Inside the travel startup accelerator building sustainability tech for Asia Pacific

Asia Pacific is the world's largest regional travel market, with aggregated total gross bookings growing 5 to 7% annually and expected to reach $540.3 billion in 2022, according to Phocuswright.

As the tourism industry booms across the region, a cross-section of stakeholders is turning its attention to sustainability and environmental stewardship and how to spur innovation in a region of diverse cultural, political and business environments.

Leading this effort are three organizations - the Pacific Asia Travel Association (PATA), ADB Ventures (a subsidiary of Asian Development Bank) and Plug and Play - which have created Travel Lab Asia, a corporate innovation program focused on sustainability in travel.

Launched in September, Travel Lab Asia has a three-pronged mission: to "accelerate the adoption of game-changing sustainability technologies in Asia Pacific," to "actively track environmental and social impact over time" and to "scale the impact across the region" and establish participating brands as leaders in sustainability.

In its first year, the initiative is focused on clean technology solutions for the hospitality sector and has signed three corporate partners: Jetwing Hotels, Minor Hotels and Hilton.

“We needed to focus somewhere, in one vertical, and hospitality was such an easy choice because of the real triple-bottom-line incentive that hotels have to invest in energy efficiency, alternative sources of energy, waste management, etc.,” says Jason Lusk, a consultant with ADB Ventures.

“Our thesis was there are hospitality brands that were hitting a plateau. They had done the easy stuff, and they wanted to do more, but had hit the limits of what was technically possible in the region.”

The need

The first step for Travel Lab Asia has been to assess the needs of the hotel partners. Between September and November, Graham Harper, PATA’s director of sustainability and social responsibility, hosted workshops with executives from the hotel brands, including representatives from their sustainability, engineering, innovation and investment departments.

“Through a process of examining what they are currently doing and what they need to do in the future, we dig down to the root causes of what’s going on so we can identify the pain points and can come up with the very strong needs statements on where their innovation is going to be done,” Harper says.

“For all of them, sustainability is at the core of their business. They know the impacts they are having have to be properly managed, just for the survival of their own brands and business.”

Those “clean tech needs analysis workshops” uncovered interests primarily around energy, waste and water.

The solutions

Now Plug and Play is leading the effort to identify entrepreneurs and startups that are suited to address these problems, with solutions such as efficient biomass energy production and enhanced storage capacity for renewable energy.

Patricia Nordstrom, Plug and Play’s corporate partnerships manager in Asia Pacific, says it is looking for startups both within Souteast Asia and globally, whether they are already working in hospitality or not, and at seed stage to Series B in their funding.

“We are looking more at the technology. If there’s already a use case for hotels, that’s a double win,” Nordstrom says.

“But if the technology is there and it’s not being utilized by hotels, we may look at how the hotels and startups can co-build a new solution.”

Using Plug and Play’s existing innovation model, Travel Lab Asia will select 20 startups - 10 to participate in an accelerator program beginning in February and another 10 for the fall - that have solutions that address the broad needs of the hotel partners.

Travel Lab Asia will also identify additional startups with solutions suited to the unique needs of the individual hotel partners and facilitate private deal flow sessions between those two entities.

The next steps

The group’s hope is to have about half a dozen pilot projects underway in 2020.

To help the pilots materialize, ADB Ventures will provide grant funding that Lusk says “at our discretion can be converted to equity in the startup’s next round.”

“Ultimately that pilot project will be proving the business case. We want these solutions to be able to scale, and not just in places like Singapore, but in the developing countries like Cambodia, Laos, Vietnam and Myanmar that really have a tough time attracting this kind of technical innovation,” Harper says.

“We’re trying to create very substantial pilot project examples that can have deep impacts on the sustainable development goals so then we can scale it across the hospitality sector.”

Lusk says he’s optimistic about the potential for Travel Lab Asia to uncover effective solutions since it combines the innovation experience of Plug and Play with the financing mechanism from ADB Ventures, the broad industry networks of PATA and three corporate partners that have a demonstrated commitment to sustainability.

“Tech providers tend not to prioritize Southeast Asia. It’s easy to move into China, because you have a market of 1.3 billion people and one political, cultural and economic context,” he says.

“So what we’re trying to do is to help industries in the region articulate demand in a way that makes entering the region more attractive and more feasible to technology providers, and then through our financing, de-risk that market entry for the technology providers.”