licensing its patent-pending technology to other travel companies. For example, you might imagine InsideTrip’s software could be used to make Expedia smarter, or improve the capabilities of online or traditional travel agencies.
The company’s strategy has been to build the consumer website as a proof of concept, and then start to focus on selling its technology to other travel firms (which might be the bigger revenue stream in the long run). In terms of attracting investors, Pelter subscribes to the philosophy of building something useful before taking outside capital. “Can you create value early on, and then go raise money?” he says. But that approach can be quite challenging. For example, the things he needs to do to boost Web traffic, like search engine marketing, are very expensive for a bootstrapped startup.
Pelter says he learned at least one crucial lesson from Farecast. “Make it dead simple to understand, or you’ll lose people,” he says. That lesson is reflected in InsideTrip’s consumer shopping site, which rates the quality of each flight with just one number; it also shows things like flight durations and layover times graphically, instead of just giving text descriptions. “We want to clean up how travel is displayed,” Pelter says.
So what are the long-term prospects for InsideTrip, and the online travel sector in general? The market is certainly big enough, says Henry Harteveldt, a senior travel industry analyst with Forrester Research. He estimates that online spending for leisure air travel in the U.S. alone will be nearly $45 billion this year, and will increase to almost $60 billion in 2014, if economic trends continue. “Travel is the single largest e-commerce category. There’s a huge amount of money at stake,” Harteveldt says. “In the end, if [InsideTrip] can help airlines become more profitable, then it’s a good tool.”
InsideTrip’s biggest challenge right now is “lack of awareness” by consumers, Harteveldt says, because it doesn’t have a big marketing budget. As for the licensing part of InsideTrip’s business, he says the air travel industry is not known for looking outside its own backyard for new technologies and solutions. “Too many companies I talk to give me the excuse of ‘not invented here,’” he says.
Pelter, for his part, sees a lot of potential for successful new businesses in online travel. And, not surprisingly, he is bullish on his company’s chances in a very competitive landscape. That’s partly because he says InsideTrip is the first and only travel site focused on the quality of itineraries. “As long as there’s pain and frustration in something we all go through, there will continue to be innovation,” he says.
