https://lnkd.in/g796ipK6
#Airline #Subscription #Investment #Hotel
Recently, a Barcelona-based startup company Caravelo, specializing in airline ticket revenue management, announced the completion of its Series A funding round. The funding, amounting to 3.5 million euros, was jointly invested by lead investor Samaipata, co-investor Adara Ventures, and other venture capitalists. Since its establishment in 2015, Caravelo has primarily assisted airlines in offering subscription-based travel package services through technology. The company's CEO and founder, Iñaki Uriz, stated that Caravelo has collaborated with 20 airlines, including Alaska Airlines, Wizz Air, and Volaris. The funds raised will not only enhance the technical tools for travel subscriptions but also expand their services to hotels and other sectors in the travel industry.
Currently, many companies in the travel industry adopt subscription models, like Inspirato and Costco, where only subscription members are allowed to place orders, or like Selina and Volaris, which offer unlimited services at a fixed subscription price under certain conditions. Previously, Haize Comment has discussed the Mexican low-cost airline Volaris launching an annual subscription service, travelers can pay a $400 annual subscription fee to redeem unlimited last-minute tickets to all Volaris destinations. Considering that Volaris is a corporate user of Caravelo, the products offered by Caravelo likely lean towards the latter, with a higher technical difficulty.
Haize Capital agrees with airlines taking subscription models as an alternative distribution channel for last-minute tickets. However, there are concerns regarding tech startups that regard a broad subscription model as their primary or sole product sales channel, especially when considering the Total Addressable Market (TAM). The reasons are as follows:
1. For companies of a smaller scale, implementing a subscription model can be done independently, especially for the vast majority of standalone hotels.
2. Hotels' existing loyalty programs and revenue management systems may not be subscription-based, but they might already cover the needs and user base that a subscription model targets.
3. The value of a subscription-based tech system to the buyer must ultimately satisfy: Buyer's Subscription Revenue - Caravelo's Fee + Third-party Last-minute Total Revenue (which in theory would be less than before) ≥ Original Third-party Last-minute Total Revenue.
Especially if point 3 cannot be proven true, there's no compelling reason for buyers to purchase Caravelo's tech services. And we believe that there are several preconditions that need to be met to achieve this.
----------
Director of Business Development EMEA | Driving API, Ad, and B2B Sales Growth | Building Commercial Partnerships Across DACH and CEE | Travel Tech Expert
3wGreat to see further expansion of this iconic partnership.