NewsWho, what and why - a guide to corporate investment in travel startupsThis article was originally published onBy PhocusWire | April 24, 2017 Increasingly, corporate innovation means dedicated incubators, accelerators, or investment arms that exist to nurture new and emerging companies.This macro trend is alive and well in travel. Larger travel companies use these models to capitalize on new ideas, markets and technologies that startups pursue.These investments are intended not only to keep close to potential threats to an established business model. There is also a very clear incentive for these companies to be active participants in the industry’s future.Without a stake in potentially disruptive technologies, industry players are either forced to innovate on their own - or face an even-more uncertain future defined exclusively by others.Clearly a commitment to travel startups has become de rigeur in travel. Here’s a detailed look at the ecosystem as it stands today.The GDS: Amadeus and TravelportIn May 2015, Amadeus jumped into bed with incubator program Travel Startups to launch Amadeus for Startups. Given that many startups seem to be unfamiliar with the extraordinary complexities of travel, the initiative is primarily focused on education.In announcing the efforts, Amadeus North America’s vice president of online travel said that the effort will align "the technology, investment and academic communities to offer new travel companies a simplified, affordable consulting partnership."The company is mum in specifics, but claims to have nurtured “dozens of online startup travel and search companies, as well as developers and travel content providers.”Beyond startups, the company also has Amadeus Ventures, which focuses on strategic co-investments in late-stage travel startups. Investments here include Bluesmart, BookingPal, Eva, Yapta, Flyr, and Betterez, as well as successful exits from Cabify (stake sold during subsequent investment rounds) and Olset (purchased by Deem for an undisclosed amount).The investments have slowed somewhat over the past year.Travelport Labs is another approach from the GDS segment. The format of this program is more TechStars-style, with two classes per year and accept up to six teams per class. The Labs program has graduated two classes, with a total of nine graduates so far.Startups accepted into the program will receive a four-month crash course into the world of Travelport, based at the company’s Denver offices. According to the company’s terms, Travelport invests $30,000 in up to ten companies each year, in return for an 8% equity stake.https://twitter.com/TravelportLabs/status/851489877912891393It makes sense for the primary inventory platforms in travel to get involved at the earlier stages of startups. As early companies make decisions on where to source inventory, the larger entity enjoys a deeper integration with its distribution system. Not to mention the energy and potential future hires that come out of the startup ecosystem.The agencies: Booking.com, Flight Centre and Carlson WagonlitBooking.com recently announced its first set of startups for its Booster program. Ten businesses will experience a three-week sprint, culminating in a chance to compete for grants of up to 500,000 Euros.These are grants, rather than investments, which makes the program especially unique. The global scope of both the company and the OTA sector has led to a cohort from across the word.Flight Centre looked to its founding story for its incubator, which is named after the first bus: Little Argas.The slogan is to “become a market leader and go global,” which the travel agency promises to offer its chosen startups.The objective is familiar: “Our goal is to work with our partners to nurture new business ideas and fast track travel start-up companies incorporating areas of our DNA. We want to be the destination of choice for a wide range of travel and technology start-ups.”The company partners with current travel startup incubators to help screen, incubate and accelerate startups, which are then plugged into the relevant parts of the group’s experts.The company is actively seeking diversification outside of its core business across a long-term, twenty year horizon. There’s no set amount for the fund, but the company will invest up to $50,000 for 7.5 percent equity. For later stage companies, there’s up to $300,000 for growth and up to $2 million for scaling up.Little Argas made its first investment recently take a stake in an artificial intelligence tools for business travel.While Carlson Wagonlit Travel doesn’t have a standalone incubation process, it has tested the waters as a partner to other organizations supporting travel startups.In 2015, Carlson Wagonlit Travel joined the Paris travel incubator Welcome City Lab as a founding member. A year later the company also inked a partnership with incubator Plug and Play to provide mentorship and support to travel and hospitality related startups.The hotels: Marriott and AccorHotelsHotels are not as active in this space, as there are fewer obvious benefits. There are certainly new