Tuesday, July 17, 2007

TripHub Interview – another approach to group travel (and outlet for ex-Expedia staff)

UPDATE - unfortunately for the company, TripHub is no more. Quote from the TripHub Blog as to "what happen".
"There is no single, simple answer to this question. Certainly we made mistakes, and unfortunately we were impacted by factors beyond our control including the current economic environment and state of the travel industry. We came close to realizing a different outcome for our venture but, as the saying goes, close doesn't count. At the end of the day, despite a well-received, market-leading product and early success with strategic partners such as Orbitz and Alaska Airlines, we simply ran out of money to continue executing on our vision. We continue to believe there's a rich opportunity to improve the travel planning experience and, while it's no longer our destiny, we look forward to watching as others carry on down the path we helped to pave."
Original Post

I have mused in the past about the new players launching and obtaining funding with a focus on group and MICE travel. The main angle of my discussion in those earlier posts was about the challenge that a product specific site has in capturing audience attention fast enough while staying ahead of the well funded big guys and keeping costs low. This first came up in my discussion of Groople and then Asdoo. Now the latest that has come across my email box is TripHub.

While Asdoo and Groople have approached the group market by going direct to suppliers and seeking to negotiate super commissions based on volume and F&B contribution, TripHub is instead building a networking, co-ordination and information collection tool that allows informal and private of people to research, track, book and distribute information on a trip. It is part mash up (ability to bring different bits of information together in one place), part wiki/blog (different people contributing comments, information and ideas) and part affiliate and meta-search network (providing links to different providers with different booking options).

Distribution comes under its own brand and site but the main strategy for distribution is to provide white labels for partners.

The company launched in March 2006 but came to my attention recently from an number of angles. They hit the news with a white label deal with Alaska Airlines and most recently a deal with Orbitz. However it was an email exchange with VP of Marketing John Pope that helped form the basis of this post

By being a facilitator/information exchange, TripHup is giving up the supplier control (and therefore potential product margin) available to someone like Groople or Asdoo however TripHub wll have a much lower cost structure, simpler implementation and more destination coverage.

I put a few questions to John Pope, the VP Marketing for TripHub. Here is the email interview in full providing insight into the company, the product, the model and results so far.

The BOOT on the Company - I see that Paul Goodrich is on the Board and Rich Barton is an advisor. Is there anything you can tell me about VC interest in TripHub? Did either of Madrona Venture Group or Benchmark put in any money in and if so how much?

John Pope replies: Madrona Venture Group is an investor along with our founder & CEO and private individuals. Benchmark is not. Josh Herst, our founder, worked for Rich in the early days of Expedia. He hired me onto the Expedia team in 1996 and that's where we got a start together. Michael McGinn joined TripHub in March 2006 and also, coincidentally, came from Expedia and worked with Rich. We have not publicly disclosed the amount of financing raised but I can say that we are a very capital efficient company with only 6 FTE and a handful of contractors. Paul Goodrich led the round for Madrona. There are a few more details here.

The BOOT on the product- What are your thoughts about the need for a social networking element. For example do you plan to add your own social networking features (ie bringing together people of common interests that do not know each other) or will you prefer to either let people form that own trip groups with people they know or build applications into other social networks (ie Facebook)?

John Pope replies Our strategy to date has been to focus on what we call "existing social networks". Your friends, your family, etc. The majority of trips we see on TripHub are trips with friends, weddings, bachelor parties, family reunions, and membership organizations like club/teams and religious groups etc. These are not conducive to inviting random people. Certainly extending the TripHub tools into other social networks (i.e. Facebook as you suggested) is an interesting strategy and one that we're considering. In time, we do intend to expand the services to work even better for shared interest groups where trip members may not know each other but have a common bond through an interest, lifestyle, what have you. Stack ranked we are targeting friends & family groups; membership organisations; shared interest groups; and unmanaged and small business.

The BOOT on the model - In group travel, the perfect world as a planner or organiser is to earn enlarged commissions because of not only the volume generated but the likelihood of contributing to the F&B and other revenue streams of the hotel. If I read your model right you filter most of the bookings though the partner. While this keeps your operational costs low it denies you access to this enlarged commission. Do you have plans for your own booking engines and supplier deals in the future or are you happy working with just an affiliate/advertising model?

John Pope: We do not believe in re-inventing wheels. There are more than enough booking engines. So we're focused on the communication, collaboration, and sharing aspects of planning trips with others. Our low overhead does help the ROI of our affiliate/advertising model. But that's only part of the story. We have a two pronged business model. Private label fees provide an additional revenue base. Orbitz is our third private label partner, with Alaska Airlines and People to People Student Ambassador Programs (a leader in student travel - not available for public use) being the other two. We are talking to a number of others and our partnering strategy will continue to be to work with a select group of market leaders across the travel and media industries.

The BOOT on the early days - Any early metrics you can share with me such as number of groups organised or trip home pages built

John Pope: Thousands of groups have used TripHub to date. Group sizes average about 9. Of course, we expect exposure to the Orbitz customer base to significantly increase adoption. We've published some of our early learnings here:

I like the functionality of the site. A trip home page can be set up in a few easy to follow steps and it is simple for friends to add comments and content. By avoiding direct supplier negotiations they are keeping their operational costs low.

However, on the challenges front, they have what are now my regular comments on the issues that content based company have with loyalty and innovation (have discussed at length loyalty in content based businesses here, here and here).

In addition they have a challenge in early scale. As I say their monetisation model is based on advertising and affiliate commission rather than commission. That puts them in the early days in the role of traffic arbitragers. Needing to play the search and affiliate traffic generation game in a very mechanical and technical way to ensure that they can generate clicks cheaper than they can buy them. This means either being very patient or spending money.

NB - I edited a very small amount of John's response to me to reflect that I was not attaching any of the documents from our exchange and some other inconsequential elements. None of these amendments are material or even that noticeable but in the spirit of open blogging I am letting you know

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