As long as the world has people who can afford to support it, the travel and tourism industry will continue to exist. The industry experienced a decline, understandably, after September 11, 2001. Travel declined again when the recession started in 2007, and an increasing number of people found themselves either unemployed or underemployed, practices like “staycations” grew in popularity. Businesses, too, spent less on business trips, choosing instead to hold video conferences or teleconferences whenever possible. Since, according to USTravel.org, 14 million jobs are either directly or indirectly supported by travel and tourism, companies like PhoCusWright, provide an invaluable service.
According to PhoCusWright, travel, tourism, and hospitality represent the world’s largest industry. It accounts for 8% of worldwide employment, 9% of invested capital, and 10% of global GDP. After sizing the travel markets in the U.S., Europe, Asia Pacific, and Latin America, the global travel industry surpassed $860 billion in 2010 and the opportunity, particularly in high-growth emerging regions, is still large.
That’s what PhoCusWright is all about. It researches how travelers, suppliers, and intermediaries connect and deliver both qualitative and quantitative data on the evolving dynamics that influence travel, tourism and hospitality distribution. Senior executives, marketers, strategists, and research professionals from all segments of the industry use the kind of data that PhoCusWright provides.
In addition to its primary research in North America, Latin America, Europe, and Asia, PhoCusWright also produces several conferences and trade shows in the U.S. and Germany and partners with conferences in Canada, China, and Singapore. While at these conferences, industry leaders, and company analysts debate issues, share ideas and define the ever-evolving reality of travel commerce. PhoCusWright, which was acquired by Northstar Travel Media in June 2011, is 100% bootstrapped company with revenues that range from $5 million to $10 million annually. PhoCusWright’s financing was derived entirely from organic growth. Although the company did close a small angel round in 2000 that burned following 9/11, after rebuilding, the founders bought back the original angel shares and sustained the company on revenues from then on.
Founder Philip Wolf, who now serves as company chairman, served as PhoCusWright’s CEO from the time it launched in 1994 until its acquisition. A graduate of Duke University, with an MBA from Vanderbilt, Wolf started out in manufacturing. In the late 1980s, he moved with his wife from New York City to rural Connecticut. He landed a job at a venture-funded travel company called Travelmation in 1989 where he served as the vice-president of operations in the travel agency division. Eighteen months later, he was promoted to CEO. During that time, he secured two intellectual property patents for calculating airfare.
In 1991, while still working for Travelmation, Wolf achieved his first online travel transaction, a 9,600-baud moment that gave him the idea for PhoCusWright. The juxtaposition of airfare pricing technology and Wolf’s experience with running a traditional travel agency helped him to recognize the travel industry’s inertia and limitations and anticipate how technology could transform the marketplace. In late 1992, Travelmation was acquired by Rosenbluth International.
In 1994, Wolf launched PhoCusWright, because at that time, Veronica, Gopher, and WAIS were the dominant Internet protocols, and he believed that information technology would be a key differentiator in the travel, tourism and hospitality industry. For the first three years of PhoCusWright’s existence, Wolf focused on teaching industry executives about the coming Internet and what it would mean for their businesses. Early clients included Fodor’s and The New York Times. PhoCusWright had its first travel industry event, PhoCusWright Live, in 1997. Wolf’s wife and co-founder, Carol Hutzelman, handled infrastructure, IT, and accounting. She now serves as the company’s senior vice-president. In 1998, Lorraine Sileo, the company’s current vice-president of research, founded the division, which is PhoCusWright’s largest revenue stream. The consulting division was gradually phased out. The Internet bubble validated Wolf’s concepts, and Sileo recognized the opportunity for growth in the online travel market and helped travel companies to understand the emergence of the online traveler.
According to Wolf, when PhoCusWright was founded, 99% of the people he knew in the industry believed that creating the company was a stupid idea. Because the ideas on which the company was founded were unprecedented, the company had no competitors. Over time, solo industry consultants, who had previously focused on other aspects of travel technology, reinvented themselves and events focused on online travel began popping up to compete with PhoCusWright Live. Today, competitors include Forrester Research and Gartner Research, among others. PhoCusWright aims to set itself apart by remaining one of the few research firms focused solely on global travel, tourism, and hospitality. The team prides itself on producing independent, rigorous and unbiased research that is built around Wolf’s catchphrase: “Strategically correct, not politically correct.” The company targets research by sector, geography, and trends and uses quantitative and qualitative methodologies to provide syndicated and custom research focused on both consumer and industry trends.
The company’s clients span all sectors of the global travel industry, including technology and media companies. Google, for example, has sent 20 to 30 delegates to The PhoCusWright Conference over the past several years. The next conference is scheduled to take place November 15 to 17, 2011, in Fort Lauderdale/Miami, Florida. Part of the draw for companies like Google could be the Travel Innovation Summit where attendees have an opportunity to win cash awards for the “best innovation” in the startup, emerging, established, mobile technology, social media or international category.
PhoCusWright uses social media to engage with clients, prospects, travel influencers and travel industry leaders, uses Twitter multiple times a day, engages in discussions, makes announcements, promotes its products, posts lengthier discussions and promotional items on its Facebook wall a few times a week, and runs a LinkedIn Group where it leads discussions and posts event information. As of July, PhoCusWright reached one of its goals for 2011 by increasing fans, likes, members, and followers by 20%.
PhoCusWright earns revenue by charging from $6,500 to $80,000 for research subscriptions, $5,000 to $60,000 for special projects and $25,000 to $200,000 for custom research. Individual tickets for conferences range from $1,400 to $3,700. Conference sponsorship fees start at $8,000 and the cost to attend the Travel Innovation Summit ranges from $10,000 to $12,500.
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This segment is a part in the series : 1Mby1M Deal Radar 2011