In many ways, Israeli-based startup Splitty Travel feels its time has finally come, both for its “split reservations” model to be accepted into the mainstream and for its entry into Asia. “It’s interesting that the big OTAs are now playing with some of the things we have been doing for four years,” said CEO Eran Shust when I spoke with him over the phone last week.
Founded in December 2015, Splitty Travel had a mission to find a better way to book hotel deals and started looking at optimising options and cost savings for travellers.
The idea was how to split and combine multiple bookings under one reservation, a booking feature that came into mainstream light when Agoda launched its “Mix and Save” in August, creating ripples among hoteliers in Asia Pacific, some of whom feared what it would do to revenue management and how it would affect the customer experience while some welcomed it.
“Agoda launching this was a good thing, they are trying to do something similar and it puts this issue on top of the agenda, it helps us out,” said Shust.
Recalling the start, he said, “At the beginning, when we spoke with the big OTAs, they were skeptical about the potential and what could be done, and how would consumers embrace it – the multiple options such as different room types, different meal plans, different payments?”
Determined to go ahead, the founding team started Splitty Travel originally as a B2B business but then pivoted to B2C when it met with pushback from industry partners.
“We felt there was a need. It’s like flying – people are willing to undergo the inconvenience of connecting flights if it means saving money. Why wouldn’t they do that with hotels? To have a split booking to save money? You can have the first two nights with breakfast, the rest bed only. Or you can upgrade from classic room to executive suite – any kind of amenities or service, we can offer this in one single booking.
“For hotels, we try to minimise the friction point between booking and hotels and communicate directly with the reservations department. Most of the hotels feel that if this would increase occupancy and RevPar, and help them offer customized deals, it was a natural evolution of booking deals.”
Of course, there was pushback from some hoteliers. “There are always going to be mixed reactions. But the point is, we are at an age now when offers should be more personalized for specific travellers.”
Currently, Splitty claims to analyse and split over 1.5 million transactions, and covers more than 500,000 properties in 127 countries.
Having the idea and executing it are two different things though. The biggest challenge was to understand how to create those deals, said Shust. “There are millions of deals you can create by splitting reservations, the permutations are endless, then consider cancellations, bed types, meal types. How to understand what would be the best deal to create in real time without having to calculate millions of options in real time – that was the challenge.”
It took the team at least two years to create a tech solution that was sustainable and for them to have a working product. “Of course, once you develop the product, it doesn’t stand still, it’s constantly changing, more rooms, more revenue changes, more options. You need to have a continuous learning system and we have been collecting data and improving our tech for the last four years.”
The turning point came when the team felt it had a sustainable product which “happened 24 months after launch and was a crucial point for us. Then we had to learn how to sell the product.”
Its primary channel of customer acquisition is through meta search sites such as Trivago and TripAdvisor.
Started with seed money from local VCs in Israel and US investors – it was part of the Tech Stars Accelerator programme in Atlanta – the breakthrough came in April this year when it raised $6.75 million in a series A round of funding led by Fosun RZ Capital, the VC investment arm of Fosun International. 2bAngels, Techstars Ventures, Cockpit Innovation and 11-11 ventures also participated. Since founding, it’s raised a total of $10 million.
“Fosun saw the potential and we hope they will help us enter new markets like Asia, and also help us integrate our tech into customers’ platforms.”
Splitty Travel is launching a B2B solution called Splitty Plus “where every OTA can now enjoy these deals”. With the funds, it hopes to triple growth in the next 12 months through smart user acquisition and its new B2B product.
The majority of its customers now come from the US and Europe and with Fosun’s backing, it wants to scale up efforts in Asia. “Asia has increasing power in the world, it was a huge barrier for us to get in, now it’s opened up for us,” said Shust.
Asked if by offering a B2B product as well as the fact that this could be seen as a booking feature, and the giant OTAs could replicate it easily, Shust said, “My guess is while they may try, we have the ability to change and adapt quickly. This trend is probably going to grow and it will be interesting to see how the market reacts. We don’t mind to be the pioneers.”
Note: Eran Shust will be speaking at WiT Innovation Stage on October 14. Sign up here
