News | DistributionStartup pitch: FastPayHotels hopes to overhaul the hotel-agency distribution modelThis article was originally published onBy Kevin May | March 7, 2016 FastPayHotels has hit the marketplace in early 2016 with a new twist on the hotel distribution and wholesale model.Based in Spain, travel agencies use the platform to obtain rates and manage their relationship with hotels, but with a different take on how payments are fulfilled and properties handle customers.What problem does your business solve?Fastpayhotels' mission is to evolve the current relationship between hotels and travel agencies to suit the current trading environment.We offer a dynamic distribution platform that makes it easier for hotels to give the best rates and availability to travel agents. We pay all our reservations hotels on the day of booking and charge a low distribution cost and deliver no cancellations.We believe that many hotels now see wholesalers/bed banks very negatively for allowing little pricing optimisations, late payments, being expensive and constantly misusing FIT and opaque rates. We believe there is a better way to connect travel agents demand to travel agents globally.Names of founders, their management roles, and number of full-time paid staff?Alex Gisbert, CEOElodie Leunen, COO The team of 17 has a mix of experience in traditional hotel wholesaling, online marketing and travel ecommerce from the ranks of Expedia, Odigeo, TripAdvisor, Jumbo, Lowcosttravelgroup, Air France, Accor, Hilton and Amadeus.All processes are automated, including hotel on boarding. This reduces the need for a large (expensive) team and keeps our commission to hotels low.Funding arrangements?The business has raised a multi-million dollar amount from angel investors in Spain and the UK from a first and only round of funding.Revenue model?Fastpayhotels charges hotels a commission for sale. Fastpayhotels charges less that TripAdvisor Instant Book, half of what Expedia merchant model charges, and pays hotels up to 390 days before customer walks into a hotel.Fastpayhotels allows makes no contractual impositions on hotels on rates or availability to hotels.Perhaps, what is most innovative in the model is the fact that we believe the easier and more attractive we make the channel for a hotel, the more likely it is our travel agent partners will get better rates.Why do you think the pain point you’re solving is painful enough that customers are willing to pay for your solution?We are evolving the B2B distribution model. Old school wholesalers serve travel agents with static rates that are out of date and have poorer availability.If travel agents and regional OTAs continue to rely on the behemoths of the B2B space to deliver supply to their customers they will continue to lose ground to the two large global OTAs because currently these 2 have better rates and availability than travel agents have.At the same time that travel agents need to fight back with better quality inventory, hotels are fighting to get commissions and cost of sale reduced. We continually hear hotel chains around the world complaining that paying more than 20% commission is too much and having no other choice but to comply.External validation?We have over 170 combined years of experience within the travel industryMore than 280 operators are already using our softwareWe already receive rates on over 12 channel managers and extranetsOver 3,000 hotels are currently signed up to the platform in over 21 countriesWe are the fastest growing B2B distribution platform in the market in terms of hotel sign ups.What is it about the background, skills, and/or connections of your founders that make them more likely to guide your start-up to success?Elodie, our COO, is obsessive on automation, dashboards and having a KPI on anything that she can. She is part of the original team that launched the highly successful Expedia TAAP program in Europe and then globally. This allows the business to operate a much lower cost base than other in this space.Alex is a former regional director for Expedia running global hotel chain relationships and then later moved within Expedia to lead Expedia´s re entry into metasearch in Europe almost 6 years ago.Both recently left LowCostTravel Group where they were MD and COO respectively and spear headed the global roll out to from 6 to 50 countries of Lowcostbeds.Market size?Global hotel chains tell us circa 30% of their business is now based on non-refundable rates.Fastpayhotels model plays very well to unlocking the really aggressive pre paid non-refundable rates that many hotels only make available on their own sites and not to the B2B channels. So 30% of a Euro 57 billion B2B market size as a minimum.How did the initial idea evolve and were there changes/any pivots along the way?In a world where everything is de duped to a best price and the focus on conversion is paramount it just didn’t make sense to us that there were better prices out there within hotels and travel agents weren’t able to access them.We built various iterations of the model but it wasn’t until we committed to bring every single component into 21st century that it became viable.Content, connectivity, operations, financial systems, technology, customer service and strategy all have a very modern approach.What is the strategy for raising awareness and the customer/user acquisition (apart from PR)?Many people now have 2 online personalities ; a personal one and a work one. We are keen users and participants of revenue management blogs, speaking events, working with universities as well as LinkedIn and Facebook for communication and any form of digital retargeting travel agents or hotel revenue managers is key.We believe that in the same way a consumer brand can use the web to segment and target people, the same techniques can be utilised in a B2B environment.Where do you see your company in three years’ time? What specific challenges do you anticipate having to overcome?Anytime you bring in a new model to an industry you have to overcome the education and building awareness hurdle.If we do this successfully, we anticipate that within three years revenue managers will begin to optimise their rate plan set up and how they drive up return on investment in line with our model.We also know travel agents will be in an even stronger position where they can exploit better inventory to fight back to their current competitors.What is wrong with the travel, tourism and hospitality industry that it requires a startup like yours to help it out?Wrong is a strong word and we don’t see Fastpayhotels as a disruptor but more of an evolution of the model.It is time, however, that B2B distributors catches up on connectivity, the cost advantages of cloud computing, the science of hotel revenue management, B2B social media marketing and a realisation that bullying your partners, customers or suppliers is ultimately a short term play.What other technology company (in or outside of travel) would you consider yourselves most closely aligned to in terms of culture and style... and why?We think Easyjet, the airline, is very impressive. Their approach to brand and personalisation as well as the way they proudly state what they do and don’t do with a very high degree of integrity is something to aspire to.Competitors? And/or, how you stand out from what’s already on the market?We haven’t met a specialist B2B operator doing what we do but we believe anyone who also aims to deliver sub 14% commission options of distribution for hotel is a competitor.What’s the most common objection/worry/misunderstanding that you hear when you talk about your start-up, and what’s your answer to it?People worry that we just re sell other hotel suppliers or that we also have a B2C channel. We don’t. We have a very focussed and pure approach to what we want to do and sell.We also don’t see value in competing as a B2C with the very customers we are trying to serve. It amazes us that travel agents continue to buy from suppliers of hotels that are also competitors.Which company would be the best fit to buy your startup?Probably a GDS. Our model takes a hotel and makes it operate like a low cost carrier flight which is something the GDSs have a very good knowledge off: Immediate payment, low number operational touch points and all parties earn their part of the deal on day of reservation.Clearly, their distribution and payment gateways would be an obvious synergy.Describe your start-up in three words?Simple, fast and transparent.Video pitch:Here is FastPayHotels's one-minute (ish) pitch.Tnooz view:Ask any hotelier about their distribution and they will often grumble about the status quo. Pose the same question to intermediaries and you'll often get similar gripes around pricing and management of the relationship.FastPayHotels certainly has the pedigree on its founding team to understand those complexities and challenges, plus the 3,000 hotel sign-ups so far is a decent start.Challenges will obviously come by way of the speed in which it can increase its inventory of participating properties to a more substantial number that gives agencies a bigger scope when searching on behalf of customers.There is also the threat of its mechanics and model being mirrored by more established players.