Jens Wohltorf, Founder of Blacklane, explains why the future of travel technology will be determined by ‘global-first’ companies
Taxi apps, hotel booking technology and sharing-economy platforms have attracted a lot of venture capital in recent years.
This is, in part, because travel technology startups have capitalised on growing smartphone penetration and demand for a more convenient, affordable travel experience.
Investors have funded travel technology start-ups in more than 40 different countries since 2009, with more than $138 million raised in the UK, more than $96 million in Germany, and more than $81 million in France.
Venture capitalist firms are taking big gambles on travel tech start-ups and competition for getting people from A to B has never been so fierce.
For start-ups intent on getting ahead of the competition to become the market leader, their real challenge is to build a global business from day one.
‘Mobile-first’ is important in technology, but in travel technology there is arguably more to be said for being ‘global-first’.
It’s simply not enough to focus solely on the domestic market or a few neighbouring countries.
Having a limited geographic footprint won’t make travel more convenient for people looking to travel outside of these geographies and for those who are travelling further afield.
For start-ups striving to get ahead of the competition, it’s crucial to have a ‘global-first’ approach.
Travellers want the convenience of organising travel through one global service without the need to download local apps and clones when arriving at the airport.
If local apps and services are the only option, travellers will find themselves asking whether they are reliable, trustworthy or affordable.
This, combined with the inconvenience of spending time researching which local travel apps are available and having to re-enter card details for various local services, means that a global service will always trump a local one.
Travel technology start-ups with a global profile eliminate these risks and inconveniences for the modern traveller.
Business travellers today, for example, use Blacklane’s chauffeur platform because it’s truly global and they can rely on it for premium transport in cities from Berlin to Sydney.
The importance of being global-first was the reason behind Blacklane’s project to accelerate its global expansion, adding 100 cities to its network in just 100 days, finishing with Palma de Mallorca in January this year.
The rapid internationalisation of the network has already had an impact on bookings, with customers using the app in multiple cities now accounting for an increasing proportion of bookings made on the platform.
Multi-city bookings increased from 14.2% to 28.9% of total bookings as a result of the expansion project and in Europe specifically they now account for 32% of total bookings.
Rapidly building out a global travel technology service is, however, easier said than done.
Most importantly, start-ups should firstly establish the right approach to local partnerships before crossing borders.
Partnering with a disruptive tech company can often be a big risk for local businesses so it’s important to make the proposition as appealing as possible by being as transparent as possible and offering fixed rates.
Local businesses will be more interested in the opportunity if it’s based on freedom to operate, transparent prices with no surprises and planning reliability in terms of local operators knowing exactly what to expect.
Start-ups also need to be aware of cultural differences and tailor their product accordingly.
As Blacklane grew internationally, for example, the team noticed that in Asia and the Middle East, car brand and size are more important for customers, while in Europe there is a preference for understatement.
In Asia today, Blacklane’s First Class category is booked twice as often as in the US or Europe.
US customers tend to book more spontaneously, while Asian customers pre-book further in advance. Asian customers tend to book cars 24 hours in advance 20% more often than those based in the US.
Start-up teams need to have a keen eye for such cultural differences and calibrate the product to accommodate for them and monetise where possible.
While a mobile-first strategy has propelled the likes of Twitter and King to success, the same is not necessarily true of the travel technology industry.
Of course, a mobile-first approach can also be valuable, as demonstrated by HotelTonight’s success, for example.
But going global counts for so much more in a world where there is a complex range of local clones and services, each of which carries its own set of risks for the modern traveller.
Travel tech should make travelling less, not more complicated, and only truly global start-ups will make this happen.