My personal math has the Travel Startup success rate at lower than 1/2 of 1%.
I’m calculating over 1000 travel startups in the last decade with less than 50 ‘successful’ startups.
The rate for Big Time success is even lower maybe 1/10 of 1%
It may be too early to tell, but I essentially agree with this post on Pando Daily from a few months ago. Travel was one of the early candidates for a market that could be disrupted by the creation of the Internet. There are several very profitable companies that have fundamentally monopolized the space. In the US Market, there is Expedia (created by Microsoft in partnership with GDS’s) 1996.
Orbitz.com (created by United Airlines, Delta Air Lines, Continental Airlines & Northwest Airlines in 1999). Two of Orbitz’s founding creators no longer exist. Travelocity.com was created by Sabre (a GDS) which was wholly owned by American Airlines at the time. Priceline.com was founded by Walker Digital (a very successful company with over $300M in revenues in 1998).
So of the big 4 Online Travel Agencies in the US, none represents what we typcially consider a startup, and 2 were actuall existing players in the market just shifting from offline to online.
If you look at the last decade, there a few very successful companies but very few that started in a dorm room. Kayak was started by Paul English (an exec at Intuit) and Steve Hafner who was part of the original Orbitz team. They started with a ton of funding and industry experience.
ITA Software was essentially a true startup. It slogged along in the “Might Make it” status for 15 years before getting snatched up by Google. Granted they had > $100M in revenues and > $200M in funding for many of their final years, but with a limited supplier chain and colossal failures in attempting to scale from Shopping Engine to PSS provider there was never going to be any future other than an acquisition for ITA. Still an $800M acquisiton deal is clearly a SUCCESS.
Tripadvisor.com (11 years since founding) certainly meets the criteria.
As does Tripit.com which was acquried for $120M by Concur.
Farecompare has done very well (founded by Rick Seaney & Graeme Wallace from work they did at Hotels.com)
There’s also Farecast (founded by Oren Etzioni) purchased by Bing.
Flightcaster (Evan Konweiser, ex-kayak staff member) was purchased by NextJump. I’m not sure NextJump is successful, but I guess I count this as a good exit.
Portland based Flightstats.com (a Datalex spin-out) seems to be doing quite well.
More recently there is Gogobot (too soon to tell whether it will last, but it has strong user growth)
And of course there is star-studded Hipmunk.com
Sidestep and Swoodo, both acquired by Kayak can probably also be considered true startups that succeeded by getting acquired. ($200M for Sidestep, unknown for Swoodo). But now we’re venturing outside the US Market where there are a few other notables:
Cheapflights.com (founded in 1996)
Skyscanner (11 years in the making, started on the backs of 3 guys, 2 of whom kept their fulltime jobs for a while)
Danish born Momondo, (6 years old),
Maybe you can count Datalex (founded in 1985) but they don’t really fit the criteria of a start-up
There are many more notables like ClearTrip.com from India, but the point I’m trying to get it is this:
In just 2010-2011 Tnooz lists in excess of 300 startups in the travel space, only Gogobot and Hipmunk from that era are surviving at any significant level of success.
The era of the Travel startup may be over. The cost of creating a startup in other areas is just too low, and trying to disrupt the travel space without serious connections and money is seeming less and less likely. I’m not sure if developers will ever stop trying to tackle this space, but it’s certainly beginning to seem less and less likely that they will succeed.
Want to mention some other companies that you think qualify as ‘successful’ travel startups? Send me a note or comment and I’ll update my post.