in travel? Investors and entrepreneurs in the audience were told, content and service, Indonesia, weddings in China, Airbnb clones, among others. 

The travel panel, moderated by WIT's Yeoh Siew Hoon, comprised Brett Henry (Abacus International), Daniel Quadt (GuideGecko), Hans Ebenhahn (Indonesia-based Internet travel entrepreneur) and William Bao Bean (Singtel Innov8).

Answering Siew Hoon’s question as to “What’s hot in travel these days?”, Brett cited businesses that wrapped themselves around content and service. 

Daniel, whose GuideGecko allows writers to publish travel guides on apps, said “content that reflected the authenticity of the voice of the writer” would rule. 

Indonesia was singled out as a favourite market by most of the panelists, particularly Hans who's based in Jakarta and who's been studying the market for a startup. 

The opportunity for startups and growth of existing businesses is huge, he said, pointing out that there is no OTA currently in Indonesia. It is a very complicated market, with various fragments of society to target and a huge mass of localised content to consolidate efficiently. 

William talked about the ever-hot market for all industries, China. He listed businesses that have successfully been ‘cloned’ by Chinese companies, for example, Jetsetter, the invitation-only travel community. William raised statistics of package tours sold in China – five million were sold last year. This year, it’s 40 million package tours sold.

He also mentioned the wedding market in China, saying that on average, 140,000 RMB (21,600 USD) is spent per wedding. 

When asked, “What’s NOT hot in travel”, Brett said anything that took a Western idea and just planted it into Asia. Going local and deep was the way to go, he said. 

William said that “People not innovating in Asia” is not hot. He talked about how Qunar is hot, innovating metasearch for travel in China. Evidently he was right, based on the recent amount of investment Baidu has put into Qunar (see article here). “Local content is powerful,” he said. There’s huge potential in growth if you’re able to harness everything right.

With the recent trend in deal sites – it is said there are close to 30 deal sites in Singapore alone, the panelists said the success of that model would depend on whether businesses can match the targeting correctly. Otherwise, it might prove to be detrimental rather than useful.

The other sector that's hot is the Airbnb model, which allows people to market their places for a short-term rent. Panellists predicted it would come to Asia and a member of the audience cited Wimdu, an Airbnb clone in Germany, which recently raised US$90 million worth of Series-A funding. Airbnb, which was started in August 2008, is valued at $1 billion. However, for Asia, some adjustments might need to be made to accommodate the different cultural issues here, and the model would need to build trust. “It just takes one bad experience for it to unravel,” said one. 

Consolidating local hotel content was also cited as a hot category. With so much fragmentation, there is opportunity to consolidate all that efficiently. And while Hans believes aggregating longtail content of local travel experiences would also do well as it would inspire travellers, Brett said that was too difficult to scale. 

William said one area that could be interesting is restaurants. “I am always looking for local places to go to when I travel,” he said.

When Siew Hoon mentioned that TripAdvisor was looking at building up the restaurants category, William said it would not be able to do a job of providing deep, local content which is what travellers are looking for.

Another trend with huge market potential, raised by William, was location-based push promotions. He and the other panelists agreed that the potential for lead generation from this technology could be huge.

Their advice for entrepreneurs in the room wanting to start up in travel? Understand the industry. It's okay if you don't know the industry, but bring in someone who does to give that balance. And because travel is a very complex industry, there are plenty of pain points to solve which makes it fertlle ground for entrepreneurs.

So there you have it, go for it. 

Tags: Echelon 2011 , Qunar , Baidu , Airbnb , Hipmunk , Brett Henry , Daniel Quadt , GuideGecko , Hans Ebenhahn , William Bao Bean