Phocuswright 2015: Travel’s big spenders are unsustainable, says Priceline’s Fogel

The way some travel firms are spending the money they have raised from investors cannot be sustained, one of travel’s shrewdest investors told the Phocuswright conference in Florida.

The way some travel firms are spending the money they have raised from investors cannot be sustained, one of travel’s shrewdest investors told the Phocuswright conference in Florida.

Glen Fogel, Priceline Group head of worldwide planning and strategy, said young entrepreneurs today have not known a time when investment has been hard to come by.

“The issue is there’s going to be a time when you cannot raise money and so it’s important you are not wasting money given to you.

“The way people are spending right now, I’m amazed. That’s something that cannot be sustained. There has got to be more money coming in at the top.

Joel Cutler, general catalyst partners founder, agreed saying: “Treat today’s capital like it’s the last capital you are going to raise.”

Fogel did not express alarm at the sort of valuations that are being talked about in travel for companies that are still relatively young.

But he said it is surprising how many people pitch the same ideas as an already existing company. “It’s surprising but also disappointing,” he said.

“They seem to have spent a lot of time putting together a product and yet they seem to have missed the point that to really create something successful differentiation is an important factor.”

Cutler said this was particularly true when a market is seeing a “platform shift”, which is happening right now due to the rise of mobile.

“It’s an opportunity to do some crazy stuff, particularly in customer experience. There’s really an opportunity. There’s plenty of capital to put behind ideas that are different,” he said.

Cutler advised against paying too much attention to company valuations, saying they go up and down, but the important thing was building great companies.

“There’s always a public market for great companies that earn consistently. We should pay more attention to a business getting a little better every day.”

Fogel said some of the over hyped valuations could be down to the fact that some firms are private and others are public.

“A private company can spend ridiculously. No one cares what their bottom line is. God forbid we did something like that.

“There is a dichotomy between those two different areas which explains a little the difference in valuations.”