The Travel Channel Invests $7.5 Million in Oyster.com

Now the channel, owned by Scripps Networks, is taking its first step toward changing that, “closing that last mile,” in the words of Laureen Ong, its president.

In a deal to be announced on Monday, the Travel Channel has invested $7.5 million in Oyster.com, a start-up that employs professionals to review hotels and takes a cut of all the room reservations it helps to make. It will promote Oyster on television and online, and may incorporate the Web site’s reviewers into future programs.

“If we’re going to inspire you, by all means you should be able to get it all done on our site. That’s on our horizon,” Ms. Ong said in an interview last week.

By linking with Oyster, which has a commerce-through-editorial model like Jetsetter and the Gilt Groupe, the Travel Channel is diversifying its revenue sources beyond advertising and cable subscriber fees. The deal is being announced about 18 months after Scripps took control of the Travel Channel from Cox Communications in a deal that valued the channel at $975 million.

Over time, the deal may also make the Travel Channel a bigger player in online travel, where the heavyweights include Expedia, Yahoo Travel, TripAdvisor and the Travel Ad Network, which represents sites like Rand McNally.

The current Travel Channel site is little more than a travel brochure. Elie Seidman, co-founder and chief executive of Oyster, said he viewed the deal as an indicator of integration between television and the Web, something that “is going to happen more and more rapidly in the months and years ahead,” he said.

Two other Scripps networks, the Food Network and HGTV, are much further along in connecting entertainment and commerce. Visitors to FoodNetwork.com can shop for cookware and cutlery and browse the online stores of the channel’s hosts, and visitors to HGTV.com can find a mechanic or a landscaper in their community. Mr. Seidman compared the Travel Channel deal to the “pots and pans” that are sold through the Food Network.

Oyster was founded, in part, he said, to replace the historical role of travel agents in guiding a vacationer to the right resort.

While planning two trips to Alaska and to Hong Kong, “I came to this realization, which was that the likes of Expedia and Travelocity had solved the transactional component of travel, but the part the travel agent historically did — which is, which hotel should I actually go to? Which is the perfect one for me? — is a piece they were missing.”

Oyster’s versions of travel agents are staff members who visit hotels, take photos and publish reviews. The site only covers 14 destinations now, all in North America, but with the new financing it will add smaller markets on that continent and markets around the world. It also hopes to incorporate some of the Travel Channel’s video archives.

The site is not profitable. “We’re still not at the place in time where we’re thinking a ton about how to maximize the monetization,” Mr. Seidman said.

“We’re thinking more about how to maximize the audience.”

The Travel Channel is part of the second round of financing for Oyster, which came online in mid-2009 and was backed with $8.5 million by Bain Capital Ventures.

The investment will make the Travel Channel a minority owner in Oyster, though the companies would not divulge its ownership percentage. Bain also participated in the second round of financing.

It will not take long for the Travel Channel to add occasional text on the bottom of the screen that points viewers to Oyster for more information about what they are seeing on a show. It will take longer to develop programming that includes Oyster, but Ms. Ong said she was sure that “if we do shows around hotels, Oyster will have participation in it.”

“It’s in our best interests to make sure they get a lot of exposure,” she said, “and we will do all that we can.”

Apr 25th, 2011 | Posted in Travel
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