Welcome to our May Spotlight Newsletter

This month we  shine the spotlight on TRIPBAM, one of Thayer's earliest and largest Fund II investments. Headed by founder Steve Reynolds who was named one of the top 25 most influential executives within corporate travel in 2015 - TRIPBAM is generating impressive savings and a powerful ROI for its travel management and Fortune 1000 customers.  A s the company refines its shopping and analytics services, hotel brands that were  once it's likely detractors, are now exploring the competitive potential of its offerings. 
TRIPBAM is an automated, hotel rate monitoring platform for corporate and consumer travelers. The platform captures a traveler's hotel booking, monitors changes in price at the booked hotel as well as price for a similar room at a select cluster of similar hotels and notifies the user of any potential savings. After initially focusing on the consumer market, the company now focuses exclusively on the Fortune 1000 where the average company generates more than 30,000 bookings per year. In the case of one of TRIPBAM's key customers, where hotel bookings exceed $15 million per month, the company is saving $4 to $5 m illion per year utilizing the TRIPBAM platform. In addition to the powerful ROI driven by direct, measurable savings, TRIPBAM's platform also provides travel managers with deep transparency into compliance with preferred property programs, strength of negotiated rates, usage of % off BAR discounts at preferred brands, and related policies. 

The result is a Thayer Ventures portfolio company driving more than 170,000 bookings per month through its engine and generating savings opportunities in excess of $3 million per months for its clients. The company is also on track to sustain a 100% plus growth rate with potentially game changing products in its development pipeline.
Opportunity Driven by Volatility

Over the past several decades, the travel technology value chain has evolved in a way that promotes hotel price volatility and price based competition. Software platforms including Global Distribution Systems (GDS), Central Reservation Systems (CRS) and Property Management Systems (PMS) ,  enable hotels to publish and distribute room availability and rate across a range of channels in near real-time. These channels, including Online Travel Agencies (OTA), specialty websites and brand specific websites, collectively spend billions of dollars clamoring for the traveler's attention and subsequent booking. 

The frenzied competition has, over time, accelerated pressure on individual hotels and their revenue management teams to adjust price frequently in response to changing forecasts, competitor's responses and channel volatility. The ultimate outcome of these trends is a drastic increase in volatility of room rates and complexity of rate structures coupled with traveler friendly policies that allow free cancellations; often within 24 hours of stay. Concurrent with price volatility, these forces also increase the ease and effectiveness of direct booking and drive a steady decline in compliance with corporate booking tools. The "open booking" pressure, in turn, undermines hard won corporate policies, negotiated rates and the like.
Enter Steve Reynolds

Steve founded his first company, a provider of travel systems and services to Fortune 1000 companies called CTI, in the late 1980s. He sold that company in the 1990s to American Express and after leaving the company went on to found Travel Technologies Group (TTG). Steve grew TTG to $25 million in revenue before merging it with two other companies in 2000 to become TRX. TRX employed 1,600 people in 14 countries and processed over 80% of the corporate travel transactions in the U.S. After leaving his executive position at TRX in 2003, Steve held multiple managing and consulting positions and in 2015 was named one of the top 25 most influential executives within corporate travel.

During an interview with Gabe Piccoli for his co-authored and soon to be published case study on the company, Steve commented on his early TRIPBAM days;

"We went out and bought historical hotel rates for 2012 to 2013 and we built an analytics engine to go back and look at how often, within a cluster of hotels, we observed rate fluctuations. We wanted to know if we could deliver savings. The key was to beat OTA's nonrefundable rates by tracking rates across a set of hotels on a daily basis. Results came out better than we expected. We found savings 50-70% of the time and the savings averaged around $60 per night. That's when I knew we were on to something."

Steve launched TRIPBAM and in August of 2013 Thayer Ventures lead the Series Seed investment and remains the only institutional investor with an ownership position greater than 30%.
Corporate Over Consumer

After initially focusing on the consumer market, Steve quickly pivoted to what he knows best - Corporate travel. Recognizing that corporate travel managers not only cared about overall costs but also about compliance with negotiated discounts, rate benchmarking and attachment rate vis-à-vis their employees, Steve architected his company to service these needs and adjusted his pricing strategy in order to partner with agencies and travel management companies. To date, Steve has signed 23 of the 25 top travel management companies (including several mega agencies) in addition to securing direct deals with many fortune 100 corporations.

Operating in the corporate market, the company charges a subscription fee for its core rate shopping services driven by search velocity. The company also sells cluster shopping services, data analytics and attachment programs to its clients and is building an innovative fulfillment platform that streamlines the cancel and rebooking process for large corporations.

An example of these products in action can be seen in TRIPBAM's relationship with one large corporate client This global services firm spends more than $15 million per month on hotel room nights alone. Over the years, the company has negotiated a broad range of percent off Best Available Rate (BAR) with hotels at the brand and individual property level. TRIPBAM launched its first product with this client in 2015, rate shopping single hotels after booking by a traveler. The service did not include shopping a cluster of similar hotels but rather focused on rate volatility within a booked property between the date of booking and date of stay and where the room and bed type are identical. This simple service is currently generating $300,000 to $400,000 of direct savings per month.

Following on the success of this initial product, the client asked TRIPBAM to continue to shop the hotel booked but also apply a variance on bed type (one bed type down) room type and amenity set (raise the savings required if breakfast is lost). Later, the company asked TRIPBAM to audit its percent off BAR agreements by comparing the rates generated by TRIPBAM's engine and the actual percent off BAR rates loaded in the GDS. Although the audit is still under way, early indications suggest that the company will be in position to demand more than $1 million in credit for lack of compliance over the past three months alone. Steve expects these two services in addition to cluster shopping, when and if turned on by the company, to generate more than $10 million per year in savings for North American travelers. The potential ROI on a global basis is even more staggering.
Value for All

Notwithstanding the powerful ROI for TRIPBAM's customers, the platform has proven controversial. To many, TRIPBAM's shopping engine is nothing more than a rate scraping assault meant to drive ADR down. Yet today, several hotel brands are actually piloting projects with TRIPBAM, seeing the potential to harvest advantage where others see a threat. One prominent global brand is contemplating using TRIPBAM to provide its loyalty customers with a best price guarantee service that automatically shops its own hotel after initial booking. This way the loyal traveler can be assured he or she will pay the lowest rate available between their booking date and stay date. 

Others are looking at TRIPBAM's data analytics in order to identify unit level compliance with last room available (LRA) corporate agreements and to identify individual hotels that practice extreme rate volatility. The goal in both cases being to fortify the brands large corporate agreements and reduce price volatility. A third is piloting the usage of TRIPBAM to identify loyal customers booked at competing brands. The system will create a cluster of preferred hotels only and when a lower rate is found, notify customers for potential conversion.

At the end of the day, technology is disruptive by its own nature and the dislocating forces it brings to industries like travel tend to reveal inefficiency and, therefore, promote positive evolution. The journey from the opaque practices of yesterday's reservation call centers to the extreme transparency of today's real time connected world has not been easy and has exposed the underdeveloped nature of the hotel industries   pricing practices TRIPBAM's platform enables participants, operating companies and travelers alike, to filter through the chaos and ultimately make better decisions. Just like polarized glass cuts through the sun's glare, TRIPBAM's platform cuts through the volatility and uncertainty of hotel pricing - enabling all participants to focus on the true drivers of value.
             We hope you've enjoyed this issue and        
    look forward to your comments and questions!
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