NexTravel launches out of Y Combinator to make booking corporate travel easier and less expensive

By Michael Carney , written on February 24, 2015

From The News Desk

For most business people, the concept of effortless, cost-effective travel has more in common with mythical creatures like unicorns than it does the realities of everyday life.

The truth is that while the travel industry was massively disrupted by technology two decades ago, most of the innovation to date has focused on the consumer side of the business, and even there very little has changed from an end-user perspective since the early days of Expedia, Priceline, and Kayak. Most business travel today is still booked manually using many of the same tools employees use to book their family vacations, and when it's not, the tools available are generally expensive and cumbersome. It's a giant market just begging for some entrepreneurial TLC

NexTravel (formerly Jetway) is a business travel platform launching today out of Y Combinator to help companies save time and money on travel. Co-founded by Wen-Wen Lam (CEO), an early marketing manager at LinkedIn, and Alexey Pakhomov (CTO), a former Microsoft developer, the company offers software tools to help managers establish and monitor travel policies, while offering employees the easiest possible way to find and book the best available flights, hotels, and rental cars, prioritizing either price or rewards at the users’ preference.

“This really makes sense for any company that has 10 or more employees traveling regularly, and which spends $100,000 or more per year on travel,” Lam says. “At $250,000 per year, it’s a no brainer.”

NexTravel has been live in beta for several month leading up to and during its time within Y Combinator’s (YC) Winter 2015 class. The company currently works with dozens of boutique consulting firms, law firms, investment firms, and other manner or road warriors. Today, for the first time, the platform is available for open enrollment. NexTravel, which is based in New York, raised an undisclosed sum of angel funding prior to entering YC.

Even with just a handful of early client companies, NexTravel’s aggregate travel volume begins to look a lot like a giant corporation to airlines, hotels, and rental car companies. As a result of this scale, the company is able to offer its members otherwise inaccessible discounts, that can be as deep as 40 percent off business class flights, hotels, and cars, according to Lam. The company can book all major travel brands like Starwood, Mariott, Hilton, Delta, American Airlines, United, Virgin America, Hertz, Enterprise, Avis, and on, and on. NexTravel is free to use and the company generates revenue on booking commissions, which it collects through a partnership with an undisclosed travel agency.

NexTravel also offers customized rewards programs based on individual each company’s and traveler’s travel patterns and preferences, allowing users to accrue rewards more quickly than traditional loyalty programs. Because of its collective scale, NexTravel is also able to offer its members more flexible cancellation policies than are otherwise available to most businesses.

The opportunity to add value in the business travel space is enormous. But equally undeniable is that this plucky little startup is operating at the behest of a number of giants, all with their own entrenched interests and resistances to change. Namely, each individual airline and hotelier has the power to remove its inventory from NexTravel’s platform, the way Southwest and Virgin America no longer participate in third-party booking and discovery platforms like Kayak and Expedia. This means that while NexTravel can promote savings and simplicity, it will need to be careful to toe the line of what the incumbent suppliers will tolerate.

This is a similar dilemma to the one that TrueCar faced as it sought to deliver transparency and savings to the auto buying process. After nearly a decade of building out its nationwide network of more than 6,000 partner dealers, the company faced a near-fatal revolt, losing half these partners overnight and badly threatening the survival of its platform. TrueCar survived that period and eventually had a successful IPO two years later, but only after shifting its approach to work in conjunction with, that than in opposition to manufacturers and dealers. The value TrueCar promised to consumers changed very little, but the messaging and posture of that offering shifted 180.

“We’ll find out tomorrow,” Lam says of her expectations of travel industry’s response to NexTravel. With only a small number of beta customers on the platform to date, the company has largely managed to fly under the radar of the travel giants. That will likely end tomorrow. “This is a bit of a test,” Lam adds.

Going forward, the real value of NexTravel will likely be less the cost savings, and more the speed and organizational benefits of its travel management platform. And it’s on this side of the house that the company is less directly competitive with and more complementary to airlines and hotels. Lam envisions NexTravel adding a SaaS component to its platform, charging for premium features like integration with other software platforms like expense management, payroll, and HR.

NexTravel isn’t the only upstart tackling this massive opportunity. Concur (acquired by SAP in September 2014) is likely the most widely-known technology platform in the space and offers corporations a subscription travel booking and expense management platform. Fellow YC alumni Rocketrip borrows a gamification approach employed internally at Google to help corporations save money on travel, and is also available on subscription. Melbourne-based Locomote, which is taking a more similar travel management approach, recently sold a 49 percent stake in its three-year-old business to corporate travel giant Travelport.

NexTravel stands out thanks to its status as a free platform (at the moment) and its focus on offering big company benefits to small- and medium-sized businesses. Whether that’s enough of a differentiator to see the company scale into a widely adopted platform remains to be seen.

Like many accelerator-staged businesses, NexTravel is still testing out its product-market fit and will likely see its offering and its value proposition change, at least slightly, over time. For now, Lam seems content to know that corporate travel is a multi-trillion dollar industry without a single software product that end users love. There’s no argument there’s opportunity to be captured in this scenario. Corporate road warriors will surely be the company’s biggest cheerleaders if it manages to make travel suck just a little bit less.

[Image via "Up in the Air"]