Travel & Tourism Technology Trends

The founder of Patagonia, Yvon Chouinard has a saying that goes something like this, “place one-foot forward and if it feels good take another step.” I have been taking several steps forward for the past three months developing an online travel business called BarHarborDeals.com. My vision was to build an OTA (Online Travel Agency) for the world-renowned destination of Bar Harbor Maine, home to Acadia National Park, the 10^th most visited national park in the U.S. Over 2 million people visit Bar Harbor every summer from June thru October and an online reservation service for the destination does not exist. What you’ll read here is my online travel business startup story. This is an insiders view of how I went about starting an online travel business from the ground up.

As I stated in part one of this article, I was successful in acquiring 5 destination activity provider contracts but was not successful in acquiring the lodging inventory needed to make this business a viable opportunity. I did have wholesale lodging contracts with 2 hotels but felt I needed at least 5 hotels to succeed in the first season. Last week I decided to pull the plug and shut down the business and website. This was a very difficult decision for me but it was the prudent and right decision. I had invested less than to $2,000 and 3 months of my time in the development of the business.

One of the hardest things about being an entrepreneur is knowing when to keep going forward in the face of adversity and not to quit. As I’ve matured as a travel industry entrepreneur (19 years now), I have become smarter and have gained enough experience to know when to be stubborn and dig in your heels and when to take out the white flag and waive it high in the air. Waiving the white flag is a very tough decision for any entrepreneur. As an eternal optimist, I always believe I will “figure it out,” or I think I am not seeing something that is present and sooner or later I will uncover the missing component and then things will take off. My two core individual strengths are a quick start ability and adaptability. I believe I achieve due to my adaptability skills and tenacity.

Let’s take a look at my vision for the business, the research I conducted, the progress I made and what I learned. This can be a learning lesson for you and a view into the inside of the building of a home based online travel business. In my free report called SECRETS of the online travel business, I talk about strategies I used to build a successful home-based travel business that I then sold in 2007. Many of the strategies in the report I incorporated into this startup and I’ll show you how below.

My goal for BarHarborDeals.com was to build a $1M (sales) company in 4 years. My goal in the first year was $150,000 in sales with a net profit of $35,000. We would sell customized vacation packages to families and couples, targeting golfers, kayakers, and people visiting Acadia National Park. Our online travel service would enable people to buy lodging deals then add in activities like whale watching, golf and other tours, creating customized vacations online.

In the home based online travel business, I believe it all starts with the business name and the website URL. I named the business BarHarborDeals.com. The keyword phrase “Bar Harbor Deals” was the 6^th most trafficked keyword search term phrase for “Bar Harbor.” The phrase “Bar Harbor Deals” is searched 18,200 times globally each month. “Bar Harbor” is searched 823,000 times globally each month. Bar Harbor is a major U.S and International destination. I acquired the domain names barharbordeals.com and staybarharbor.com as a backup domain. In less than 2 months barharbordeals.com acquired the #1 search listing position on the first page at Yahoo, the #5 search listing position at Bing and we varied from around #40-#100 at Google.

Right from the early stages I was calling upon the hotels, motels and was setting appointments to meet with many of the lodging suppliers in person. I’ve found that you can generally build wholesale lodging contracts and activity contracts with businesses by just calling them on the phone, then redirecting them to view your website, so they see that your business is for real and that you are in startup mode. In this case the website was not designed yet, so I had a placeholder on the home page.

My first call was to one of the more prestigious hotels, a 4-star property in downtown Bar Harbor. We talked and after about 2-weeks of going back and forth I signed a really strong wholesale lodging contract with favorable terms and rates. The hotel owned a sister property that was more economy based so I picked up the second property as well. In the first month I had 2 hotels contracted. I should note here again if you missed it earlier, that I was only able to contract with 2 hotels over a 3-month pursuit. It’s funny how things work as I bagged 2 hotels in my very first calls. I had success and momentum very early, so I took my next steps forward.

Prior to contacting the hotels I wrote a 1-page business infrastructure systems outline and a 3-page sales and marketing plan. The business systems outline was my guide for building and implementing the pre-launch components to get the business up and running. The sales and marketing plan would be implemented after the business was capable of conducting business transactions or ready to take reservations and bookings online.

I had a killer web design made. It was a straight HTML design but very attractive. Our goal was to keep the website simple and focused. Our objective was to sell pre-packaged vacations and customized packages through the trip quote online booking system. I setup a toll free 800# and virtual office with Phone.com to take reservations and customer inquiries.

