The 60-second video promoting “Microsoft Expedia Trip Planner 98” looks so dated viewers could be excused for expecting it to be in black and white. Remember printing out maps and driving directions? Documenting your journey with a Kodak disposable camera capable of shooting — wait for it — 15 images?

But as a kickoff for a recent Phocuswright webinar, “Tripped Up: Why Trip Planning Startups Stumble,” the old TV commercial offered a fresh insight.

“This illustrates the point that I hear most often,” Gilad Berenstein, an investor and former founder of Utrip, said during the hour-long presentation. “Whatever the newest technology is, it is that difference that’s going to allow trip-planners to succeed. … I think this makes a really important point that in 1998 they thought they had the killer technology that was going to make this possible.”

More than a quarter-century later, the travel industry is still trying to get it right, despite no lack of incentive.

An Accenture report released Tuesday shows nearly two-thirds of travel consumers feel overwhelmed by how much information they have to sift through when making a purchase, and travel entrepreneurs for decades have been pitching new solutions to the problem.

Yet the Phocuswright presentation made clear that the path to success for trip-planning startups is an uphill climb, while those that don’t shut down along the way may ultimately be knocked back by some of the industry’s biggest players — or even Google.

“There’s always a chance someone will crack the code and prove us wrong,” said Phocuswright senior manager of research and innovation Mike Coletta, who hosted the webinar and was joined by Berenstein. “I guess we’re telling you there’s a chance, even if it’s only one out of a million.”

The data tells the story.

Going back to 2005, the Phocuswright Travel Startups Interactive Database of nearly 4,700 companies has tracked about 700 involved with helping travelers find inspiration, research destination content or build itineraries for their trips. Those three categories have had the highest failure rate among all travel verticals, with about 300 recorded failures. The actual number, Coletta said, is no doubt much higher, given the challenge of proving that a company has shut down.

“Our goal is just to point out how hard it’s been,” Coletta said, “and, likely, how increasingly hard it could be to succeed here.”

The joys of doing it yourself

Coletta and Berenstein cited numerous reasons for the startups’ difficulties, starting with the increasing difficulty of just getting a new company’s name out there.

“Really, building any consumer brand is only getting more cost prohibitive,” Coletta said. “There’s just not a lot of great, free marketing opportunities.”

And travel marketing is expensive. According to research company Statista, in 2023 the top 11 publicly listed online travel players spent $8.4 billion in Google Ads, 19% more than 2022 with a forecasted growth of another 10% in 2024.

Even when consumers are familiar with a new company, it’s not easy to secure bookings or other revenue to make it pay off.

Most consumers travel infrequently, and when they do, they’re generally more interested in bargains than in where they find them. And the time between when a consumer begins researching a trip and finally books it can be so long it’s hard for any one company to convert that effort into a sale. An oft-cited 2013 Expedia study said consumers visit as many as 38 travel sites in the weeks leading up to a booking.


Most people actually enjoy trip planning. They enjoy researching the destination and things to do and things to see. It can be fun. It builds excitement, anticipation.

Mike Coletta – Phocuswright

“The bottom line,” Coletta said, “is it’s just very hard to get repeat usage that translates into any kind of significant revenue.”

“And it’s important to remember that even the largest companies in our industries, even the [online travel agencies], do not count on repeat usage without reacquisition costs,” Berenstein added. “If you look at the business model of Booking or Expedia or any of the big guys who actually sell travel, they assume that they’ll have to reacquire the customer every time because of this infrequency. So imagine having a brand that is tiny in its presence in comparison to the big guys and imagine what your reacquisition cost might be.”

One of the biggest stumbling blocks in Coletta’s view is that many travelers would rather do the work themselves.

“Most people actually enjoy trip planning,” Coletta said. “They enjoy researching the destination and things to do and things to see. It can be fun. It builds excitement, anticipation.”

He cites the discovery of “hidden gems,” perhaps buried deep or on an obscure message board as an addictive reward.

 “A successful trip that you planned yourself brings a sense of satisfaction and accomplishment,” he said, “so if [a company tries] to do too much for someone, you actually take that away.”

Too much of a good thing?

The new research from professional services company Accenture helps show just how eager consumers are for an easier way to book travel. The report found that nearly three-quarters of consumers across retail, consumer goods and travel sectors feel inundated by too much choice.

The “information overload” reported in the study — based on a survey of 19,000 consumers across 12 countries — prompted 75% of respondents to say they are bombarded by advertising, resulting in 74% abandoning purchases in the last three months of 2023.

