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Summary:

Berlin-based GoEuro has just closed a $4 million seed round with impressive backers. Like its neighbour Waymate, the firm wants to make it simpler and clearer to book a multimodal journey. That’s no easy task.

Booking a long-distance journey online can be a fragmented affair. Travel operators like to keep it that way: they want to keep control over offers and pricing, so they steer customers to book directly on their websites. That’s why we have services such as Skyscanner that make it possible to compare offers on different airlines, for example, but that will always send you to the chosen airline’s own website to seal the deal.

But, as two Berlin-based startups called GoEuro and Waymate show, change is underway – a new generation of heavily algorithm-driven travel site promises to make it much easier to compare different types and combinations of transport type, from air to rail to bus, and perhaps even to book multimodal journeys through a unified portal. GoEuro announced the closure of a hefty $4 million seed financing round today, so let’s talk about them first.

Big solutions need big money

GoEuro’s idea is this: one search will show you your travel options between all European cities, towns and villages, including air, rail, bus and car rental. Customers can then choose which combination of these transport modes suits them best, based on criteria including price, convenience and total travel time. A closed beta should launch in a few weeks’ time and, all going well, the full service will open up a few weeks after that.

Naren ShaamThe seed round was led by Battery Ventures, which previously invested in travel and accommodation companies such as Hotel Tonight and GoGoBot, and Hasso Plattner Ventures, was set up by the SAP founder. Others involved include ITA Software’s Dave Baggett and Global Eagle Entertainment’s Jeff Sagansky – this is a serious crowd and, within Europe alone, GoEuro has a serious problem in its sights.

As GoEuro CEO Naren Shaam explained to me, travel across Europe can be particularly complex partly due to the sheer number of operators in those dozens of countries:

“The financing is mainly going to scale up the technology to integrate some of the partnerships we already have lined up into our platform. Within Europe the number of travel options is huge: train and bus infrastructure is as good as air. And with deregulation, there are a lot of travel providers across Europe.

“Air has a standardized platform – TXL is Berlin Tegel airport [whether you're booking from] Sydney or wherever, but train stations are different. The magnitude of integration is far different from building an air search platform. That requires resources that are able to tackle this challenge.”

A platform such as this would be a big step for Europe’s fragmented travel market, but at the same time GoEuro is still hewing to the traditional model of providing comparison transparency, then sending the user off to the operator’s site to actually book the various legs of their journey (Shaam said this was based on deep links, though, so the user should then be part-way through the booking process when they land on the operator’s site).

According to Shaam, GoEuro is holding back for now on taking that extra step because of the complexity it would entail, in terms of both infrastructure and customer service requirements. One country may allow electronic ticketing, for example, while another may not. Leaving the booking to the operator also removes the need to deal with what happens in the event of a partial cancellation – there, the customer will have to engage with the travel operator, much as they do now.

The next step

Waymate does not have $4 million in the bank – it’s currently angel-funded by Günther Lamperstorfer, co-founder of the IT services firm CompuNet – but that doesn’t stop it from having even more ambitious plans than its neighbor does.

WaymateRight now, Waymate lets web users buy tickets for Deutsche Bahn (DB), the German national rail operator. That in itself is a minor achievement – like many such companies, DB is notoriously tight-fisted with its station and timetable data, and not many startups have been chosen as approved partners with the ability to handle DB bookings (UK rail-booking outfit Loco2 trumpeted a similar deal back in January). These bookings are made on the intermediary’s website – customers don’t need to go through to the operator’s site, even to pick up the operator’s frequent traveller points.

But that’s only the start. Waymate wants to apply the same principle to two different use cases: intercity travel, of the sort GoEuro is involved in, and local travel. The company will soon produce apps for both purposes, and late this year or in early 2014 it wants to combine both into a single service – one app to book them all, if you like. As CEO Maxim Nohroudi told me when we spoke a month or so ago:

“We are working on integrating flights, but then we thought, let’s not forget about the door-to-door case. One you arrive in Munich, for example, you want to know the local transport options – all public transport, plus car-sharing, plus taxi.”

Waymate intends to allow the same kind of user criteria as GoEuro will allow. Now, there are some multimodal transport booking sites out there, but they tend to come from the transport firms themselves, particularly the rail operators, making their neutrality doubtful. The big issue is getting access to all the necessary players as a neutral party. In Waymate’s case, that was only made possible by winning an EU Smart Mobility Challenge last year.

And even then, Waymate CFO Tom Kirschbaum noted, you hit the data problem. Sure, you can scrape station and timetable information, but that kind of data needs to be regularly updated:

“Now we have managed to get over these entry barriers, to discuss with those public transport companies, and they said their data was all their own property. Many players… have established data regimes based on an API, but that’s not the end of the discussion. You have to convince them you’re a solid player.”

As a result, Waymate will build up its own infrastructure so that, in time, it can store and handle large amounts of data without relying on APIs. As all this data will need to be subject to a single algorithm in order to return speedy and useful results, this will be an essential move, and an expensive one.

What these companies are trying to do is really, really hard. The pitfalls are many – from massive complexity to closed-off data and competitors with vested interests. But the rewards will be huge, not only for those who can pull it off – if indeed they can pull it off – but also for the consumer. There is real value in increasing transparency and reducing complexity in the travel-booking business. Watch this space.

  1. Oz Har Adir Monday, March 4, 2013

    Moovit app seems to be handling local transit quite well, and rumors in Israel today say that its on the brink of raising $20m

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