TLabs Showcase on travel startups featuring Canada-based Backbid, an auction platform to allow consumers to bid on unwanted hotel reservations.
Who and what are you (including personnel and backgrounds)?
Backbid is an online booking site that enables travelers to post their existing hotel reservation and accept bids from alternative hotel properties, in order to find the best value for their upcoming stay.
Backbid allows hotels to see which travelers are coming to their market, how much they are willing to pay and what their travel preferences are because Backbid travelers already have a hotel reservation, confirming their intention to travel.
With this insider knowledge, hotels are able to create personalized offers and deliver them directly to consumers, enticing them to book with their property and abandon their original reservation.
Backbid is based in Montreal, Canada and the founding partners have extensive experience in the hospitality, software and technology space.
What financial support did you have to launch the business?
Backbid launched with a combination of self-funding and private capital.
What problem are you trying to solve?
We are frequent travelers and we were frustrated with all the work that goes into finding the best rate for a hotel stay. Often we would cancel and rebook the same reservation several times as prices fluctuated, and in the end, we weren't even sure if we'd booked the best deal.
From a consumer perspective, Backbid alleviates the time, effort and uncertainty of finding the best price and value for their upcoming hotel stay.
For hotels, Backbid provides visibility to guests coming into their market, enabling them to target new business from confirmed travelers.
Backbid also enables hotels to compete for business based on value, rather than just on price, by offering value-added services as part of the personalized pricing model.
As well as eliminating the need for discounting to increase business, Backbid eliminates the issues of rate parity, page placement and LRA allotment associated with traditional OTA sites.
Describe the business, core products and services?
The site allows hotels to see guests coming to their market, when they are coming, where they are staying and how much they are paying. Furthermore, hotels gain insight into the travel profile and preferences of these guests.
With this insider knowledge, hotels are able to create personalized offers and deliver them directly to consumers, enticing them to book with their property.
Who are your key customers and users at launch?
We are targeting online bookers who are savvy and motivated to explore many online channels to get the best hotel deal.
We provide these consumers with a no-risk alternative to lengthy and frustrating online searches for hotel deals because if they aren’t able to find a better price/value on their upcoming hotel stay, they are able to keep their current reservation and travel knowing that they received the best deal available.
Did you have customers validate your idea before investors?
From the beginning, we have worked closely with advisory boards comprised of independent and chain hotel representatives to ensure that our model would address many of the pain points that hoteliers were experiencing with current online channels.
What is the business AND revenue model, strategy for profitability?
There are no fees for consumers using the site. Backbid is commission-based, offering hotels a competitively priced channel that makes moving inventory simple and efficient.
SWOT analysis – strengths, weaknesses, opportunities and threats?
Strengths:
- Because hotels have insider knowledge about guests coming to their market, Backbid offers are a function of the highest rate/value that can close the sale, not the lowest possible rate.
Weakness:
- Potential confusion of hotels and consumers to understand the differences and competitive advantages of the site compared to other OTAs, especially since we are a new brand in a crowded marketplace.
Opportunities:
- Savvy hoteliers have now recognized that discounting is a good way to increase bookings but that it works against the hotel in the long run as it diminishes the property’s brand and decreases RevPAR. Hoteliers are looking for a way to increase online bookings without discounting.
- Traditional OTAs offer many problems for hoteliers, including rate parity agreements and page placement issues.
Threats:
- Increase in non-cancellable bookings, which will require consumers to pay cancellation fees when using the Backbid site.
Who advised you your idea isn't going to be successful and why didn't you listen to them?Initially, our model has been perceived as bold and disruptive by some long-time hoteliers; however, in many of these cases, the hoteliers that previously challenged the model have been asking to be kept abreast of our progression indicating they do recognize the potential we offer.
What is your success metric 12 months from now?
For us, success would mean for the site to have conversion rates that are above the current industry average.
Backbid travelers are experienced travelers and we are arming our hotel partners with essential tools to precisely target these travelers in a personalized and automated manner, increasing opportunities for online bookings and maximizing RevPAR. BACKBID represents a win/win scenario for both travelers and hotels.
NB: TLabs Showcase is part of the wider TLabs project from Tnooz.