A version of this report appeared in two parts on
Business Travel News Europe. The first part was largely based on an interview
with Snowfall
CEO Stephan Cars and financial details from Companies House. The second part
documented a response from current and former Snowfall employees. The report
below joins the two original stories.
Stefan Cars, the founder and CEO of UK-based travel tech
company Snowfall, has admitted to a series of misjudgements in his running of
the company following accusations of poor management, staff going unpaid, and
concerns over the company’s ability to deliver on its promises. While Cars
adopted a conciliatory tone when he spoke to BTN Europe, he categorically
denied any allegations of financial misconduct or misappropriation of funds and
spoke to such concerns as though they were in the company’s rear view.
Twenty-five current and former employees via a group
communication to BTN Europe this week called Cars’ statements “fundamentally
false,” and painted an entirely different picture of Snowfall’s affairs.
Who is Snowfall?
Snowfall acquired
the lauded PSNGR1 booking tool in August 2022, when the startup corporate
travel booking tool lost its footing amid dwindling finances and closed up shop
even while it was in a testing phase with the corporate travel program at
electric vehicle manufacturing giant Telsa.
After what appears to have been a series of financial,
product and management failures, Snowfall faced a slew of allegations from
employees last year, many of them publicly posted on employment forums such as
Glassdoor.com. BTN Europe also received unsolicited communications from former
employees and heard the concerns of several TMC partners. Together, their
stories depicted a company struggling financially and rather more focused on
getting a product up to speed than on selling it.
Speaking to BTN Europe late last year, Cars admitted
Snowfall had encountered challenges but insisted the company is “back on track.”
He said a series of “mis-hires,” an inflated workforce and
the swift purchase of PSNGR1 had hindered the company’s progress, but also
admitted that “under equipped” finance and sales teams had exacerbated its
difficulties. Snowfall was founded in 2003, with Cars in past interviews with
BTN Europe stressing his ambitions to challenge
legacy distribution systems.
“Have I made a lot of mistakes during this journey? Yes,”
said Cars. “Have we been overly ambitious? Yes. And do we sometimes find that
something we think will take four weeks takes eight or 12? Absolutely. We’ve
had a lot of growing pains but we have the full support of our investors.”
Addressing questions about the company’s financial
stability, Cars pointed to investment of more than £12 million from Paris-based
Korelya Capital, with an additional commitment of £2 million last year. That
was complemented by an unspecified investment in spring 2024 from UK-based
investor Kingsway.
Cars also said the company would name a new COO “with
experience from easyJet” before the end of 2024. “They will be joining an
incredible team of leaders such as Régis Blanc, our chief architect, who
brings deep expertise from Google, and Anthony Poole, our new head of product,
alongside other talented industry experts joining us,” he said. No information
on the appointment has been forthcoming from Snowfall, however, since BTN
Europe’s interview with Cars.
Smoke and Mirrors
Despite Cars’ assertions of stability, it is Snowfall’s
complex set-up that spooked one TMC customer who already had frustrations with
the company’s “tendency to over promise and under deliver,” according to a
representative of the TMC who wished to remain anonymous.
Concerns had been mounting and, when undertaking their due
diligence, the TMC found on Companies House—with whom Snowfall is registered in
the UK—what they described as “a spider’s web; a complete mess.” They added:
“It didn’t look good. If you can’t work out how a company is structured on
Companies House then something’s not right.”
According to Companies House, Cars is the director of 18 UK
companies, many of which were formed in 2020 and 2021, have variations on the
Snowfall name, are individually owned by Cars, and have zero employees.
Cars said such structures are the nature of a global
business. “Our first financial director set up numerous entities. Certain of
those are now being folded and a lot of them are idle. I think early on there
were some savings to be made on business relief rates and things like that. We
are cleaning that up heavily.”
There was much to clean up in 2024 for Snowfall, and not
just structurally. Financial and product missteps also plagued the tech firm.
In March 2024, Snowfall Travel Tech UK Limited received a
First Gazette Notice announcing an intention by Companies House to strike the
company off, seemingly due to a failure to submit its accounts on time. Cars
says that was an administrative oversight.
Snowfall’s most recent accounts, covering the year to 31
December 2022, were filed in May 2024 and the strike notice was subsequently
removed. Those accounts revealed liabilities of £186,397, an improvement from
£721,598 the previous year. The ultimate holding company, Snowfall Holding
Limited, at the end of 2022 had net liabilities of £4.67 million. Its 2023
accounts were due on 31 December 2024 and, at the time of this article's
publication, were flagged as overdue.
For the TMC partner with which BTN Europe spoke, its
concerns deepened when it brought its implementation team together with
Snowfall’s tech team and “really lifted the lid on the booking tool” which by
this time had been renamed
as Junction One.
“When we really looked at the tool it could only do a small
amount of what we needed it to do—there was no NDC content, no Expedia content,
it only took card payment... a lot of the normal functionality you’d expect
from an OBT just wasn’t built in.”
They continued: “It was disappointing. We’d been excited and
the tech looked really good, but it felt like there was nothing actually there.
It was all smoke and mirrors.” For the TMC, which had also heard rumors of
staff going unpaid or being made redundant with no compensation package, it
marked the end of their partnership.
It was a similar story for another company who spoke to BTN
Europe on the condition of anonymity, praising the tool’s interface but
ultimately left in limbo. “There was certain functionality we asked for which
hasn’t been delivered yet, but we’re still hopeful we’ll get there,” they said.
“The UX is great. Visually it’s all good and from what we could see on the demo
site the functionality was all there. The roadmap looked amazing and we still
really want them to succeed, but it feels like there have been some empty
promises so far.”
Employees Still Unpaid?
Meanwhile, one former Snowfall employee with senior status
at the company told BTN Europe that they were “sent to Coventry after causing
too much friction.” They had repeatedly raised concerns about the company’s
direction and a lack of investment in winning new business, they said, which
culminated in an acrimonious end to their time at Snowfall.
“There was a lot of money being spent but little being
achieved,” they told BTN Europe. “We needed revenue but there was no focus on
generating business—it was just build, build, build.”
They were among the first to leave the company ahead of a
swathe of resignations and redundancies, they said, adding that they were not
properly remunerated but met with a “wall of silence in my battle to get paid.”
That executive was not alone in the battle, according to a
group of 25 current and former Snowfall employees, who hit back at Cars’
description of a company that ultimately had made good on its commitments. In a
collective communication to BTN Europe they wrote that all Snowfall employees
“have been affected in one way or another by pay issues,” and assert that many staff
at Snowfall still are owed months’ of pay.
Cars claimed to BTN Europe that all current employees
were paid up to date.
“It is imperative for
us to reveal what has been going on within the company and shine a light on the
behaviour of senior management, namely Stefan Cars, and refute the statements
he has made publicly about the financial health of the company related to employee
pay which is fundamentally false,” they wrote.
The employee collective alleged Snowfall staff in
Canada have gone unpaid since July last year and employees in the U.S. since
November. As of Tuesday, current UK-based staff had not been paid wages for
December, they said, nor had pension contributions paid since March 2024. Four
former UK employees have opened tribunals with the UK government “in reference
to the illegal garnishment of pensions and missed garden leave payments.”
Cars admitted in his interview with BTN Europe that Snowfall is in
dispute with some former employees. He said Snowfall has “the best
support from [law firm] Dentons… we are not doing things from the hip.”
The employee group had a different take. They
wrote that all the company’s Armenia-based staff were made redundant last year
and were owed six months of back pay. “Snowfall has refused to address this
with them, choosing to ignore rather than acknowledge their outstanding debts,”
read the group statement.
Meanwhile, in the U.S., workers’ health insurance
has been revoked and in the UK employees no longer have access to a health
insurance provider despite contributing to it, with both incidents due to
Snowfall defaulting on payments to providers, the group alleges.
The group also said employees were
told some salary payments would be made in December but did not come to
fruition. “The most recent promises were a bevy of assuring messages that some
pay would reach the staff by Christmas, which it didn’t,” said the group.
Addressing Accusations
Cars confirmed the company went through “quite heavy
restructuring” last spring when it laid off “quite a few people.” The 130
employees it had at one point was “too much,” he said. Today it has around 75,
still more than double the number stated in its 2022 accounts. “We did a reset
but what tech company hasn’t made some layoffs in the last 18 months?”
