We’ve seen it time and time again: Given the vast marketing resources of the major players in the hotel reservation arena, it’s extremely difficult for startups to build their brand with consumers. Building a B2B business is a little easier, but Stayful’s pivot may have come too late.
Dennis Schaal, Skift
Stayful, a four-year San Francisco-based startup specializing in enabling consumers to book boutique and independent hotels at negotiated rates, liquidation transactions, and WorldVentures Holdings of Plano, TX, has acquired its technology and what’s left of the business, Skift learned. exclusively.
The Better Business Bureau of North Central Texas describes WorldVentures as a “tiered marketing” business where individuals pay a fee to sell its travel products and, in theory, earn a commission, which can be used for future travel. The Better Business Bureau, which gives WorldVentures a C + rating, said that in 2012-2013, the vast majority of its “independent representatives” were not paid any commissions.
Companies similar to these are widely disparaged in the travel industry as card factories for falsely portraying members as travel professionals and allowing them to enjoy the benefits of travel agents, although WorldVentures has an FAQ explaining why its “leisure travel consultants” are distinct from travel agents. . He specifically explains in his FAQ why this isn’t a card mill or pyramid scheme.
WorldVentures did not respond to requests for comment regarding its plans for Stayful. The hotel reservation site, Stayful, still accepts reservations.
After Skift had advice on Stayful’s demise, Travel industry veteran and CEO Cheryl Rosner, who co-founded the startup in 2013 with Shariq Minhas, reported that WorldVentures recently acquired the technology and the company. by Stayful.
Stayful informed investors of its demise earlier this week and its hotel partners were briefed on these developments today.
Stayful had raised some $ 6 million in funding over several rounds, including a 2013 funding round of $ 2.4 million led by Canaan Partners. It is not clear whether a subset of investors got some or all of their money back from the sale of WorldVentures. Several people familiar with the situation said it was complimentary that Rosner was able to sell the assets at all.
“At least there was some sort of business there,” said one of the early investors.
With nine employees, Stayful has enabled consumers to book discounted stays at boutique and independent hotels, and complemented it last year with check-in and courier services for hotels.
On the business-to-business side, Stayful has provided free mobile check-in, mobile checkout, and concierge services during guest stays to independent and boutique hotel partners in exchange for hotels encouraging their guests, including those who have booked the hotel directly through the hotels own channels, to download the Stayful app.
In addition to providing these free services to hotels, many of which do not have their own apps, hotels could earn commissions from Stayful every time their customers book a different hotel, whether across town or across town. Across the country. and beyond, via the Stayful app.
Given the intense competition, including the marketing influence of a variety of big players among online travel agencies and metasearch engines, as well as other tech companies and even hotels offering overlapping mobile solutions those of Stayful, the startup was unable to break through with consumers.
“As you know, for a small-scale business in this space breaking into is very difficult,” said Rosner, pointing to the “changing landscape” characterized by Google prioritizing its own travel products over those of its. competitors.
Referring to the marketing efforts of large companies such as the Priceline Group, including Booking.com, and Expedia and its brands, Rosner said that “the amount of money that large companies spend on marketing daily is significantly higher than what we even collected. . “
Rosner said she was proud of her nine-member team and the technology Stayful created.
Private company WorldVentures Holdings did not respond to requests for comment on Stayful, so it is not clear what the Texas company’s plans are for the hotel reservation industry and its technology.
[Update: A WorldVentures Holdings spokeswoman, Laura Wards, said this article’s characterization of the company is “very one-sided and it also contains inaccurate information.”
“For instance, WorldVentures Holdings is the parent company for several brands, products and services, including a travel agency where the technology is to be used. WorldVentures Marketing is a direct selling company who’s product is a travel and lifestyle membership club — it is not a travel agency, nor does it procure travel.”
The WorldVentures travel agency Wards referred to, and that would likely use Stayful technology, would be Rovia.]
One observer, who has worked at various online travel companies over the years, said that Stayful’s pivot over the past year to becoming “a marketplace network for independent hoteliers made sense, but that it there was no marketing to boost the business.