Farecast Opens, VC Money Continues to Flow to Online Travel

Farecast Opens, VC money continues to flow to online travel startups. As you may already know, Farecast opened its doors in 55 new cities. TechCrunch, GigaOm, SearchEngineWatch, and others have already written a good deal about Farecast. A few weeks ago, Farecast created a lot of buzz when it was open by invitation-only for private beta testing. The site boasts an innovative fare prediction tool, which will help consumers make a buying decision. It’s an interesting concept, however, I am not completely convinced that it will be so reliable. Airfare pricing is hard to predict with statistics. A lot of things like weather, terror alerts, and a host of other factors combined with a complicated yield-management logic makes it extremely difficult to accurately forecast.

However, the Farecast site looks good, with a clean UI and RSS feature that can search city pairs for a specific dates. They are using an ITA engine to perform the back-end queries with proprietary statistical analysis software to predict pricing. With $9 million in VC funding, I am sure that Farecast has staying power.

These days, there are loads of new online travel startups. VC money seems to be flowing in the millions. Katie Fehrenbacher over at GigaOM asks, "How many web travel startups make a bubble?" Personally, I don't consider this growth as a bubble, but rather rejuvenation of an industry sorely in need. US consumers are traveling more than ever. Travel is a $100 billion market, so it’s no surprise that more people are looking for a piece of the pie.

There seems to be little or no innovation with the big online travel agencies, in terms of technology or the way consumers interact with them. Customer loyalty as a concept is, generally, extinct as services such as air travel become commodities. Customers are looking for ways to plan, search, and buy travel products from a multitude of sources. As a result, new online startups are finding clever ways to lure customers. Thanks to the tons of money and buzz around these companies, it’s possible that these startups might give big OTA a run for their money and force them to find new ways to keep existing customers.

Here are few more travel companies that have, recently, received funding:

ITA - $100 million - Battery Ventures, General Catalyst Partners, PAR Investment Partners, Sequoia Capital, Spectrum Equity

SideStep - $17 million - Trident Capital, private investors

Kayak - $15.5 million - General Catalyst, America Online, Sequoia Capital

Mobissimo - Undisclosed - Cambrian Ventures, Index Ventures, Benhamou Global Ventures

TravelPost - $1 million - Amicus Capital, Arba Seed Investment Group

TripHub - Undisclosed -Madrona Venture Group

RealTravel - $1 million – Angel Funding

Viator - $6 million - Carlyle Venture Partners, Wandrian Brook Venture Partner, Boston Capital Vntures, and private investors

Gusto - $4 million - DHST, L.L.C., CEO

Groople - $6 million - ArrowPath Venture Partners, FA Technology Ventures

Indian Ventures:

Yatra - $5 million - Norwest Venture Partners (NVP), Reliance Capital

MakeMyTrip - $6 million- Gabriel Venture Partners

Travelguru - $10 million - Sequoia India's

Cleartrip - $3 million - Sherpalo Ventures, Kleiner Perkins

Let me know if you know of more VC funding in travel startups.