The modern traveler is demanding. He or she seeks new, unique vacation experiences. Less interested in a trip to the top of the Empire State Building, the choosy New York tourist would rather visit an underground bar popular with locals. The modern traveler wants online offers that match his or her interests, as well as a full range of experiences while interacting with a brand.
In a survey conducted by Skift in 2017, 69% of US respondents said they would rather spend more on activities than a nicer hotel room. On average, people visit38 websites to plan a trip, says enterprise digital solutions provider Vector ITC Group. A satisfactory travel experience leads travelers to spend 140% more on ancillary revenues during their stay than those who have had a poor experience.
No surprise then that the "experience economy," a retail segment covering leisure, recreation, travel and food services – as opposed to material goods – is forecast to grow to US$8tn in spending by 2030 from US$5.8tn in 2016, according to Euromonitor.
Recognizing the growth potential of the recreational activities sector, Iñigo Valenzuela, a C-level executive with over 20 years of experience in the travel and tourism industry, spotted a unique opportunity. "I noticed that most travel companies didn’t have a live agenda of tours and activities that could be permanently updated," he said.
In 2015, Valenzuela, CEO and founder of Smartvel, started work on a SaaS solution to generate business opportunities for hotels, tour operators and city tourism agencies as well as car rental, railroad and airline companies. His other objective was to improve travelers’ experiences through effective destination marketing content.
Competitive advantage through technology
It took over two years and 80,000 hours of programming to develop Smartvel’s native technology. Its software deploys machine learning and big data to collect information on cultural activities, local events and tours from over a thousand data sources and then provides the information to end users in an easy-to-comprehend manner. The platform was officially launched in 2017 and attained rapid traction and sales growth. Since 2018, the company has reported positive EBITDA.
Smartvel collects data through an API that parses the websites of sports and holiday events as well as travel blogs, social media influencers, ticket sellers and travel destinations. The interface is powered by an advanced search engine that filters a large amount of data based on destination, travel dates and user preferences.
The website of the City of Buenos Aires has integrated Smartvel technology such as dynamic content and AI into an app for both citizens and visitors. Users of the app can create personalized itineraries, book tours and activities,and share content across digital channels.
Integrating dynamic content and using big data to create personalized tours and activities has become a competitive advantage for players in the travel industry. Travelers expect to find up-to-date information at their fingertips and value activities and initiatives that align with their taste and preferences.
Valenzuela believes AI and chatbots will revolutionize the way customers plan and manage their travels in future. Smartvel has developed within its travel planner interface a chatbot that can be directly integrated into Facebook Messenger, facilitating communication between tour operators and clients. The chatbot provides users with content about what is going on at their travel destination throughout the planning, purchase and post-purchase phases.
"With our solutions, our customers engage more with their users, sell more ancillaries, and become a supplier that enhances the experiential [traveler] with content that would be very difficult to get," Valenzuelasaid.
Singapore Airlines, Europcar, Alsa
Smartvel, which monetizes through a monthly SaaS licensing fee, earns an estimated US$2m in annual revenue, with 20% monthly income growth. The team is composed of 25 full-time employees based in Madrid, where the company is headquartered, and a worldwide network of sales representatives dedicated to international business expansion in destinations such as London, Zurich, Buenos Aires, Dubai, Delhi and Bangkok.
Smartvel's client portfolio contains prominent industry players such as Singapore Airlines, road transportation group Alsa, Europcar and the Citiesof Buenos Aires and Iberia. About 40% of the company's clients are based outside of Spain.
In October 2018, Smartvel closed a US$1m funding round from Caixa Capital Risc, Alsa, Fides Capital and Faraday Venture Partners. The new round brings the startup's total funding to US$2m.
The new capital injection is being used to accelerate international growth with a focus on Asian and US markets. Part of the money will be also used for technological improvements. "Every year, we increase the number of features in our solutions […] with the aim of covering more touchpoints during the traveler’s journey," said Valenzuela.