I setup a merchant account with Chase Payment Tech and an online payment gateway with Authorize.net to accept credit cards online through the website. I opened a bank account with my local bank and incorporated the business as a LLC in the state of Maine.

I contracted with Reslogic.com to run the online travel software, booking engine and trip quote system for the website. The training with Reslogic was long and their system was a little overwhelming in the beginning as they are currently transitioning from an older version to a newer more web-based version and I seemed to be caught right in the middle of the transition. Reslogic has great software and I would recommend their software platform to any business looking to build an OTA, Tour operator business or large online travel business.

After acquiring the 2 favorable hotel contracts I moved quickly to contacting the 2 large hotel groups that control a combined 17 lodging properties or about 65% of the inventory in Bar Harbor. I new this would be difficult but I figured I could pick up a few of each of their hotels. Over a months time I soon found out why many business people call this upscale destination a “tough place to do business.” One of the hotel groups basically just told me to go away while the other invited me to talk and I was able to make my pitch. This hotel group was very professional and I felt I could really build a long-term relationship with their properties. I felt that if we did a deal with just three of their hotels that I would have 5 in total and that would be enough inventory and diversity in properties to succeed in the first season.

In the end the rates proposed to me by the hotel group just didn’t make any financial sense. The bottom line was that the hotels just didn’t need any help selling their rooms.

Just like that, I lost access to 65% of the marketable inventory. The other 40% of the lodging properties in Bar Harbor are mom and pops and B&Bs. The 2 large hotel groups controlled the majority of the properties I wanted to have as inventory. This was a real blow and for the first time in this startup I felt doubt. I decided to dig in and try to find 2 to 3 other hotels.

The positives were that I had successfully acquired 5 activity provider contracts that included a whale watching tour operator, a National Park Tour bus operator, a Sea Kayaking company, a museum and a golf course. The activity providers were gung hoe and I felt I could sign at least 5 more activity providers fairly easily.

After another 2-3 weeks of no progress with the other hotels and lodging properties I stopped my pursuit and decided it was time to re-evaluate everything. I knew in my heart it was over. My vision and first season financial goals were not attainable. I lastly looked at changing the website to a strictly activity provider based travel website. Selling activity providers tours and trips online at a discounted price but decided ultimately this wasn’t the direction I wanted to go and I felt that it would ultimately be very difficult to market and sell.

What you can learn.

1. When you take a new step forward in your startup process and it “doesn’t feel right,” listen to your instincts.
2. Establishing and sticking to a pre-launch budget limits possible losses. By allocating a set amount of capital (cash) to the startup phase, I forced myself to spend money on the necessary components for the business to run within a set amount of capital. I allocated cash to the essential business startup costs I discussed earlier. The pre-launch budget forced me to spend money on the infrastructure to run the website at launch and to build supplier relations. Money spent was allocated to the necessary items to enable the first transaction or sale to be made in the business. I did not spend any money on marketing or advertising.
3. Without travel products to package and resell you have no products. I can make a really good argument that I could have saved time and money by first contracting with all the hotel suppliers before I started building the business. I believe I could have saved probably 30-45 days of time and half of the startup costs but if I had to do it again I don’t think I would change the process or steps I took.
4. I licensed the online travel software on a month-to-month basis. This kept my costs down and I spent 2 months on software fees. Web based software is the way to go when launching a new online travel company.
5. You’ll never succeed if you don’t try. I’ve started 5 companies over a 20-year span. 3 have succeeded and 2 have failed. I have sold 2 of the 3 successes. I have never worked for anyone else and have been self employed my entire life. I will most likely start 5 more companies before my entrepreneurial days are over.

I have no regrets on trying to build an Expedia type business model for the Bar Harbor market. If an opportunity like that comes around again I’d take the chance in a heartbeat. If you are thinking about starting an online travel business, take your first steps by conducting your research, making a plan and writing it down. Your plan doesn’t need to be lengthy it just needs to be focused. Everything starts with a written plan, a guide to follow as you go forward. Like life, as in business, as you go forward you need to adapt and make decisions. Don’t spend your life thinking and dreaming. Decide today to take your first steps forward to building your online travel business. Like Yvon Chouinard the founder of the organic clothing company Patagonia says, if your first steps feel good, take another step.

Matt Zito is an entrepreneur and strategist helping small businesses to start and scale-up their online travel businesses.

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