There's a new luxury travel auction website in town, and it's definitely worth checking out. ItsyBiD.com earns its name because auctions start at $0 (with no reserve bid) and each bid raises the sale price of hotel, resort, or vacation destination packages by only one cent. The wining bidder obviously pays the final sale price, but the final prices can be so low, it's a wonder that the owners of Itsybid are making a profit at all. An auction for a gift certificate to a luxury inn in California's wine country recently went for under a dollar! Adding to this, a percentage of every winning auction is given to a nonprofit organization.
Looking at the auction website raises a lot of questions; fortunately, co-founder Graham Keavney was willing to answer them in this interview. Bonus: Enter "Suite101" in the "Buy Bids" promotional code box, and get a couple of free bids to try out the ItsyBiD experience. Thanks, Graham!
How was ItsyBiD conceived? Could you describe a bit of the process?
For a long time, Steve (Matthews, Co-Founder) and I have been friends, and been looking for the right opportunity. We are both passionate about travel, and wanted to create a way for people to still be able to travel, even when the economy is the way it is. We had a number of ideas, but there was not another way that we could think of that people could literally save 75-99% on their travel. And, we are sending people to fantastic hotels and resorts that are normally hundreds of dollars per night.
We started coming up with the details of our model over a year ago, in June 2009. All the while, we were working full-time jobs, and each had daughters under 2 years old at that time. Sixteen months later, we each have newborn daughters, and have essentially bootstrapped this company from scratch. It has changed enormously since last June, but we are thrilled about where it is today, and where it’s going.
What separates ItsyBiD from other travel auction websites, such as LuxuryLink?
Travel auction sites are certainly not a new idea. But ItsyBiD has a few critical unique differences from other sites. For one, there is not any other auction site where the average savings will be 90% off of retail. Additionally, other auction sites have pre-packaged auctions, like a two-night stay in a specific room type at Hotel X. ItsyBiD will have some packages, but most of our auctions will be for gift certificates to our partner hotels. So, if you win a $1,000 gift certificate, you can go anytime, stay in any room type, and in most cases, use the remaining money for food, beverage, spa services, tee times, or anything else the hotel offers. You create your own vacation! You can stay one night in the Penthouse Suite for $1,000 per night, or four nights in a Junior Suite, and have some cash left over.
And finally, every one of our auctions starts at $0.01, and every bid raises the price only $0.01 at a time. You pay a nominal cost to bid ($0.75 per bid), and, if you are the last bidder when the timer ends, you will win the auction for a huge savings.
Is there a certain action level at which a final auction is considered unacceptable, and no one wins the hotel package? For example, on the site right now, there is a current price of only 15 cents for a $500 gift certificate to an inn in Napa Valley. How do you turn a profit?
That’s the fun of it. Someone could quite literally win an auction for $0.02 if nobody bids on it. And, that particular auction ($500 to the Napa River Inn) ended up selling for just $0.62!
As the site grows, we will get more bids per auction. At $0.75 per bid, our revenue comes from the bidding process. But, if we don’t get the bids to cover our costs, it’s great news for the winning bidder!
How do you determine which hotels and resorts can be part of your action site?
We love our hotel partners. There isn’t specific criteria that we hold our hotels to, but we look for hotels and resorts in the top destination areas. They are top hotels, typically 3.5-5 stars, and have solid reputations for quality and service. There has to be a wide market for them, as we will be auctioning packages for most of our partners on a regular basis.
Similarly, is there some sort of screening involved for people to become bidding members of ItsyBiD?
Anyone can participate in our auctions. Our goal is to have something for everyone, be it an exotic vacation or a weekend stay-cation. We have a short, simple registration, and once you buy your bids, you can bid on any of our auctions at any time, and your bids never expire on our site.
Do you consider ItsyBiD a luxury travel auction site?
Yes. But in a non-traditional way. When most people hear “luxury”, they hear “expensive”. That is not ItsyBiD. We work with luxury hotels & resorts, but we sell them in a fun, exciting way, that is not usually associated with “luxury”. We are what luxury should be!
A certain percentage of your profits go to nonprofit charitable foundations. Can you describe this?
Since day one, it has been important to us to bring in a socially conscience element to our business. I think there is a time in everyone’s life when they’ve wanted to help someone, or a cause, but didn’t have the means to do it. I know that Steve and I have been there. So we built the ability to do good into our business.
The bids on ItsyBiD.com cost $0.75 each. Every month, we work with a different non-profit, and donate $0.05 for every bid placed on our site in that month. Five cents may not sound like a lot, but think about this: if one of our auctions sells for $50, we’ve generated 5,000 bids. At $0.05 per bid, that is $250 to the non-profit. And we hold auctions each and every day.
What happens when someone doesn't win an auction. (i.e. They don't get their money back, where does it go?)
Great question. We don’t want anyone to lose, even if they don’t win. Say you really want to win the $500 auction to Park City, and you spend $100 in bids, but you get out-bid and lose the auction. We have a special opportunity for our losing bidders. We’ve worked with each of our hotels to offer our losing bidders a special price (usually 10-20% off). So, the special price for the Park City $500 Gift Certificate is $440, and you’ve already spent $100 (on lost bids). We offer you the full value of the bids back as cash to use toward the “buy it now” purchase. You pay the difference ($340), and still save $60 on the certificate.
Is it possible to just bid one dollar and bow out, or are the bid packages' purchase necessary?
You do have to buy a minimum of 20 bids ($15). These bids can be used on any auction at any time, and don’t expire. But you can just bid one dollar and bow out.
Where do you see ItsyBiD going in the next year or two, in terms of expansion?
There are nearly unlimited areas for growth with an auction model like we have. People love to bid, and love to win. We’ve just launched, and will spend the remainder on 2010 expanding our US market. We are exploring our first international destinations, so look for those very soon. Beyond that, we have plenty of ideas, and will be exploring many new ideas!
Thank you, Graham. ItsyBiD is a great idea, with an admirable business philosophy.
Jennifer W. Miner - Jennifer has years of travel writing experience, spoken at several national conferences, and more. See Jendeavor.com for more details.
