What came to the forefront at a recent Thayer Ventures conference was that two of the startups on stage were targeting the group sector. Until recently, those panels and this industry have been dominated by companies innovating and trying to disrupt the leisure and corporate business sides of travel.
But group business is too big, lucrative and antiquated not to make it ripe for entrepreneurs and investors. According to STR, it makes up almost 40% of industry revenue. It’s healthier than ever as the AIG Effect is but a distant memory. And the booking process is time- and resource-consuming, typically led by a hotel’s sales organization and structured around requests, then proposals and negotiations.
Technology companies like Cvent and startups like Groupize and Social Tables are automating the process and making it easier for planners and hotels alike. Right now they provide tools and services for hotels to sell and manage meeting space with minimal to no costs. But as they grow market share, it seems hard to believe they won’t extract more value through increasing tolls.
It’s similar to how the OTAs grew after the turn of the century when hotels were happy to take advantage of new distribution opportunities after September 11, 2001. As these models are proven, more startups will emerge. Group business will become more transactional, and the pressure will be on hotels to get the right price to the right planner, right away.
Contributed by Patrick Bosworth, Duetto, San Francisco