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Travel Tech Essentialist #21: Optimism

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Travel startups are on the rise. Tens of billions of dollars are flowing to travel startups from Vent
 

Travel Tech Essentialist

February 23 · Issue #21 · View online
A short newsletter every two weeks with my pick of the top 10 Travel Tech stories and innovations shaping the world's largest and fastest growing industry.

Travel startups are on the rise. Tens of billions of dollars are flowing to travel startups from Venture Capital, Corporate Venture Capital and travel players. Some OTAs and metas might be facing challenges related to Google, but thousands of new travel startups are being created and financed to capture new opportunities as the travel sector grows beyond its traditional boundaries. The future, no doubt, is bright.

1. Venture Capital activity in travel startups
Venture Capital investment in Travel & Mobility reached $30 billion in 2019, 22 times more than in 2013. It is also responsible for 18% of total venture capital funding. I wrote this post to understand who is investing, where, and why. Hopefully you’ll find it useful. Read more.
2. How Google Flights could shake up the travel Industry
Mario Gavira writes about Google’s recent decision to stop charging airlines and OTAs for leads in Google Flights. If it is indeed the case, this could have a significant impact on the airline distribution ecosystem, and could deal a heavy blow to the existing flight metasearch players. Read more.
3. Expedia chairman Barry Diller speaks candidly
In the latest Expedia quarterly earnings call, Barry Diller brought a breath of fresh air in sharp contrast to what these events generally are: measured and performed. He called Expedia “sclerotic and bloated” and blamed it for having an “all life and no work” atmosphere, unlike Amazon’s culture of “all work and no life”. He stated that they will target cost savings of $300 million - $500 million by “stopping doing dumb things”, pushing markets as opposed to brands, reducing reliance on metas and Google, etc… Expedia shares rallied 11% as a result of this candid speak. Maybe more will follow this style (unlikely). Read more.
4. Amadeus’ Startup Universe: Eight travel tech startups
to watch
Amadeus Ventures is one of the most active Corporate Venture Capital players in the travel startup ecosystem, as seen in my Venture Capital in Travel Tech post. Amadeus has developed a collaborative ecosystem to support promising startups by making investments in early-stage startups and helping them scale-up more quickly. Amadeus’ Head of Research, Innovation and Ecosystems highlights 8 of the most innovative startups that are part of the Amadeus Startup Universe, a few of which we have written about in previous issues of this newsletter. Read more.
5. Accor’s partnership strategy
Accor is another very active investor in the travel tech ecosystem. The company expects its partnership revenues to double to €100 million between now and 2022. Accor CEO says the company groups its new businesses in three buckets: 1- strategic that are being incorporated into the Accor core business (example: Gekko, ResDiary and VeryChic); 2- performing well but needing “muscle and fresh capital” (example: Availpro and Fastbooking); 3- companies that Accor does not see itself as needing to “remain in the capital". Read more.
6. Google’s travel search has massive traffic and growth
Every travel player wants to reduce their Google addiction, except travel consumers. Google continues to develop travel tools and search experiences that resonate with consumers. According to Skift, Google’s travel vertical search modules generate nearly as much traffic in the US as expedia.com and booking.com combined. Not only traffic to Google Flights and Hotels is massive, but it’s also growing quickly, with growth rates of around 28% in the US and 30%–40% in major European markets and Japan. Read more.
7. Former United CFO plans to launch a “boring new airline”
Andrew Levy has raised $125 million and plans to launch a new airline that will offer nonstop service to “midsize and large” airports from secondary airports that currently lack or offer limited commercial air service. The objective is to serve markets that are underserved with basic, no-frills service. In his words: “the best way to compete in the airline industry is to not compete.” Read more.
8. A shiny spaceport and its dusty neighboring town in the middle of the desert in New Mexico
A tiny town in New Mexico is waiting anxiously for space tourists to fly out of Spaceport America with the hope of seeing the influx of jobs and tourists they were promised. The spaceport was built with a $220 million investment from the state of New Mexico and its residents, and if all goes to plan, actual spaceships will fly from the site as early as this coming summer. The spaceport’s primary tenant is Virgin Galactic. A seat on the company’s spaceplane goes for $250,000, and so far, around 600 people have signed up. This is the story (and the video) of two places that are that could not be more different, are inextricably linked. Read and see more.
9. Funding 💰
  •  Ayenda, a Colombian low-cost hotel brand raised $8.7 million in Series A funding to finance expansion into Peru. Kaszek Ventures led the funding.
  • Munich-based Loyalty Prime, which creates enterprise software to run loyalty programs, raised €5 million in Series B funding led by VC Hi Inov.
  • Habitas, a NYC-based hospitality company, raised $20 million from investors including Uber co-founder Travis Kalanick. Habitas uses 3D printing technology to manufacture its flat-pack buildings and has been described as wanting to be a “Club Med for Millennials”. 
10. Promising startups
  • Founded in 2017, UK-based Travala.com claims to be the world’s leading blockchain-based travel booking platform. It offers over 2,000,000 hotels and accommodation covering 90,124 destinations in 230 countries. Accommodation nights booked through the service exceed 1500 / month. 
  • Populetic is a Barcelona startup that manages online claims to help travelers get compensation from airline for delays, cancellations, overbooking or loss of luggage. It has recovered €12 million in compensations for 30.000 customers.
👍 If you like this newsletter, I would appreciate if you forward it to a friend or colleague. And hit reply (or via Twitter) to send me feedback, ideas or suggestions. Until next time,
Mauricio
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