The travel industry has changed drastically during the last couple of decades. Most of the changes have been inconveniences to the travelers. Fewer flights, higher costs, no amenities, extra fees for stored baggage, travelers avoiding baggage fees with backpacks, luggage and extra boarding time needs - what part of change is for the customer? Pricing.
Although fares have increased due to gas hikes, companies like Kayak and Expedia have turned traveling into an ebay-of-sorts. Having been around now for over a decade, these wholesalers are starting to look alike.
Supply always follows demand and new businesses always find a way to "do it better". A new company on the travel agency block, Options Away, is the latest wholesaler - but with a twist.
With Options Away, there is no commitment to purchase, yet the customer can hold several flights at once by paying a minor cost. Proprietary software was developed to be able to offer this advantage to their customers. Great for businesses and consumers alike, Options Away is backed by multiple patents and encourage user to use social media to share plans with family and friends before having to decided on and purchase their ticket.
We had an opportunity to meet up with the founders, Heidi and Rob Brown, to find out more about this burgeoning new business and hear their projections on the future of the travel industry.
Faleris: What inspired Options Away?
Brown: We tried to follow the classic start-up formula of combining what we know – financial products - with what we love, travel. Rob and I spent the first decade of our careers working in the financial markets in Europe during a time when lots of small airlines sprouted up offering really cheap flights.
We didn’t even live in the same nation but we were able to meet in a different country at least once a month. After we settled down, complete with mortgage and children, we would pine for the “good old days” of convenient airfares, spontaneity, and romance. Hence Options Away was born.
Faleris: How do you freeze prices without having to prepay? Do you have contracts with carriers?
Brown: This is a big part of our secret sauce. What I can say is that we have taken a number of models traditionally used in the financial markets and combined them with decades of experience in airline revenue management in order to calculate the appropriate price to hold the flight.
The other very important factor that goes into our models is the consumer behavior – many of our users purchase multiple options for a potential trip. We know that a customer will only purchase at most one outbound and one inbound flight for each trip. We build discounts into our models to encourage this behavior thus giving consumers more flexibility at a lower price while also enhancing our models.
Faleris: What happens if the held flight ends up being overbooked?
Brown: As a travel agency we have direct access to flight availability and our system constantly monitors the flights that we are holding options on, hedging with a ticket purchase if deemed necessary. In the VERY unlikely event that a flight sold out in all classes and we were not able to obtain a ticket then we offer our customers a similar flight or a $100 voucher for a flight of their choice.
Faleris: How do you market Options Away?
Brown: We have just started online ads and a social media campaign and we also are working with a PR person to help spread the word. In addition we get asked to speak at travel innovation conferences and summits because we have such an innovative new product. The industry is listening.
Faleris: Is it specific to certain airlines? Domestic, international or both?
Brown: At the moment we are only offering US Domestic flights. Canada and Mexico will be added in the coming months. We offer flights on most of the major carriers and our prices are the same as one would find on other OTA’s (online travel agencies) such as Orbitz, Kayak, etc.
Faleris: Does the customer always save money? How does that work?
Brown: It is possible, for example a customer bought a one week option for $12 and the price of the flight only increased by $8 then yes, they are out $4. This is not the kind of price fluctuation we are trying to guard against. We are trying to prevent that “oh no” feeling when the price of the flight has gone up say, $150 since the last time you checked online. In addition we see the fee as the cost of peace of mind, an insurance against a significant price increase – especially important when you are booking for multiple travelers.
Faleris: Who is your target audience?
Brown: Our target audience is split:
- single, 20-35 young professionals who are more spontaneous when it comes to travel and value choice and cool new services
- working parents, 30 - 50 (primarily mothers) who do most of the trip planning/vacation coordination and value convenience and flexibility
Our marketing tends to favor the first group, savvy, spontaneous and sexy. This speaks directly to the first demographic while appealing to the second because this is how parents want to feel when they think about themselves travelling.
Faleris: Did you bootstrap or get funding for this business?
Brown: A combination of bootstrapping and angel money to date. We are now talking to local VC’s and have a trip to the West Coast planned for October.
Faleris: How do you see this concept growing or evolving?
Brown: We are starting out as a B2C product to prove to the market that the technology works and that there is a customer demand. We are hoping to evolve to a B2B company where we would have an “option” button on the sites of the major airlines and OTA’s (online travel agencies). We are in the process with talking with airlines and some big travel technology players about forming strategic partnerships.
Faleris: What are your projections for the airline and travel industries?
Brown: The quest for new ancillary revenue will continue for the airlines. Our offering is unique in that it creates an entirely new revenue stream, which has certainly gotten the airlines’ attention. I see travel beneftting greatly from travel and social sites, however these sites often lack a clear revenue model. Our product offers the customer more than just inspiration, it offers and actual service.
Options Away is the first breakthrough company to offer a new advantage to purchasing customers. With a strong patent portfolio, it won't be easy for competitors to cut into their market share. It will be interesting to see what comes next in our travel routines.