Travel startups could be considered a reasonable gauge for what’s going on in the sector.
They’re geographically spread out, cut across all segments of travel, often have experienced investors and advisors at hand and they tend towards a lean and agile mentality.
Like their peers in the established travel industry, many startups are having a tough time with their survival dependent on funding positions, access to grants and an ability to reduce costs.
One thing most have in common is the ability to keep going with what one described as a “delusional positivity” - that if they can just get through this, better times lie ahead.
PhocusWire asked them for their thoughts on the shape of recovery in their particular segments, as well as any pockets of opportunity that might be ahead.
Business returns
The corporate travel segment is one where many startups see the potential for recovery, perhaps even more quickly than leisure, although still a timescale of at least two years.
As Comtravo says, it is often “necessary for a company’s success.”
The Germany-based corporate travel technology specialist sees consolidation ahead for the business travel industry, as well as an even greater focus on costs from companies, which could drive further automation.
“Winners will be those companies that have enough capital and prepare for consolidation early on," says CEO Michael Riegel.
For Pilota, a startup focused on disruption management, health and safety are going to need to be built into all parts of the booking process, so it is adapting its products and services accordingly.
Aeroband, a startup focused on distributed ledger technology, says the industry will be “jolted irrevocably” but it believes some technology innovation will survive.
Brendan McKittrick, co-founder and chief executive, says: “Invariably, the industry will resume its modus operandi through the force of habit and on the surface it will begin to resemble what it was in 2019. However, below the surface there will definitely be strategic teams looking at hedging a % of revenues for future shocks and implant resilience into the DNA of the airline model.”
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He believes the aviation industry needs to think differently going forward in terms of “democratizing assets.”
“People need airlines and airlines need people. Rather than the taxpayer bailing out the airlines at the 11th hour, it is much more wiser to spread the ownership during peace-time so that the shocks are absorbed across a bigger stakeholder base.
"New tech such as blockchain and digital currencies enable this paradigm to become a reality. The upside is the passenger can also share the good times.”
Mind the gap
In other segments of travel, startups are also optimistic about recovery but pragmatic about what will change.
Christian Watts, CEO of Magpie Travel and founder of City Sightseeing San Francisco, says that online travel agencies will be seeking the efficiency his platform provides.
However, the bus tours business, and activities involving volumes of people such as events and theatres generally, are more problematic.
Watts also sees winners such as GoCar Tours, self-driving and sightseeing vehicles at some point in the future.
“Businesses like that are going to have a great time. It’s 100% socially distanced and should be a huge winner,” he argues.
Similarly self-guided walking tours companies stand to do well.
Watts says: “There is going to be a ton of people wanting to do stuff. When Disney is not the number one any more, or Broadway, people need to find the right product. It’s the long-tail - by definition the short-tail is high volume.”
He also sees local and regional partnerships as having potential going forward is especially if countries such as Australia, New Zealand and China, create "travel bubbles" between themselves and destinations could “fill up in a week.”
Overall, Watts believes 2020 should not be written off by the travel industry. “People are going to want stuff to do. It might be different but we will want to occupy ourselves and tour operators just need to be there.”
On message
Startup marketing agency Wildebeest also sees pent-up demand but more from a B2B perspective.
Jared Alster, co-founder and chief strategy officer, says: “We firmly believe that there will always be a demand for well-focused, strategic thinking. This is like the stages of grief - once businesses and brands can get to the 'acceptance' phase of our new post-COVID reality, growth plans will be dusted off and business will resume.”
While he does not see a return to pre-COVID-19 levels of business any time soon, Alster believes businesses will want to “reshape their messaging and ensure they are present in the marketplace.”
Some of the trends above around sectors like to fare well as well as others around funding were also discussed during the Phocuswright FAST FACTS: The state of travel startups session in late April.