The dual angst of the impact of online travel agencies on hotel companies as well as the challenge of finding suitable vacations for families spurred StayFaster's founders to develop the startup.
The current 10-strong team includes founders, chief executive John Hart, chief technology officer Tim Kosmider, chief service officer Humberto Chacon and chief development officer Andy Stewart.
To date the startup has benefited from a seed round of $2.6 million as well as an unspecified Series A round and it is chasing the B2C market worth $65 billion of hotel rooms purchased directly by consumers online via desktop or mobile.
StayFaster also sees a potential market in B2B2C through small and medium sized businesses.
Competition is such heavyweights as Priceline and Expedia and the company is looking to earn revenue via a commission on each booking as well as a subscription fee from hotels for business intelligence.
Q&A with CEO John Hart:
What problem does the business solve?
For consumers – they are stuck using 1990’s technology that takes too long, sacrifices their privacy, and frankly doesn’t do what they want it to do.
To make matters worse, the needs of most frequent travelers are ignored by the existing OTAs and left to TMCs (travel management companies). Yet most of the frequent travelers are not managed; they do not book through TMCs.
For hotels – existing OTAs are too expensive and commoditize their brands.
- Rewards - today frequent travelers must choose between getting their points OR searching all of the hotels. Otherwise they must jump from site to site. We accomplish all of that on one site, one window, one app.
- Power - today search functionality is based on 1990’s technology; we add natural language, special rates and the ability to search multiple locations and dates all at once.
- Privacy - as a good host, we won’t gossip about our guests, we have one of the highest standards for consumer privacy.
- Convenience - get a real hotel confirmation number, cancel with one click (no need to call or email), pay after you stay, call us or the hotel, live US-based support available 24/7.
- Lower fees – we introduce a new pricing model whereby we can lower the transaction fee for each reservation by 90%.
- Brand differentiation – we support hotel loyalty programs (22 to date), can enroll loyalty members and provide other first-in-class branding opportunities.
- Pricing intelligence –we provide hotels on demand access to the pricing of their competitive set; useful for revenue managers and asset managers.
How did the initial idea evolve and were there changes/any pivots along the way in the early stages?
- Offer platform – we provide hotels a way to increase their margins while they bypass rate parity and best price guarantees with transparent, exclusive offers to individual guests through our proprietary platform.
Discovery - we spent nearly a year researching the market and competitor products before we wrote the first line of code for a consumer product.
Validation - we built multiple MVPs to validate our key hypotheses around search capabilities.
The experience of having StayAtHand in production across 2014 and learning from our customers helped us to more fully realize the key value propositions for frequent travelers such as the one click cancellation and searching by rewards programs.
We unbundled the frequent traveler functionality from StayAtHand to create StayFaster – a highly optimized user interface for one market segment.
Why should people or companies use the business?
Superior search (points, special rates, all the brands), common sense convenience (all on one site) and peace of mind (privacy). We offer aggressive revenue sharing for organizations via corporate, affinity and affiliate relationships.
We partner with hotels to increase their profit through lower fees, drive preference through brand differentiation and provide them actionable business intelligence. We support their crown jewels – their rewards programs – and we use an agency fee structure, further enhancing their RevPAR and ADR.
What is the strategy for raising awareness and the customer/user acquisition (apart from PR)?
Pay per click – we will acquire web and mobile through social media channels (e.g. Facebook, Twitter) and search engines (e.g. Google AdWords, Bing). We already have CTRs that are more than 10x the industry average.
Premium leads – we will focus on frequent travelers (e.g. 10% travel or greater) and target their “watering holes”. This is a life time value calculation.
Revenue sharing – we will continue to offer aggressive revenue sharing for organizations, including a civic campaign for all of the small but high affinity community groups (e.g. PTA, Houses of Worship, Youth Sports Teams).
Where do you see the company in three years time and what specific challenges do you anticipate having to overcome?
If we have not already been acquired, the greatest challenges will be:
What is wrong with the travel, tourism and hospitality industry that it requires a startup like yours to help it out?
- Staying Focused
- Sustaining our culture
- Scaling internationally
We are the first team of hotel insiders to actually start an OTA. All current models threaten hotels through high fees and commoditization. The technology does not address what consumers want, especially frequent travelers. Consumers are forced to choose between having a good relationship, seeing all of the data, or visiting multiple sites. None of those are ideal solutions.
What other technology company (in or outside of travel) would you consider yourselves most closely aligned with in terms of culture and style … and why?
Evernote – an innovative, high performing team that is bringing enterprise expertise to bear on a consumer problem; security and privacy conscious, focused on culture.
Which company would be the best fit to buy your startup?
Google. We offer it domain expertise, IP, a working platform, and a business model that is highly disruptive. It could provide us capital, technology staff and data expertise.
Describe your startup in three words?
Veterans, insiders, strategic
Here's a startup up with a lot of promise or, perhaps that should that be with a lot of promises.
It's certainly bullish with ambitions to crack the hotel distribution consumer-direct market as well as the unmanaged business traveller segment. StayFaster is taking on some giants in the space - Expedia and Priceline - not to mention the host of other smaller players out there.
Removing the threat of commoditization will probably get hotels to sit up and listen while the promise of providing consumers with all the information in one place is also attractive. However, it also needs a complete change in mindset from consumers who have grown used to shopping around.
The dual approach - B2C and B2B is wise in a market that is overcrowded at one end and hampered by more traditional ways of distribution at the other.
There are challenges ahead but at least the team has a hotel distribution background and knows how the sector lives and breathes and has an understanding of what frequent travellers want.
The idea of offering business intelligence on a subscription basis is also a good one with hotel companies looking to segment and target customers on an individual basis.
The progress of StayFaster will be interesting to observe - will it gain traction in the consumer market or B2B faster? Will the promise of better search and results bring in the masses? Will hotels fighting back the high commission rates of the hotel distribution giants be willing to take a punt?