The travel industry has made the much-needed transition from physical offices to websites where travelers from around the world can book flight tickets, hotel rooms, buses, and taxes from the comfort zone of their homes. There are approximately 677,000 travel companies in the United States alone, valued at $20 billion, and that number is growing rapidly. Here are some common travel startup challenges and issues that can be addressed if you are innovating in travel startups. If you dream of making a decent start in the league of big brands, it makes sense to be prepared to face the challenges. However, if you know the challenges in advance and are ready, calculated, and updated to overcome all obstacles quickly.
So if you’re with a travel startup, read between the lines to find a shortlist of 7 challenges to help you get ready in advance.
1. Expansion
With low-profit margins and stiff competition, travel startups often see expansion and growth as a major challenge. Getting more customers is the key to expansion, because travel companies only make money when there is volume. Expansion is also an important condition for sustainability as a travel company. A global presence will make it easier for consumers to recall the brand that comes with it. Because travel is an industry where it will be necessary to focus on multiple geographies, different laws and regulations in different countries may create friction while enforcing new features at your service.
2. Legal obligations
A wide range of legal matters depends on the startups of the travel business. Therefore, it makes sense to get acquainted with the legal mumbo jumbo to get your business off the ground. After all, your business is your dream and you can’t take the risk. Find business insurance if necessary. Also, it pays to pay according to the rules, so run your business according to the rules of the land.
3. Low-Profit Margins
The travel business, being in the service sector, does not have high-profit margins. The profit margins are much lower than in many other businesses. Low-profit margins can be attributed to the commission-based model on which they operate. There is also the risk of things going awry where the OTA will have to bear these costs. Because they take important capital and resources to get started in the travel business, it is important to make sure that profit margins are always high. Otherwise, it will be difficult to survive. One way to deal with this difficulty is to decrease operational costs through smart use of technology and automation.
4. Infrastructure challenges
The Internet, office space, hardware, transport, and other organizational matters remain a major challenge for startups, especially for travel startups. However, with affordable tools and resources readily available in the market, managing infrastructure at an early stage will no longer be a big deal. You all need to carefully research and know the tools available in the market and then choose the right ones to solve your problems.
5. Intense Competition
The biggest challenge for travel startups is competition. In addition to competing with companies with the same business model, most travel startups also have to compete with hotel chains and flight companies that are trying to capture the market directly by eliminating middle menus like OTA. The growing popularity of price comparison sites has also strengthened competition, making it easier for consumers to compare prices in different OTA in the blink of an eye.
6. Management Problem
Poor management is a surprisingly common problem that causes startups to fail. Therefore, for travel start-ups, it makes sense to hire experienced management professionals. But what if you don’t have the money to cover the high cost of management? Well, an effective way to deal with this situation is to manage your own business.
7. Geo-Diversity
Life could have been much better if travelers had traveled less around particular geography. Unfortunately, this is not the case. It doesn’t make sense to expect customers to use your service if they only relate to specific geography. Simply put, you need to equip your space with everything you need to make it a place where customers can get service for every trip. Giving people more options to discover will help you scale faster and make the service more dynamic. Connecting your service to multiple geographies is a corporate startup challenge that travel startups should address as soon as possible.
Be prepared for these challenges before you dive deep into the travel business, prepare yourself. Beat your competition with the most disruptive, innovative and sustainable solutions and be the next game-changer in tourism.
We also provide free online consultation to Travel Industry experts who are looking for Business growth.
You can Book an appointment with our Travel IT experts here.
