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April 2017, San Francisco
Rome2rio: a very successful ‘cockroach’
To build a successful consumer facing travel brand you really to have to be ‘small and indestructible’. Aussie-based Rome2rio is proving that it has what it takes. Sally White reports
Amazingly the hectic billion-dollar M&A activities of the mega-OTAs have failed to suck the energy from the online travel start-up scene. Browsing through Crunchbase, Dealroom, et al, shows just how much is going on at the lower levels of the marketplace. Top take-overs may grab headlines, but start-up fundings abound.
Conditions are right. There are trillions of dollars swishing through international markets in search of homes and the investment stories are good. Rapid growth continues in both emerging economies’ mobile internet base and in customer numbers among their fast-growing, travel-hungry middle classes.
Top take-overs may grab headlines, but start-up fundings abound
Start-up fundings featured already this year on Dealroom’s site include the UK’s OTA Blue Bay which raised $6.5 million, while $0.5million went to German event travel group Travis. Venture capital backing was won by Denmark’s Drop Local, which finds places to leave your luggage, there was $5.3m for airline ticket OTA OneTwoTrip, €8 million for French B2B hotel network group Osmozis, €18 million for German cruise OTA Dreamlines and €0.8 million for French parking slot finder Lolo.
Most of these are looking to do global business. Even more start-ups can be found on Crunchbase. At the grassroots, business is thriving.
One such firm from down-under is Melbourne-based Rome2rio, started by two ex-Microsoft engineers back in 2011 and still growing, in spite of tough competition. Viator founder Rod Cuthbert says the firm offers a global search engine to help a traveller find the way from A to Z. It was described back then as basically Google Maps with an added layer of multi-modal travel options, and that is basically still the case. Cuthbert will be sharing a panel with former Kayak exec Brian Harniman - now MD of Brand New Matter Inc. - at EyeforTravel’s upcoming European Summit in May on the subject of Google, partnerships or going direct?
Inspired by a dilemma
The founders said they were inspired by the European dilemma of plane-versus-train. They aimed to capitalise on their idea through taking commissions from flight sales rather than ads.
“We wanted to do from the airport to where you want to go; no one goes on holiday at an airport,” co-founder Michael Cameron told the press at the time. Users were instructed to enter their starting point and destination in Rome2rio’s map-based UI. Then Rome2rio searched through flights, ferries, trains and driving routes to show transportation options for every leg of the trip.
For example, for a trip from San Francisco to Athens, Greece, Rome2rio shows the drive from home to the airport, a flight directly to Athens, and then a drive directly from the airport into Athens. Plus, it shows the price, optional routes and those prices and booking details. Of course, it caught on!
By 2015 Rome2rio was receiving six million visitors a month and decided to end its white label programme for third parties. “This is what most travel start-ups dream of,” says EyeforTravel editor Pamela Whitby. “Usually it’s the other way round. Many founders start by believing they are meeting a consumer need based on a blip in their own travel experience, and end by trying to make some money launching a white label product.”
Usually founders start by believing they are meeting a consumer need based on a blip in their own travel experience, and end by trying to make some money launching a white label product
Pamela Whitby, Editor, EyeforTravel
Not so for Rome2rio, where the success of its consumer-facing product had taken all its brand development resources! At that stage, it said, there were 400 brands which were active users of its white label service. Instead, partners were asked to switch to its existing API-based tool to obtain routes and fares from multiple transportation sources.
Well, it worked and Rome2rio has been growing since, collecting awards along the way. It cites thetransport data searched by Rome2rio as including 612,610 bus routes via 3,328 bus operators, 100,167 train lines via 364 train operators, 44,833 flight paths via 670 airlines and 5,628 ferries via 531 ferry operators! The current total posted on its website is 4,800 transport operators in over 158 countries.
Last year it reported that its US business was growing fast, with 1.6 million visits - meaning that traffic in May was up 53% on the same period a year before. Cuthbert says that for the year as a whole, “we expect 110 million visitors worldwide, with an estimated 20 million of those from the US”.
US: the travails of travel
Yet the US is not an easy market for the likes of Rome2rio: “US travellers naturally look at flight and drive options first, because the country is so well served by airlines, airports, and road networks. Bus travel has traditionally been thought of in pretty negative terms; rail networks are patchy — there’s no high-speed rail (what the rest of the world would call high-speed, anyway); and ride-sharing hasn’t taken off yet, maybe for cultural reasons,” Cuthbert says.
Then, the competition in such a vast market as the US is inevitably getting tough. eDreams ODIGEO’s Liligo offers multimodal options that include flights, car rentals, buses, and rail. Since 2013, Google Maps in the US has multimodal search offerings (helping introduce the concept to US consumers.) In Europe, too, competition is growing - for example, Liligo also offers car-pooling with a multimodal product.
Rome2rio’s founders are intensely proud of the fact that Australia’s lack of local start-up capital for anything but mining has not stopped its growth. They raised just A$1.6 million from angel investors in Melbourne and abroad. By 2016, five years after launch, the company was profitable with a team of 16.
Rather than raise further capital, we have chosen to grow the business organically with revenue
Michael Cameron, Co-Founder, Rome2rio
“Rather than raise further capital, we have chosen to grow the business organically with revenue," co-founder Michael Cameron told The Australian. “Lack of capital has not stopped many Aussie entrepreneurs,” he continued, “and there have been some major success stories in the last few years.”
He added: “Prominent Silicon Valley investor and mentor Paul Graham describes self-funded, profitable start-ups as cockroaches. They are small but indestructible. Australia’s harsh capital environment has been the perfect breeding ground for world class ‘cockroach’ start-ups.”
Such as Rome2rio!
Join us at the EyeforTravel Europe Summit (May 3-4) to hear more from Rod Cuthbert, founder of Rome2Rio and Brian Harniman, MD Brand New Matter Inc. Harniman will also be speaking at the San Francisco Summit (April 24-25) and features in an exclusive EyeforTravel.com interview next week with CarTrawler CTO Bob Healy and Del Ross, a senior advisor to McKinsey