Tell us if you’ve heard any variation of that sentence before. In just the past five years, companies like Uber, AirBnB, and Priceline have shaken up the travel industry, revolutionizing the way consumers explore new cities.
It doesn’t stop there either, as other travel technology startups allow consumers to easily create customizable travel experiences all around the world.
The travel and tourism industry is one of the largest in the world, generating $7.5 trillion in revenue and responsible for 1 out of 11 jobs globally. With Uber raising money at an $18 billion valuation, Airbnb closing on a $850 million dollar funding round and hotel corporations trading at north of $5 billion dollars, the travel technology industry is as strong as it’s ever been.
Austin is no stranger to reaping those travel benefits as billions of dollars pour into the city from South by Southwest, ACL, the Longhorns and other conferences held throughout the year.
The city is also host to one major travel technology company, and several growing startups that are making waves in various niches of the travel technology industry. We spoke to them to get their outlook on the industry, and what the travel technology cluster is like in the Live Music Capital of the World.
HomeAway isn’t one of our three “companies to watch,” because most people in Austin Tech are already watching. Still, here’s a brief introduction to the big anchor tenant of Austin’s travel tech cluster. HomeAway was acquired by Expedia for $3.9 billion last year and has experienced some large changes at the top. In late September, founder and CEO Brian Sharples stepped down and was replaced by John Kim, a former Expedia executive.
The company has caught the ire of some homeowners for recent product changes in the market as it aims to keep competitive in a marketplace and fights of a challenge from AirBnB, whose valuation is 10 times that of the Austin vacation rental company.
HomeAway is credited with producing much of the Austin-based travel tech talent, as evidenced by the recent $4.4 million round of funding given to OnceThere, an email targeting based startup founded by former HomeAway Vice President of Corporate Development John Weimer. OnceThere also counts several former HomeAway executives among its investors and advisors.
One of Austin’s fast-rising companies in the travel technology industry is Localeur, founded in March 2013 by Joah Spearman. Spearman, the founder of Style X, the fashion segment of South by Southwest and former Director of Operations and Strategic Initiatives at Bazaarvoice, saw a need for curated online recommendations for travelers by actual locals.
The company recently raised $4.2 million from 43 investors, and hit over one million users in February of this year, but it wasn’t easy.
The metrics are different. Travel doesn’t have a daily use case.
“The metrics (in a travel technology company) are different,” Spearman said. “Travel doesn’t have a daily use case; consumers travel no more than 4-7 times per year. It’s about whether a user actually USED your product. “
For Localeur, branding is its current focus. The company wants to court millennials who aspire to travel and is in the midst of rapid expansion, as Spearman expects the company to be in 100 more cities over the next 12-16 months.
One of the biggest needs for the Austin travel technology cluster, according to Spearman, is the desire for more large business to consumer companies that produce talent and funding focused on travel companies. (Spearman recently hired a UX designer from HomeAway.) The city has traditionally had a stronger reputation in the B2B industry.
“Companies in the B2C space like Facebook, Twitter and Snapchat constantly try to out-innovate each other, whereas travel is an industry that puts weight on innovation later on than other industries. Austin could benefit from that.”
A founder can have the inspiration for a travel company anywhere. Just ask Ravi Parikh, who came up with the idea for RoverPass four years ago while driving back to Austin from Coachella. He tried to find a place to park his RV and after multiple fruitless attempts to find a campground to accommodate the vehicle, parked his RV in the parking lot of a New Mexico Wal-Mart.
Unfortunately, his idea was kept on the back burner as he worked to start his other company, MakerSquare.
After selling MakerSquare to Hack Reactor in 2015, Parikh focused on building out the RoverPass platform, and officially launched the platform in August. The company is currently serving 200 campground clients and 15,000 consumers. RoverPass is designed to be a centralized aggregator for RV reservations.
“We are essentially doing digital marketing for plenty of mom-and-pop campgrounds,” Parikh said. “It’s almost like a fulfillment platform.”
All of RoverPass’ funding has been Austin-based. The company raised a $500,000 seed round from ATX Seed Ventures in 2015, and Parikh assumes there are plenty of investors hungry for travel startups who came out of HomeAway.
“At least that’s what they theorize,” he said, but mentioned that there is always talk about a lack of venture capital funds in Austin.
Parikh is bullish on the Austin travel technology cluster. His biggest gripe is how hard it is to recruit engineers. To combat this, RoverPass is offshoring engineering to Mexico, citing the fact that Austin is a bit expensive of a city to build a tech company in.
TurnKey is listed by Datafox as one of the top companies in the vacation rental market and recently raised a $10 million dollar funding round in March from Silverton Partners and Atlos Ventures. Its co-founder and CEO, T.J. Clark, a HotWire veteran, cites Capital Factory’s Josh Baer, ready access to talent and low costs of doing business as the reasons he and co-founder John Banczak moved here.
But Clark sees a huge impediment to the growth of the travel tech cluster: the current Austin City Council.
We initially came down to Austin because the regulations on short-term rentals were innovative and seen as welcoming.
“We initially came down to Austin because the regulations on short-term rentals were innovative and seen as welcoming,” Clark said.
“The current City Council decided to enforce a ban on new rentals and not create a solution that could benefit interested parties,” he said. “This could be an industry killing regulation that could cause potential employees and companies to look elsewhere.”
Clark cites Turnkey’s mission as one focused on supporting homeowners that want to participate in the sharing economy by taking out the work involved in managing a home rental. The company creates a listing and puts it in HomeAway and AirBnB, while also overseeing repairs and guest screenings. The company will have managed over 200,000 room nights by the end of 2016.
“We have to be viewed as a community that is welcoming to technology,” Clark said. “Austin built up a great reputation, but with the mishandling of Uber and bans on short term rentals, I’ve had people all over the country tell me these decisions aren’t making sense to them.”
“Austin needs more HomeAways–billion dollar companies coming out of the ecosystem–and we need a city council that is interested in fostering an image and vitality and growth,” Clark said, “instead of one that passes shortsighted regulations that stifle economic impact.”