Editor’s note: Amadeus is pleased to share a guest blog from Voyager HQ, a new concept in travel startup support systems. The global Voyager HQ community finds their home in their clubhouse in New York City where you’ll find new and emerging travel technology startups participate and work in networking events, roundtable discussions, mentoring sessions and more. Through a strategic alliance, Amadeus for Startups gives Voyager members access to our tenured team of travel experts, best-in-class technology solutions, and a community that supports travel startups.
If you watched the frenzied consolidation in the travel, tourism and hospitality industry over the last decade, you wouldn’t find much incentive for established travel companies to work with newcomer startups. Fortunately, however, the innovation ecosystem surrounding the travel industry has rapidly evolved over the last five years.
To provide context around the dynamics that startups face, three common barriers to entry include:
- Costs – Starting up in travel requires significant upfront costs to build basic connectivity before starting to build the USP or product.
- Relationships – Ventures in travel require existing relationships with suppliers and technology providers that can be extremely difficult to form.
- Funding – The industry is plagued by higher-than-normal risk investments with smaller margins, making it difficult for emerging startups to secure funding.
Given these challenges, it once made sense for the most startup support to come directly from larger corporations — those who hold the inventory — in the form of corporate venture capital models. However, this resulted in founders giving up their technology in exchange for access to the inventory. If I had been a startup founder in travel five years ago, I wouldn’t have had much of a choice but to be acquired.
Things are starting to change
The venture capital (VC) landscape has warmed up over the past few years, with $51.1 billion raised in 2016 alone, leading investors to start paying attention to travel as the next testbed for disruption. While the sentiment that “investors hate travel” persists to this day, the truth is, the landscape is far from bleak. Plenty of investors don’t hate travel, and organizations such as Travel Tech Lab and Plug and Play Tech Center are taking note.
Both of these companies belong to that crop of innovation vehicles known as accelerators. As Ian Hathaway explains in Harvard Business Review’s What Startup Accelerators Really Do: “Accelerators support early-stage, growth-driven companies through education, mentorship and financing. Startups enter accelerators for a fixed period of time, and as part of a cohort of companies. The accelerator experience is a process of intense, rapid and immersive education aimed at accelerating the lifecycle of young innovative companies, compressing years’ worth of learning-by-doing into just a few months.”
The particular idiosyncrasies of the travel industry, however, have challenged the success of this much-acclaimed model. Specifically, the fragmentation of inventory and reliance on relatively expensive technology pose high barriers to entry for startups, not to mention substantial education, supportive long-term mentorship, and significant financing.
Even Amir Amidi, Managing Partner at Plug and Play, was quoted by Skift’s Sean O’Neill in Travel Tech Startup Accelerators Learn From Early Missteps and Adjust Course: “Larger [travel] corporations have not been incentivized to work with newer players. They get away with not being innovative. So we’ve had to be much more patient about helping good startups gain traction.”
Here comes the club
While accelerators can be successful for some startups in certain cases, they are often expensive and out of reach for many young companies. At Voyager HQ, we believe there needs to be an evolution of the available startup launch vehicles. We have set out to introduce an altogether new model that brings together companies on a curated level.
We call it the club model.
Voyager HQ works with partners like Amadeus for Startups to identify specific points of interest for their business. This enables us to provide introductions to startups in our community that are developing the innovative solutions these larger companies need, lowering their cost of sourcing new vendors, and finding them high-growth, high-value customers. This all takes place while supporting the startup community as a whole!
Our hypothesis holds that the travel industry is looking for something more free-standing that brings together all the pieces in a dynamic way. The club model allows all players, big and small, new or established, to work together to solve the industry’s most pressing issues. Unlike accelerators, there is no timeline associated with club membership. Rather, our club is open to entrepreneurs, free of equity, for as long as they actively work in the travel industry. As a part of our club, founders receive access to the shared knowledge, resources and connections the community brings together, and our à la carte programming provides a customizable framework to propel ventures to the next level.
Collaboration beats acceleration
A startup club provides an accessible environment where startup founders sit alongside other founders, investors and enterprise partners, creating a collegial environment that fosters open interaction with potential stakeholders. In our view, travel doesn’t need to accelerate as much as it needs to collaborate.
Disruption is an inevitable truth in any industry, and as far as the future of travel innovation is concerned, we should aspire to have all the right players come together to collaborate on an even playing field. This gives us all the best opportunity to accelerate disruption in a useful, meaningful way. This is the reason Voyager HQ was created, and this will continue to be our mission.