Travel Tech Essentialist #45: The Race
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The vaccine is here. Scientists have succeeded in the race for the vaccine, and politicians and institutions (with notable exceptions) are failing in the race for vaccination. But we have many reasons to be excited and hopeful for 2021 to finally unleash again the power of travel. My best wishes to you and your loved ones for a fantastic year.
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1. The vaccination race
The vaccine is finally here, and Israel, with more than 12% of its population vaccinated, is giving the world a lesson. Antonio García Martinez (author of Chaos Monkeys) explains Israel’s lead as follows: My current sweeping theory about Israel's vaccination triumph is that the soft West just doesn't know how to think in terms of a total wartime mobilization anymore, and Israel alone has maintained that willful cohesion coupled with strategic planning. Meanwhile, in France a total of 138 people have been vaccinated; in the US, vaccines were being trashed or left to spoil and the governor of NY is setting fines of $10M for too much vaccination; In Spain, vaccination numbers are missing in action. Government officials and institutions are failing again. A task of this magnitude should be led by the best logistics and distribution professionals out there, such as Amazon. Or by institutions used to perform and deliver when it’s needed, such as the military. Or simply, outsource to the Israelis.
2. A framework for decision-making in a time of change
COVID is changing many things about the world. Some will be permanent, some will be temporary, and for most things, we don’t know yet. Alex Rampell, GP at Andreessen Horowitz, proposes an interesting decision-making framework.
Structurally positive means that something has finally caught on—there’s no going back to the older, worse, more expensive alternative.
Ephemerally negative: consumption has been rendered challenging, but there is a lot of latent demand which will be soaked up once activity returns. The key is to make sure the cost structure is aligned to persevere past the ephemerally negative.
Ephemerally positive, under the mistaken assumption that the euphoria for something temporary carries over into permanence. A one time boost as opposed to a long term change of habits.
Structural negative. Negative long term perspective, with no likelihood of improving.
The author places “work travel” as an example of structural negative (potentially bad investment), and “leisure travel” as example of ephemeral negative (good investment). It would be interesting to have such an analysis matrix fully dedicated to the travel industry. In which box would we place private aviation, alternative accommodations, airport tech, TMC, outdoor travel, travel insurance, campers, bus, OTAs, etc…? Please tell me by providing your input here. I’ll show the results in the next newsletter.
3. Do things that don’t scale
Paul Graham, founder of Y Combinator wrote a post titled Do Things that Don’t Scale back in 2013. This piece of advice that Graham gave Airbnb in 2009 was instrumental in embarking the company on an exponential growth curve. Among other non-scalable initiatives, Airbnb founders Chesky and Gebbia went to NY in the summer of 2009 and took high quality photographs of all Airbnb apartments to figure out if this would make a difference in conversion. And it sure did. They demonstrated how doing things that didn’t scale could dramatically grow their business. It’s an old post, but timeless advice.
4. Ryanair CEO sees historic growth opportunities across Europe
Airline capacity has tanked during the pandemic, creating a window for survivors to fill the gaps once people start flying again. Thomas Cook and Flybe collapsed, while Norwegian entered administration. According to Ryanair CEO Michael O’Leary, up to 100 million seats will be taken out over the next 18 months, equivalent to around a 15% reduction on normal passenger traffic: “somebody has to step up and take that capacity...I have never in my 30 years in the industry seen such a clean-out...The real seismic change from Covid will be the growth opportunities across Europe. They are much greater than after the financial crisis or 9/11”. Low-cost carriers are widely expected to lead the recovery in flying because the short-haul and leisure markets they serve will rebound faster than intercontinental and business travel. Read more. Of the largest airlines in Europe and the US, the 5 that had the best stock performance in 2020 were all low cost airlines.
5. Back to basics: a reminder of why we travel
Tom Turcich and his dog are entering their fifth year of a five year walk around the world across the seven continents. Take a look at this infographic and their Instagram account to get a feel. They’ve faced plenty of challenges and hurdles, which is expected for an adventure of this magnitude, but the recurrent theme throughout their journey has been the shared humanity they’ve consistently found around the world. A reminder of the magic that happens when people travel, and the reason why travel will come back in full force this year.
6. Barcelona as a travel startup hub
When we started eDreams back in 1999, we were the first travel startup headquartered in Barcelona. The city is now 5th biggest European startup hub. A couple of years ago I wrote a post (in Spanish) on the prerequisites needed for a city to become a tech hub. One of them was to have successful startups. I gave the example of the impact that eDreams (among others) has had in the local startup ecosystem. Back in 2018, I counted 50 new companies founded by eDreams former employees. I was glad to read an article in Skift which focused on how Barcelona is becoming a travel startup hub. It accounted 370 travel companies with offices or HQ in Barcelona, and travel tech represented 7% of the digital professional job offers in the city in 2020. Well funded and high growth startups mentioned in the article include TravelPerk, The Hotels Network and ByHours.
7. