Venture capitalists are still trying to crack the Web 2.0 nut. Most are focused on video and social networking, but a few realize that the application of new Internet technologies to the travel market will create a few very successful companies.

There are a wide array of targets, and one segment that's received funding this year is group travel. No formal market studies have been done on the size of the market but Michael Stacy, CEO of Groople, said he's read reports that estimate group travel to be worth $175 billion per year. Groople and TripHub are two VC-backed startups that are trying to capture a chunk of that market. He said, "We got to gring more group travelers online. Right now, they’re calling their travel agents. We've got to make group travel exponentially better than the offline world."

Since joining Groople in November, Stacy has initiated a site redesign and a project that will automate the company's group booking technology. He believes the group travel market is different from the individual or business travel market that early online travel sites catered to. He says: "It's a different type of transaction. The planning that has to go in upfront to make these trips go flawlessly so everyone can get everything out of it – that’s where our focus has been. We did market research up front. We know the customer experience up front. The back end is done and front end is coming."

To address my skepticism that Groople is a little play that would yield a sub-$50 million exit at best, Stacy said, "We’re hitting this out of the ball park. This is a $300 million exit. We’re swinging for the fences."

And he's not concerned by competition from TripHub, a startup that was launched by Madrona Venture Group. "Online travel is a gigantic market. There is room for a couple really good players. I welcome competition." With experience at Travelocity and CheapTickets.com, which he led to a sale to Cendant, Stacy and Groople have a chance.

For more on group travel funding, see:
Groople press release
Puget Sound Business Journal

Tags: groople, travel, triphub, vc, venture+capital