DealBase, the hotel discount comparison search site that spun off Silicon Valley sensation HotelTonight, is being revived by a new CEO, Clem Bason.
Bason was president for four years at Hotwire, the semi-opaque deals brand owned by Expedia Inc
Gave birth to two spin-offs
Launched in 2009, venture-backed DealBase began as a search engine for online coupons and promotion codes primarily for hotel packages. Yet its timing wasn't amazing because of the global financial meltdown.
In 2010, co-founders Sam Shank, Jared Simon and Chris Bailey, with the help of Battery Ventures, spun out the mobile-only hotel deals startup HotelTonight.
Meanwhile DealBase itself struggled. In 2010, Google's changes to its search algorithm took the wind out of site's marketing tactics, which had depended upon search engine optimization.
As the years wore on, DealBase's investors didn't add any funding to the company.
Then, late last year, Bason met with its investors, including co-founder Sam Shank (an active board member), through "a random connection". At the time, Bason had been out of Hotwire for six months.
The investors asked him what he would do with DealBase. He came up with a plan. They liked its broad outlines. In January 2014, Bason joined as CEO.
One of the first things Bason did was spin off yet another brand, DealScience.
That brand came out of what DealBase had learned regarding coupons in travel and applied it to coupons in other consumer segments, such as "flowers and gifts" and "kids and baby." The company spun out in May 2014.
The remaining DealBase team has seven full-time employees, including Bason. The team claims its website receives 2 million unique visitors a month on average.
Bason poached a couple of colleagues from Hotwire, such as Seth Strumph, the startup's new chief technology officer.
DealBase's next goal was to do work under the hood to fix the back-end technology. The site ported to a new Ruby on Rails application, among other fixes, for greater flexibility, speed, and improved analytics.
The site hadn't had a redesign since 2010 and was not functional on mobile at all. The team has updated it with a responsive design to work well across platforms.
Another project this year has been putting energy into each of its marketing channels, such as by re-thinking its Google search campaigns.
Mystery future
Bason says that the next step will be to build something new that will launch during the first quarter of 2015. The focus, at launch, will be on hotel deals for consumers, "because that's where the greatest variation in pricing is."
Says Bason:
"I'd rather not go into too much detail about what it is. But here's what is driving and causing us to create something new:
Five years ago, if you were a hotel wanting to offer opaque or semi-opaque discounts, it was Hotwire or Priceline you used. Those were your main outlets.
That limited set of options has really broadened. There are now discounts all over the place. Many are invisible to customers, or are visible only to a particular segment of customers.
This fragmentation makes it practically impossible for any one customer booking for any one destination or trip to find the best price. Consumers have this nagging sense there's always a deal they're missing.
You can point to HotelTonight, with its mobile-only deals, as an example.
Of the population searching for hotels on any given night, what percentage is checking HotelTonight? It's still tiny. And HT is the largest in its segment!"
Tnooz had some additional questions for Bason:
Are online coupons still relevant in the trade? He argues yes, saying that various online travel agencies still offer them most days of the week, such as Orbitz's Out of Here 20% off code.
Aren't the odds dauntingly long against DealBase? How can it gain traction against well-capitalized conglomerates like Expedia Inc and Priceline?
"My first response is boring but still true: Anyone building a site from the ground up has an advantage over someone who has to redesign a legacy architecture, especially if goal is being strong on new mobile platforms, which legacy brands still don't get.
It's an Innovator's Dilemma sort of thing.
Second I'd say our team has an advantage culturally in that many of us came from Hotwire. When it comes to travel deals we have insights that our rivals lack.
We have the passion for deals that used to be here in the industry five or ten years ago but that has since dissipated.
Priceline has become Booking.com at some level. Hotwire is increasingly part of Expedia Inc. The juggernauts are growing, and they've lost focus on niches.
And hotel deals is a niche and we're really passionate about it."
Isn't this a door-to-door sales business you've gotten yourself into?
"Yes. [Laughs.] You have to go door-to-door, so to speak, to get suppliers. But we have a great network of contacts to build on. I'm not worried."
Suppliers have fought hard to create "walled gardens" to be able to discount to targeted segments without launching price wars across in of their storefronts.
In light of that, why would they help DealBase if the startup plans to trawl for deals in a thorough way, letting consumers comparison-shop in something like a meta style?
"Suppliers are torn. On the one hand, they want to have the gates activated so they can discount inside and have full prices outside, whether in a Sam's Club warehouse membership model, including for travel, or a Barclay Card World Arrival's hotel discounts exclusively for cardmembers, or a mobile-only deals channel.
But the suppliers also have quotas to meet for selling more rooms or other product. There is a tension that has always existed in industry and I'm not sure that tension will ever go away, at least not anytime soon.
As a startup, we're going to have to flow wherever the trends take us. Right now it’s gated communities selling unique exclusive rates. But these brands may change tactics.
Six years ago, we had the Travelzoo email deals phenomenon. Four years years ago we had Jetsetter flash deals era.
Two years ago mobile-only deals became hot. We’re seeing other gated community blossoming now.
A couple of years from now, there will be a new retail era. So we'll just have to be wherever that is."
Some people in the trade argue that the supply of opaque and semi-opaque deals has waned. Bason, given his Hotwire background, is philosophical about it.
"Opaque and semi-opaque are still healthy and large markets. That said, anecdotally, the amount of inventory suppliers are setting aside for those channels has been shrinking."
EARLIER: Opaque bookings on the wane: Priceline, Hotwire, and a changing landscape