With a presence in 90 countries and sales growth of 20% per month,two-year-old Web Reservations International is a phenomenal Irish successstory, writes Karlin Lillington. The age profile for such travellers is older... Nowadays hostellers and backpackers carry credit cards and typically go online every day in internet cafes, making online booking a cinch.
A small Irish company is doing dotcom the way dotcom was supposed to be. Some 40 per cent of the people who start a transaction on its website finish it. The company is truly global with a presence in 90 countries. Sales have grown by an average of 20 per cent per month - a staggering 200 per cent in the past six months. The company is profitable, yet has spent almost nothing on promotion.
Where the company differs from the stereotypical dotcom is that it has a working business plan. No venture capitalist money has been sought or needed. And it doesn't depend on advertising on its Web pages.
And no, it isn't a sex site.
Rathmines-based Web Reservations International (WRI) provides online bookings for one of the fastest-growing areas of travel - budget travellers and backpackers. Through its primary website, www.hostelworld.com, and a presence on several hundred other sites, including big name online travel bookers such as Travelocity.com, WRI sorts out 6,000 beds a night for globetrotters.
"It's all volume, huge volume," says company co-director and co-founder Mr Tom Kennedy, owner of Dublin's Avalon Hostel, who believes that budget and hostel travellers collectively spend about €4 billion annually for accommodation.
The value of the market has been vastly underestimated because an individual booking might be worth only €10 or €20, says WRI's other director and founder, Mr Ray Nolan. But he points out that six to 10 people might share a room, pushing the value of a simple hostel dorm room to luxury hotel levels. "It's one of the hidden facts about the tourist industry. Hostels are a very profitable business," he says.
The age profile is much older for such travellers now, too. Rather than students on summer breaks, hostellers and budget travellers are often older people or families. Many hostels and budget hotels now offer single and family rooms to cater to this market, in addition to multi-bed dormitories.
The entire market has changed too in ways that make the internet an obvious tool for reaching travellers.
No longer is the budget sector formed of poor students eking out the cheapest possible holiday. Nowadays, hostellers and backpackers carry credit cards and typically go online every day in internet cafes, making online booking a cinch.
They also demand a more structured travel experience, seeking outdoor adventure or cultural activities and tours, all of which can be booked through WRI sites. And they spend plenty of money in restaurants rather than cooking in a communal hostel kitchen.
"A few years ago, we would have been full of people cooking their pasta or lentils, and they would all arrive by bike. Now everyone arrives by taxi from the ferry or airport and they all head into town for dinner," says Mr Kennedy.
The two began to work together back in 1999 when Mr Kennedy was interested in getting a software program to manage his hostel business from Mr Nolan, a programmer who also owns a Dublin accounting software company called Raven Computing. Mr Nolan had been selling a program called Backpack to hostels for several years.
However, the two realised that, while it was time-consuming and labour-intensive for an individual hostel to deal with e-mails and booking software - Mr Kennedy had two people doing nothing but that - an automated booking service for hundreds or thousands of hostels could be the basis of a solid business.
Mr Nolan reworked his Backpack software and began giving it away to hostels, which would then promise an allocation of beds to WRI. Travellers could book from any website offering the WRI facility - perhaps the hostel's own website, or the Hostelworld.com site, or any of some 270 websites WRI runs under names like Hostelusa.com or Hostelnewyork.com. It also runs the budget booking service on big travel sites such as Travelocity.com, Roughguides. com, Timeout.com and Studentuniverse.com.
Travellers are told immediately if a hostel has space, which they can then book and reserve right away by having a 10 per cent deposit and small booking fee charged to a credit card. WRI offers the rooms at the price the hostel charges, making its money by keeping the 10 per cent charge and the fee. The margins may be very small on a typical €10 hostel bed, but with 2,000 hostels in nearly 100 countries and 460 cities, WRI does very well on volume.
The company also takes a slice of bookings for a range of tours and other offerings, and has arrangements with 300 tour companies, large and small. For example, in Dublin, travellers can book the Dublin literary pub crawl tour on the site, or the blue Aircoach service to Dublin Airport (some 40 per cent of people booking a Dublin stay through a WRI site also book on Aircoach, says Mr Nolan). In South Africa, a tour operator offers a safari package; in New Zealand, there's a deal for tandem sky-diving; while, in Uzbekistan, travellers can book a museum or mosque tour.
The result is a win-win for everybody, Mr Nolan says - WRI makes money, while hostel and tour operators, some very tiny, can pitch their services to a much larger international market.
The company has been self-funding until recently, when WRI raised €500,000 from private investors. It will use the cash influx to gear up for further expansion, pulling in further hostels to the service and more tour offerings.
The directors note that the budget, independent and youth traveller market is expected to represent more than 25 per cent of all travel by 2005.
They already have the budget, independent and youth traveller online booking sector pretty much to themselves, they say, which still comes as something of a shock.
"Never in our wildest dreams could we have expected this kind of growth, for two guys in Ireland to own a whole sector," says Mr Nolan.
