EzRez EzMoney ToughBusiness

White label provider EzRez has announced a fund raising round of $15mm led by Canaan Partners and with pieces thrown in by Azure Capital and "existing investors". Not sure what the "existing investors" part means. Startup Capital Ventures partner John Davison is on the board already and they list EzRez as a portfolio company, however they have not put their name to this round.

EzRez have been very active in the online white labelling space. The initial white label moves in online travel were dominated by B2B versions of online agencies such as Expedia's WWTE or online versions of offline operators such as GTA's Octopustravel.com. However neither of these or other players like them were able to offer a technology style solution that allowed the distribution partner to either add inventory not contracted by the white label company or to request bespoke hosted layouts. This left a gap for EzRez (and competitors like TopDog) to steal clients and build a business despite lacking the scale in both supplier turnover and developer numbers of the OTAs.

There are been early success globally but also in my home market - Australia - with Qantas spin off Jetstar using EzRez for their packaging options. But even with these success and $15mm in the bank this is not an easy sector. EzRez has to constantly find the space between the online agents and the traditional distribution/connectivity companies (GDS and Switch). Simultaneously staying ahead of the OTA white label/affiliate providers on the technology elements that I mentioned above and staying ahead of the GDS' and Pegasus on contracted inventory and web display. It is like being David against two Goliaths but at least having a little bit more than a sling.

UPDATE - stated reason for the fund raising was to "drive product development and interenational growth to meet the increasing blah blah blah yadda yadda". The other sides of the story that I hear from anonymous industry insiders is that they have had to be a bit more radical that this stock phrase sounds by throwing out their old business plans and change the focus. This includes physical changes such as the well known shift in location from Honolulu to San Francisco and funding the not so well known round of redundancies. It also involves a change in the business model. The early days of the model had a lot of focus on mid and back office operations support for clients/distribution model. The new variation is focusing much more on web services/distribution and UI syndication. That is - less of the mechanics behind the scene to bring supply in and manage bookings, and more of the aggregation and distribution of different supply sources with flexible UI for delivery. Complex differentiation but think about it as less an end to end booking engine and more an aggregation engine.

It can not be said definitively whether a change in model is a sign of panic or genius. But it is further proof of the challenge that the EzRez' of the world face in making a business out of the gap between OTA's and traditional distribution companies.