Assessing VCs continued interest in niche online travel segment

Venture capitalists have sustained their interest and investment in niche offerings, focusing on segments such as luxury vacations and short-term rental homes.

According to wsj.com, while websites such as Expedia and Travelocity Inc. are pulling in the bulk of online travel sales, “venture capitalists are placing their newest bets on niche markets such as luxury vacations and short-term rental homes”.

“A boatload of venture capital has sailed into the online travel market recently, with start-ups including LeisureLink Inc., Viator Inc., Luxury Link LLC and Gusto LLC raising more than $40 million this summer alone,” the report says.

Among the ventures highlighted, LeisureLink is an electronic marketplace for booking vacation rental properties. “We source inventory from both the vacation rental and timeshare industry, giving the broadest possible selection of premium inventory for our customers,” states Kelly Tompkins, president and founder, LeisureLink Inc. on the homepage of the site, leisurelink.com.

It connects owners of substantial inventories of vacation rental properties with broad distribution networks, including traditional GDS and online travel agencies. In May this year, LeisureLinkannounced the closing of its five million dollar “Series B” round of venture capital from Mission Ventures and Clearstone Venture Partners.

In June this year, Viator (www.viator.com), the world’s largest online resource for tours and activities, raised an additional $4 million through its current investors, Carlyle Venture Partners, the US venture and growth capital arm of Washington D.C.-based The Carlyle Group, and Sydney-based Technology Venture Partners. This financing follows the $6 million raised from the same investors in November 2005.

Allan Thygesen, managing director of Carlyle Venture Partners and a member of the Viator board had then commented, “The online travel sector is poised for continued growth, specifically in two key areas that bode well for Viator -- global markets yet to capitalise on the retail power of the internet for purchasing travel, and the advance-purchase activities arena. With more than 3,500 affiliates around the world and the ability to complete transactions in multiple currencies, Viator is seizing a largely untapped market opportunity as the preferred global resource for consumers to research and book trip activities before they travel.”

Unlike many destination sites that aggregate content from various sources, Viator is not a paid listing or advertising site. Viator’s activities are provided by reputable local operators, hand-selected by the company‘s in-house travel experts, who routinely review and validate these activities for quality of experience, overall value and superior service.

Among others, founded in 1997, Luxury Link is an online luxury travel resource. Showcasing more than 1000 extraordinary hotels and resorts, cruises, tours and villas in more than 60 countries, Luxury Link provides access to exclusive offers and insider tips for the sophisticated traveler.