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Cover image for Defying common mistakes of travel startups leading to the failure

Defying common mistakes of travel startups leading to the failure

adamodigitalco profile image Adamo Digital ・4 min read

In the competitive environment, travel and tourism startups have to take on many challenges as a part of the game. Unfortunately, lots of them can not make it after just a year.

The travel market has transferred significantly from physical offices to online platforms. Travelers worldwide are likely to book flights and accommodations through their mobile devices at their own place. As a result, dozens of tech travel startups are established every day. However, travel is a challenging vertical line for new enterprises. Not many of them stand out and become successful.

State of startups in travel and tourism

Travel and tourism are continuing to grow as a multi-trillion-dollar global market. Over the last five years, there are some well-known startups in tourism, including Klook, TripActions, Sonder, Vacasa, Flixbus, or Wheels Up.

Although the travel sector's nature is cyclical, investment deals in this sector have remained relatively healthy during that period. Some sub-sectors appearing in high-profile funding rounds are in bookings, travel ticketing system, travel software development, short-term rental, hotel web, and mobile application, and activity marketplaces. According to a report by Phocuswright, $7.4 billion was invested in travel and tourism startups in 2019.

The pandemic of COVID-19 has affected every corner of the industry, as there is a massive drop in demand from travelers as well as services from copartners. However, the positive news is that at the end of 2020, the need for going out and traveling is going to rise again after a long time of lockdowns.

Reasons why startups fail in the travel industry

Reasons why startups fail

Factors such as founder teams, mentors, or investors play an essential part in all startups' success. Besides, there are still some other problems that might lead to the failure of travel industry enterprises.

1. Short of validation

Many travel startups invest in an idea without proper and comprehensive validation. It can be a brand-new idea, but does it solve a big enough problem for your customers? Most startups in the travel industry do not put aside their passion to get opinions from other people about their initial ideas.
Another reason why startups fail is the shortage of travel and tourism market knowledge. This sector and its sale cycle are complicated, requiring business owners to comprehend them before starting.

2. Not enough geographical variations

Travelers are likely to move between many destinations, not only within a country but also abroad. That will become a challenge for some travel startup companies, for example, local discovery apps or tour booking platforms.
The wider geographical region the app can cover, the larger number of users it can acquire. Do not expect travelers to frequently use the app when its information includes just two or three destinations, where they might not visit again.

It means that if you can not provide the services for almost all the trips, customers then stop using your services sooner or later.

3. Technology difficulties

Difficulties in technology should be taken into consideration regarding startup in travel and tourism. With the complexity of the database, keeping the user experience as simple as possible could become a significant and constant challenge throughout the process of product development.
Another technology-related problem comes from a lack of dedicated development team. A weak software development team might offer an uncompleted product that will make that startup fade away to the unknown.

4. Unimpressive products

Travelers go for a trip 2-3 times a year on average. Unfortunately, they use your product once does not mean that they will surely be back to your service six months later.
There are numerous new products and OTA tourism services that are introduced each year. All of them have significant advantages to help travelers to simplify their trips. That's why your product must stand out and leave a remarkable impression so that customers will remember it for years. Always find ways to keep being visible to your target customers and remain on top of their minds.
Additionally, developing a copycat of a famous existing product is never a good idea for a new travel business, even if there are rooms for multiple players in this sector. Unless your product is genuinely much better or you have much more money for promoting.

5. High acquisition costs

You might need much more effort and money to support your travel startup business's scale-up during its first years. Short of a clear budget plan, building an amazing product with abundant resources for users might make your app development cost, as well as acquisition total costs, get higher.
On the other hand, the pressure to raise revenue for showing up to investors could also distract the business's development focus.

In conclusion
In such a dynamic travel and tourism industry, maintaining and developing a business is always a huge challenge, especially for new travel companies. If your young travel brand is facing any difficulties, do share with experienced consultants of Adamo Digital - an outsourcing software development company for a more specific recommendation.

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