I’ve sat through, and sometimes judged, many pitch competitions in the travel industry over the last few years.
My role as a judge has always been as an industry subject matter expert, not an investor or potential acquirer.
For example, someone who understands the operations and revenue side of a business, giving those pitching the chance to hear feedback from the people within travel companies who would actually have to use or manage whatever the pitched product or service.
I would evaluate or give feedback about costs or understand its impact on the guest or passenger or actual user.
And that meant what I looked for from a startup or from a company with a new product was completely different from what the investors were looking for.
I was looking for products that would drive real business for travel companies:
- That weren’t copycats of an existing product (please, not another OTA)
- That wouldn’t be a nightmare from an operations standpoint
- That wouldn’t undermine or erode the brand, that wouldn’t detract from the guest/pax experience at any point in the travel cycle
- That wouldn’t take a data scientist (or two) to make it usable
- That would make money for the travel company
Because that’s what matters in the real travel world – a product or service has to make money for the travel company (not just for the investors).
The investors cared about potential returns on their investment dollars, but I cared about how the product actually worked and the value it drove for the travel company.
That weird dichotomy sometimes meant we judges operated at cross-purposes (although it made for some really fun conversations during the judging discussions), so it was interesting to see the pitch session at the recent Revenue Strategy Summit in New York, hosted by Duetto and Kalibri Labs.
They didn’t call it a pitch, and it wasn’t in the conventional sense we’ve come to expect.
They called it a panel – The Shifting Landscape: New Players, New Models – but it was, at its heart, a pitch.
Three companies, including HotelTonight, tripBAM and Nor1 (disclosure: I am the vice president of strategic relationships for Nor1) each presented their model, then listened while a panel discussed the model, then had the opportunity to address the panelist’s comments.
The presenting companies’ job was to convince the panel their product would in fact drive value for the panelist’s companies.
There were no winners, just a lot of discussion about the value of the products.
And here was the thing – the panelists/judges were all travel industry people – hospitality owners, operators and brands including LaSalle Hotel Properties, Chartres Lodging Group, Woodside Hotels, and La Quinta Inns and Suites – not investors.
So what they listened for during the pitches was what I listen for when I’m a judge, and their questions dove down into operational and revenue implications of each product.
And the questions were good ones:
- How does this product allow me to better utilize inventory?
- Will this have an impact on rate parity?
- How does this product interoperate with my existing products?
- What’s the ‘return on effort’ of the product for the hospitality company?
- Do the revenue goals of the product conflict with the revenue goals of the hospitality company?
- How will this product strengthen my relationship with my guest?
- Does the product strengthen my brand, or dilute it?
- How do I measure success?
- What’s the return on investment?
Successful products in the travel industry are those that create a virtuous cycle – the guest/pax benefits, the travel provider benefits and the investor benefits.
But the challenges of the virtuous cycle are that it can generally only be seen in hindsight, that travel providers aren’t always capable of evaluating a company’s market value and that investors can’t see the operational and revenue impact of the product at the provider level.
While there’s nothing wrong with investors pounding away on companies to test their structure, model and financials, it is much better to be free of those conversations, focusing directly on the implications and benefits of these products for the travel companies.
More, please!
NB:Rain cash image via Shutterstock.