Regarding comments to Junction One’s shortcomings, he chalks
it up to the speed at which Snowfall moved to acquire PSNGR1—an opportunity
Cars believed would help “fast-forward” the work that Snowfall was already
undertaking to develop a booking tool.
“We actually tried to talk to them [PSNGR1] a year before
the transaction happened. They wanted a ludicrous amount of money at that point
as every tech company in the world did in 2021,” said Cars. “But when they ran
out of money we made a quick deal. We didn’t have any time to do any proper
technical due diligence because they were insolvent at that point.”
While the purchase price reflected PSNGR1's status, Cars
also claims Snowfall did not get exactly what they were expecting. “It
soon became clear that some of the technology might not have been the most
modern,” he said.
The employee group saw the product issues differently,
pointing to lack of investment, but also missed vendor payments. “Snowfall
has also at various times missed critical vendor payments which have resulted
in setbacks or failures from a product perspective.” These included payments to
ATPCO, ARC, Sabre and content providers “like Benerail and Travelfusion,
resulting in a lack of content, even while operating actively with customers.”
The group highlighted lapsed payments to vendors “which
have caused significant delays in any relevant upkeep, maintenance and road
mapping,” while the development team—largely based in Canada—hasn’t been paid
since July and that “missing several quarters of development, maintenance and
upkeep has led to invariable tech gaps between the product and the
competition.”
Can Snowfall Make It Rain?
Junction One is only one element of Snowfall’s overall tech
offering, which is largely focused on helping airlines increase their
distribution reach and on aggregating content from multiple sources of
transport via an API-based platform. Cars said Junction One accounts for only
15 percent of Snowfall’s transaction volume.
The employee group said Cars’ focus
on Snowfall’s API-based content platform rather than on its booking tool was
certain. “Cars has made it clear to staff a number of times that Snowfall isn’t
an OBT company, [rather] that they are interested in investing in the content
API, seemingly distancing himself and the company from the PSNGR1/Junction One
IP.
Cars told BTN Europe, the company has
70 companies consuming its content and technology, including tour operators,
TMCs and “one of the biggest fintechs in the world” which “has its own internal
TMC and we just added them on.”
He remains confident in Snowfall’s vision of disrupting the
travel industry’s legacy systems, but Cars concedes the company has lacked some
commercial nous in the past. “Maybe that mindset was missing. … Our company is
80 percent product and engineering—there’s not a lot of sales guys in our
organization.”
The employee group countered that idea with
harsher summary: “It has been evident for some time that the severe
mismanagement of funds, lack of transparency and sub-standard management skills
have driven Snowfall to where it is today. Rudderless and strategically aloof.”
Snowfall Responds, Investors Voice
Confidence
Responding to the group's claims, a
statement from Snowfall read: “We are speaking to our employees around the
world on a very regular basis, keeping them abreast of developments and
reassuring them that with the new funding round now complete, we are getting
back on track.
“We understand there are frustrations—that
is the nature of being a disruptor—launching transformative technologies into
the global travel industry is intensive in every sense; it is not the work of a
moment.
“We have significant backing and
support in place, with impressive global experience in our company, and we will
be making significant announcements this month about the exciting future of our
business. And as always, our employees will be the first to know.”
The company did not directly address
the group's assertions of missed payments.
Antoine Dresch, founding partner of
Korelya Capital, said in a written statement:
“Korelya is investing significantly
in Snowfall and we are fully committed to the future of the business. Launching
transformative technologies into the global travel industry isn’t easy,
and there have been challenges along the journey, no doubt.” He went on to say
the company was refocusing on core, revenue-generating innovation that will
stabilize and then grow the company this year.
A statement signed by 23 current
Snowfall employees expressed support for its leadership team.
Excerpts from the statement said: “It
hasn't been an easy ride, this is fair to say, but we are effectively a tech
startup working to disrupt a long-established travel industry with new
technologies, platforms and approaches to operating in the travel business.
It added that while employees “didn't
sign up for delayed payments and frustrations,” the group appreciates the
“dynamic and exciting working environment” of a disruptor and “stands by the
leadership team through this difficult time, looking ahead positively to 2025.”
Article written with additional input from BTN Europe
contributor Mark Frary