technologies that might benefit hotels but there’s not always a clear way to integrate this kind of program into the structure of the hotel business.One exception to this is Marriott. The massive global brand claims to have launched the first hotel innovation program. Called TestBed, the ambitious effort offered startups access to a real-world hotel to test their products.This offered a completely fresh way for a startup to go from product to development, and then use an operational hotel to pilot the technology. There were 150 startups up for consideration, and the two finalists were Dazzle (a voice activated assistant) and Jambo (a location-based professional platform).Another exception is AccorHotels, which captured global headlines with its acquisition of onefinestay for nearly €150 million.This was a capstone purchase, as the brand had several previous investments in accommodation-related startups. The company has also been actively pursuing new strategies, including an investment in digital distribution to move beyond simply its own hotels.Accor has also employed a more internal model for incubating new concepts in hospitality. Outside a hackathon in Russia, the company has focused resources on pushing its internal teams to think like startups, listen to customers, and disrupt its own core business.The result is its new Jo&Joe concept, which will ramp up to 50 units by 2020. By employing the same techniques that startups use, the company hopes to evolve its own business alongside its external investments and acquisitions.The airlines: JetBlue, British Airways, EasyJet and El Al JetBlue has been one of the most active investors in emerging travel and transportation companies. Its venture arm, JetBlue Technology Ventures, invested in a startup called Zunum Aero alongside Boeing.JTV president Bonny Simi explained why the airline made the investment: "We believe that electric propulsion will disrupt the regional airline industry. By investing now, we will literally have a seat at the table to see how this technology evolves."Share this quote As a guiding focus, JTV “invest in, incubates and partner with early-stage startups at the intersection of technology, travel and hospitality.JTV has also formed a partnership with Israeli airline El Al on a project called Navigator. The partnership stems from El Al’s own innovation initiative, a centre based in Tel Aviv called Cockpit.Navigator is a four-month accelerator program for startups focused on aviation. According to a joint press release, the program includes access to "strategic partners, initial funding and ongoing close guidance."Chosen companies will spend three months being mentored in Tel Aviv, followed by one month in Silicon Valley.British Airways is one of the most active legacy airlines in this space, originally launching its UnGrounded Innovation Lab in the Sky back in 2013.More recently, its parent company IAG created a standalone accelerator called Hangar 51.The initial pilot was successful, and the program was repeated again last year. Out of 450 applications, twenty-six startups were selected and four moved on to a ten-week mentorship program with executives.IAG recently announced its investment in two startups as part of the Hangar 51 initiative.The manufacturers: Boeing and AirbusBoeing recently made headlines with its investment in Zunum. The startup is in the early stages of manufacturing an electric-powered regional jet that could make short-haul flying far more economical. The jet is expected to take off starting in 2020.As far as range, the planes can fly up to 700 miles in the earliest configurations. And the planes are small. With only ten to fifty seats, airlines would be able to operate the jets on routes without enough demand for larger regional aircraft.This makes them viable for plugging gaps in regional travel ecosystems.The investment is one of the first for Boeing’s investment arm, HorizonX. Principal Steve Nordlund explains the fund’s goals: "Our charter is to look beyond the horizon. We’re looking at traditional, non-traditional partnerships that help us accelerate innovation and market opportunities."Share this quote As far as why he chose to invest in Zunum, Nordlund says: "We want to be close to them to see, number one, if we can be helpful in their success as one of their investors. As well as the innovation that we think they can bring forward."Share this quote The company also invested an undisclosed amount in Upskill, a company that provides Google Glass-style technology for assembly workers.Airbus is certainly not out of the race.In 2015, the French firm landed in Silicon Valley with a centre capitalized by a $150 million fund. The A³ group is tasked with building “the future of flight now, by disrupting Airbus Group and its competitors before someone else does”.Cargo and logistics have also seen some interest from airlines, with Lufthansa Cargo participating as an inaugural partner for the Rocketspace Tech Accelerator.Are we missing any travel-supporting endeavors run within larger companies? Tell us in the comments!NB: Image via G. Peshkova for BigStock.