6 reasons why your travel startup might fail

Photo credit: 贝莉儿 NG

Head to angel.co and select the “Travel” category. Every day, you will find dozens of new startups being listed under this category, but how many of them will you hear about a year from now? Any major industry event will put you with hundreds of startup founders, but it is very likely that three days later, you will remember just the ones who stood out. You don’t build the next Airbnb or Uber out of thin air. It is easy to call something disruptive, but really hard to disrupt. Travel is an insanely hard vertical for new businesses. And while we hear about many successful startups, there are many which fade away into the unknown.

Of course while factors like the team, mentors and investors play a very important role in the success of any startup, there are some other factors that add to the problems of travel industry entrepreneurs. We dug around to find reasons why some travel startups fail.

1. Volatile customer memory

You have an amazing product, something that will really simplify the life of a traveller, but will it really leave an impression that will make your customer remember you for years? The average traveller steps out 2-3 times a year for a trip, so even if you manage to catch him at time to use your services once, he or she might not remember you 6-7 months later. Unless you plan to keep spending to be visible to the right customer, you will have to find a way to remain on top of the customer’s mind.

2. Geographical diversity

Life would have been much easier for travel companies if travellers were moving between a small number of destinations, but that is not even remotely the case.

Take the example of local discovery apps. To get a large number of users, you have to cover a wider geographical region and give people options to explore. You can’t expect customers to come to you if your app is relevant for just one destination they might never visit again. If your service isn’t of use for every trip, the customers will eventually stop using it.

3. Acquisition costs

Promoting a travel startup requires more effort, and thus needs more funds. This again comes back to the previous point of geographical diversity. If you have to blow your trumpet across vast geographical regions, the bills are going to be huge.

Even an individual hotel property at a tourist destination can get guests from all over the world. But the hotelier might not be able to spread the word about it beyond few regions, because the scale of the business won’t allow for that.

4. Copycats

Unless you are building a product 10 times better than the existing product, don’t be a copycat. In some cases, there could be room for multiple players, but you will otherwise need to give users very strong reasons to ditch the established services and come to you. If you plan to go against Uber or Ola in India, you need a product that is better than any of them by miles (or more money to burn, which is highly unlikely). If that is not the case, you can save yourself the time and effort by dropping the idea.

5. Lack of validation

Are you planning to build a startup to solve a problem you and your friends face? Is that really a major problem? Are you looking at a very small sample size?

At times, founders start building their idea without validating it properly. Your friends, colleagues, family, neighbours can never be the right people to give opinions. They like you, and they won’t discourage you unless you have a really weird idea. Talk to random people, discuss it in forums like Quora, reach out to people in different geographies and put aside your passion to build when you are judging the opinions.

6. Not enough paying customers

Travel booking isn’t a quick process for many. You might have a great product, but it is no good until people are ready to pay for it.

People don’t mind their inspiration process being clumsy. We talk to our friends at the first thought of a trip. We dig through Instagram and Google images. We find ideas from a large number of sources, and we don’t mind doing that. This isn’t a major problem people will be willing to pay to solve.

As a travel startup, you should also focus on the monetization aspect, rather than just going after building a network.