How do you start a travel business that becomes a $500M company?

As the founder of the Travel Business Academy, a professional program that teaches entrepreneurs globally how to start a travel business, I am always searching for stories about successful travel entrepreneurs that I can share with our members. Travelzoo is in the news lately, with rumors surrounding an impending sale of the company, so I did a little research online to see what the story was behind the company and how it got started.

At the Travel Business Academy we teach entrepreneurs to create one-of-a-kind travel businesses. First, your start up must offer something unique that no one else is offering. We call this the unique-selling-proposition or USP. Second the consumer or business buying your travel service or product must truly want it.

The story behind Travelzoo and how solo entrepreneur Ralph Bartel built Travelzoo into a $500M company.

Ralph Bartel’s Travelzoo travel website, launched in the late 1990’s during the Yahoo and Netscape .com days, listing special travel discounts and last minute travel deals. Bartel launched the company with a killer USP. He offered 7 million free shares in a Bahamian holding company. As you can guess, the subscribers came rushing to his doorstep. He quickly built 700,000 subscribers, 1.5 million web site hits per day to the website generating $3,000 in daily ad revenue. [1]

At the time Ralph was going up against multi-million dollar travel companies that were running similar travel websites. The key differentiator was the lure of a free stock share for subscribing. The .com craze was a wild time and the populist theme was that people all around were getting rich starting Internet businesses. What Ralph was offering was the opportunity for the average person to participate in the .com craze to acquire his or her share of Internet riches. The USP was the idea that by subscribing maybe you to could get rich like everyone else. The interesting thing here was that this had nothing to do with travel. The Travelzoo website and promoting travel deals was just an avenue for people to get what they really wanted, which was the chance to think that they might get rich by being a part of this new travel website.

The free stock shares were obvious a gimmick to build a large subscriber base. The hard part was building a business and selling travel deals and offers that people really wanted to buy. Well it worked. Ralph Bartel successfully executed on his travel deal publishing business and today his company is worth close to $500M.

I am not recommending that your travel start up offer free shares as I think that would be very challenging today, although there are bills in the U.S Congress and the Senate, that aim to make it much easier for entrepreneurs to sell stock as a start up. I am advising all travel start-ups that you better have a killer USP when launching and have a travel service or product that people want to buy or it will be hard as hell to make it.