Travel startup investors look beyond AI hype

While it’s still the biggest buzzword, artificial intelligence (AI) has created a challenging funding environment for travel startups.

In mergers and acquisitions, “all of the money” is being put into AI, said Roger Sharp, chair of Web Travel Group and North Ridge Partners.

But software itself is no longer a fully defensible moat, and startups that describe themselves as being “AI-native” must think beyond the AI wrapper.

“We use AI to build things, which we use to deliver those outcomes to the customer,” Callum McPherson, founder and CEO of Obvlo, a PhocusWire Hot 25 Travel Startup for 2025, said during an executive panel at Phocuswright Europe.

“The AI-wrapper argument definitely can be thrown around if you are building a SaaS product on top of some AI models and then giving it to your customer—that probably isn’t going to work long term, but I think if you could build the AI into your own systems, your workflows, your customers’ workflows, you look less like a product company, possibly, and that in itself is a moat.”

When discussing hotel distribution travel API provider Nuitée, panel moderator Chris Hemmeter, managing partner at Thayer Investment Partners, described the company as an “outlier” due to its success in raising capital.

And while AI may be a looming threat and concerning for some, Leyla Allahverdiyeva, Nuitée’s SVP of sales and partnerships, said the startup isn’t facing much anxiety from investors.

“Our partnerships have really grown, so in terms of that trajectory, it’s looking very positive on our side,” she said, citing deals with large fintechs such as Revolut and superapp Grab.

In addition to partnerships with established names, fundraising also comes down to whether a company is solving a problem.

“One thing I think is, if you are early stage and you’re adding significant value, you’re meeting a need that someone has, you’ll raise money,” Sharp said.

“You’re growing fast, your economics work, somebody needs you, you’ll raise money.”

The panel delved further into the divide between private capital and publicly traded buyers, shareholder pressure and more. Watch the full conversation below.