Despite all the tools available to consumers to make informed decisions — or perhaps because of them — less than one-third of consumers (29%) said they think it takes less time and effort to make a purchase decision. More consumers said it takes more time (41%) or just as much time (30%).

The news was a little better for travel than the other sectors. Among consumers making purchases for flights, hotels and resorts and cruises, 64% said they were overwhelmed with choices, a full nine percentage points below the overall pool of respondents.

Still, the research showed the challenges consumers say they experience when deciding on booking a trip. For example, the report found that consumers feel less confident about booking a hotel than buying a car. And booking a flight was nearly as nerve-wracking as getting a mortgage.

“Planning a trip can often feel siloed, disjointed and overwhelming as consumers grapple with the huge incoming volume of content and advertising from competing travel brands and influencers,” said Emily Weiss, senior managing director and global lead of Accenture’s travel industry practice.


I’m watching what travel companies are trying to do. It’s evident that all of this focus on personalization over the years is making progress, but not enough progress. It’s just going to take time.

Emily Weiss – Accenture

Much of Accenture’s report emphasizes the need by brands to tap into the power of generative artificial intelligence to reduce the “noise” around decision-making and increase engagement, loyalty and sales. 

“Generative AI has the potential to simplify, accelerate and enrich the travel booking experience … elevating personalized recommendations in real time to help consumers feel more confident, informed and engaged,” Weiss added.

Of course, that’s exactly the goal of many of the trip-planning startups that have rushed to the market. Weiss holds out hope that trip-planning companies will find more traction on that uphill journey with the aid of generative AI.

“I’m watching what travel companies are trying to do,” she said. “It’s evident that all of this focus on personalization over the years is making progress, but not enough progress. … It’s just going to take time.”

Count Weiss among the travelers who love planning their journeys. She concedes there may be “a bit of a contradiction” between those feelings and the Accenture report’s findings, but she believes both can be true, while technology can reduce the pain points for those who now feel overwhelmed by their choices.

“For those who love that exploration phase and want to do all the research, it’s always going to be available,” she said. “But for those who are looking for a much more streamlined process, from inspiration and planning all the way through booking and even service afterwards, that’s where the technology is going to come in.

“Simplified doesn’t mean you don’t get to explore anymore, you don’t get to plan anymore,” she added. “It just means you’re not stuck in this [overabundance] of information.”

Google’s potential for the connected trip

The growing role of generative AI and other technology could prove a boost to trip-planning startups that stay small and focused on niche areas, Berenstein said. He offered examples of smaller online travel agencies that focused on journeys to Asia or hiking in the Pacific Northwest.

“There’s a real opportunity right now using Gen AI and other technology to build incredible small and medium businesses in the space,” he said. “But that will actually be more beneficial to travelers because of the unique content, because of the unique inventory they might offer.”

Just don’t expect to get big enough to compete with the established players, the experts said. Coletta said “the biggest problem of all” for the startups in the field is the prospect of competing with the likes of Expedia, Tripadvisor, Microsoft and others that are using AI in “targeting travel planning and booking with renewed zeal.”

Google, which recently rolled out an AI-powered feature that can create custom travel itineraries, would be the biggest threat of all, the experts agreed — if the search giant commits to the business of travel planning and booking.

“To me, Google already has most of the world’s information that’s accessible on the internet,” Coletta said. “They have the native integration with major travel products for real-time prices. … There’s everything they know about people that can be used for personalization. … This, to me, looks like a really formidable product for travel planning.”

Berenstein agreed.

“One of the challenges trip planners always have is connectivity. You need to build a connectivity to your calendar, to a map, to an Uber, to whatever it is you need to do to execute the trip,” he said. “Some of us refer to this as the connected trip. Well, Google has connectivity pre-built. This is why I really think this could be a killer product because it seamlessly will go into your e-mail, into your calendar, into your maps. And that kind of activity is a huge advantage they have over any type of startup doing this in this space.”

The only thing that might stop Google, Berenstein added, is Google itself.

“The question they have on the business model is a difficult one,” he said. “They’re running one of the largest ad businesses in the world. And our industry is one of the biggest spenders on Google Ads in the world. So there’s clearly a challenge they have in the business model of trying to figure out how to balance their mid-billions of dollars of revenue from advertising and travel with these travel products. So I will say that even if they don’t go into booking … [that] does not mean they’re not going to be a formidable competitor in the planning phase of trips.”

Watch the full webinar below.

Tripped Up: Why Trip Planning Startups Stumble

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *