Travel brands of all sizes are experiencing a squeeze - or, in many cases, a devastating crush - from the COVID-19 outbreak much faster than they ever could have anticipated.
For startups, the impact can feel particularly dramatic: Not only are these businesses equipped with fewer resources, funds and time, but also, the close-knit nature of their workforces means that even one shift within the company is often felt by all.
The sudden downturn is especially surprising for travel startups that were on an upward trajectory, such as Stay22 - one of PhocusWire’s Hot 25 Startups for 2019 - which had been growing at a rate of 400% year-over-year for the past three years until last week, when it had to lay off 25% of its staff.
According to marketing director Noemie Turcotte, because Stay22 - a platform that maps out accommodation offerings near events - lives at the intersection of travel and events, the effects of the coronavirus crisis were felt almost immediately.
As part of the executive team, Turcotte was involved in Stay22’s restructuring plan - which, for better or worse, included her among the casualties.
Founded in 2016, Stay22 offers more than 35 million bookable listings in more than 220 countries and territories. Its accommodation partners include Airbnb, Booking.com and Kayak, as well as more than 1,000 event organizers and ticketing platforms.
In 2018, it raised a $600,000 seed round, and just before the coronavirus outbreak hit, Stay22 had raised an additional internal investment round of about $1 million.
“Our growth was hockey-stick-style,” says Turcotte, who joined the company in July of 2019 after a stint at bus ticketing platform Busbud. "There was a potential exit possible for us. Not an IPO, but we could sell.”
Then, two weeks ago, “shit hit the fan,” and the company had to assess its next move.
“We looked at all the scenarios possible,” Turcotte says, which included ideas around temporary layoffs, permanent layoffs and forced holidays.
Ultimately, anything temporary “felt like a Band-Aid, not a solution,” and the executive team felt it important that anyone impacted should be eligible for employment insurance. Thus: the decision to let five employees from the 21-person team, including Turcotte, go.
"It's never easy," she says, "but at the same time, these were things they had to do for the sake of the business.”
Because she was involved in the executive team’s discussions, Turcotte, in a way, was prepared for her termination and plans to continue to work with the company on a contractual basis.
Others, however, were caught totally off guard.
A travel industry veteran, Linda Luo joined Stay22 in August 2019. “The first time I saw the product, I fell in love,” she says.
As business development manager, she was charged with growing business in Asia and made rapid progress, securing TEG, Asia Pacific’s leading ticketing platform, as a partner by November.
As COVID-19 began to spread across China in January, Luo was monitoring the situation, but she did not expect it to impact North America - or the company - as quickly as it did.
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“Honestly, I was quite shocked,” Luo says of when she learned she was being let go. “This comes with mixed feelings, because as a startup like Stay22, we're very close to each other, not just as colleagues, we're also friends.”
In truth, “I wanted to fight with them,” she says. "I said [to my director], 'China is bouncing back. If you let me go, we're going to lose this geographic coverage.’
“I was not mad at the decision that they let me go, but I feel sad that we're going to lose this geographic coverage that we spent the past few months working on.”
Says Turcotte, who participated in a conversation with PhocusWire alongside Luo, it was, indeed, difficult to see a “specialized” employee such as Luo be terminated "and if there was a chance they could rehire her, they would do it for sure.”
Importantly, Turcotte says, Stay22 felt it was doing the right thing now to avoid additional layoffs in the future, though she adds much obviously depends on how long the effects of the coronavirus pandemic last.
Turcotte says despite the toll the virus is taking on travel startups, members of the community have stepped up to support one another.
The crisis is also providing companies an opportunity to reflect on the health of their businesses, she continues, "to make sure the people, the technology, the resources are worth the investment.”
“It's kind of a self-auto-regulation. It's very sad to say, but it's like the planet - we are a lot of people on this planet, way too much for the resources it has,” Turcotte says.
“In startups, the strongest and best managed will make the cut, and maybe the weaker ones will transform and evolve and become something else. It’s something that you have to go through.”
At Stay22, for example, the “crisis mode” it’s now in has forced the startup to roll out new features earlier than anticipated.
The company also hosted an emergency hackathon earlier this month, prior to the layoffs, to work out various initiatives.
"I think it was a really smart decision to bring everybody together. Everyone in the company knows it's not about themselves anymore; it's about the whole company," Luo says.
"I found it really useful and some great ideas came out of it ... and it was really great, fun teamwork.”
Turcotte concurs: "It brought people together and brought awareness, ownership and engagement from our team that I've never really experienced before.”
However, both Turcotte and Luo caution that startups exploring similar ideas need to move sooner rather than later.
"If you don't do anything and you just sit back and let it come, it's going to kill you,” Luo says.