Startups, investors see opportunities and challenges as travel industry struggles with COVID, diversity issues

It’s mixed messages these days from both startups and investors in travel as they navigate the COVID-19 crisis and issues around diversity and inclusion.

During a panel discussion as part of Phocuswright’s Battleground: The Americas online event, startup founders spoke with optimism about the pivots their companies have made to ensure their sustainability through this crisis.

Saniya Shah, co-founder and CEO of Pilota - one of PhocusWire's Hot 25 Startups for 2020 - says her company is launching a new product next week known as Fly Safe, which will enable travelers to compare flights and itineraries based on the “disruption, health and safety factors that matter to them.” 

Cheraé Robinson, founder and CEO of Tastemakers Africa, another Hot 25 startup, says her company has shifted from creating travel experiences in Africa and for Black travelers to creating a supportive community and hosting online conferences focused on topics such as business, healing and spirituality.

“We realized we had a huge opportunity to engage our audience who was ecstatic about our brand pre-COVID but who only had one way to engage, which was by taking a trip. So we decided to launch a membership program to allow us to be lockstep with this community every day,” Robinson says.

Tastemakers Africa has also begun working with ministries of tourism in Africa to help destinations operationalize virtual experiences and take other steps to recoup some of the revenue lost due to the lack of travel.

As CEO of Optii, panelist Katherine Grass, also a venture partner at Thayer Ventures, says the company has been adding features to its technology solutions for hotels to help those properties meet the demand for enhanced cleaning protocols.

And Plug and Play managing partner for travel and hospitality Amir Amidi says he sees opportunities for startups that can create solutions that address the immediate needs and add efficiencies.

“I think you are going to see an increased rate of adoption for automation, for internal processes on behalf of airlines and hospitality brands and even airports. And then you are going to see a wave of contactless solutions, which ultimately will make these businesses more lean and hopefully contribute to their margins.”

However, Amidi says companies developing a short-term solution must also have a “viable business model post-COVID” in order to attract his interest for funding in the next six months. 

Grass agrees, and adds that very early stage startups will have the biggest challenge fundraising because investors are prioritizing supporting their existing portfolio companies. 

Speaking specifically of the hospitality industry, Grass says border restrictions create a new predicament for evaluating a startup’s viability.

“I think we are really starting to need to understand the strength of each region’s domestic travel market … because the cross-border corridors are not going to be open for some time,” she says.

“What would the hotel occupancies be if just domestic Europeans are traveling around Europe? What would the hotel occupancy be in the U.S. if it’s just domestic travel, or in Asia? Is that market share big enough for you to have a business?”

Responding to questions of diversity, panelists agree there is work to be done to make the travel industry more inclusive.

“I think the biggest challenge in the industry is just recognition of the market size that has had adverse effects on Black founders who are working on companies that are dedicated to this market,” Robinson says. 

“The industry needs to do some self-reflection and education around that market and how big it is and what the opportunity is.”

Amidi says he is challenging his team at Plug and Play to “definitely spend more time with female founders, definitely spend more time with African-American founders, and make sure that every knowledge we have is transferred to them and make sure they are getting access to the same resources that they may not have had access to in the past.” He adds that he will not, however, invest in a company just because of the race or gender of a founder.

Grass says it is important to ensure that female and Black founders get “a fair shot at the table.”

“With Black Lives Matter for me personally and as an investor, it’s about listening. So right now I’m at a stage of listening to try to understand before formulating a view, and trying to understand where additional unconscious bias may exist so we can try to overcome that.”

The Battleground event also included a pitch competition with seven startup participants. The overall winner was OccasionGenius and the People's Choice winner was Trip Ninja.