iStock_000070255329_SmallA few weeks ago, I wrote a blog titled “Why Uber and Airbnb are About to Hit the Jackpot … Again! The rationale behind my prophecy was Uber’s and Airbnb’s recent entry into a very lucrative corporate travel market—key word being “lucrative.” Not only is this segment huge (U.S. revenue of $1.2 trillion worldwide and $275 billion in 20141), but also the quality of that revenue and the relative inelasticity of the segment makes most travel companies drool! As a result, you would think the travel startup world would be licking their chops and be flooded with companies focused on serving this segment right?

Wrong!

Much to my amazement, of the 31 largest ($20 million or more) venture-funded travel startups, only four are focused on the B2B channel—that’s a meager share considering the opportunities that exist. My good friends at GetGoing.com and other B2B-focused startups such as Rocketrip are few and far between. Why, you ask? Well, I was wondering the same thing, and here are some reasons I reckon why.

Not sexy enough?

Many reputable travel publications say it’s because B2B in travel is not sexy enough to pique the interest of entrepreneurs. Entrepreneurs are drawn toward consumer-facing ideas because that’s what people perceive as cool. Who wants to start a company that focuses on developing backend solutions for TMCs when they can launch an integrated online site that provides you with an easy way to plan your road trip or a one that brings together a community of adventure travel enthusiasts!

I simply don’t know much about it.

The lack of interest in B2B could also be a function of access to information, or the lack thereof. Some of the most successful startups—or innovation, more broadly speaking—is born from a personal need or pain point. Take Airbnb as an example. The idea was conceived when the founders rented out airbeds on their living-room floor, to generate extra income to help pay rent, when all the hotels in San Francisco were fully booked. We hear of ideas like this all the time. But you don’t know what you don’t know (pardon the cliché). More specifically, given that most folks may not understand the gaps in B2B travel and the subsequent opportunities as a result, they may not be as inclined to solving these issues.

It’s green-screen time!

Playing devil’s advocate, well, to myself, although the B2B segment within the travel industry is attractive, it is also relatively insular and notorious for being slow to innovate and adopt new ideas. This is largely a result of the industry’s ongoing technological challenges. Over the past few decades, as technology advanced exponentially in most industries, for many reasons, travel suppliers chose not to invest in a heavy-duty technological “renovation,” so to speak. Instead, they used a Band-Aid approach and layered one system over another, making it extremely complicated and an ongoing challenge for outside vendors to integrate seamlessly with their systems. As a result, having to work with some of the industry’s archaic systems may not be as enticing for the highly sought-after 21st-century software engineers.

It’s just … so … slow!

Making inroads into B2B takes time, there’s no question about it. Companies in the travel industry, and in a number of other sectors for that matter, take time to win. Moreover, they tend to be slow to respond and react, are difficult to negotiate and close agreements with, and are high maintenance when it comes to ongoing account management. Dealing with corporate customers is not only arduous, but also costly, in that a significant amount of time and money is required to achieve consistent customer satisfaction.

I’ll be the first to admit, focusing on the B2B travel segment has its challenges and deterrents. But that doesn’t change the fact that opportunities are plentiful. More often than not, the revenue they generate is steady and substantial, and more than compensates for the effort required to acquire, maintain and retain the business.

OK … “So what?” you’re probably thinking by now. What pain points are incumbents currently not addressing? Or where’s the need for innovation?

Tune in to my next blog to find out!

1 www.gbta.org/PressReleases/Pages/rls_072814.aspx

Topics: Kunal Shah, Uber, Airbnb, B2B, Travel, revenue growth, startup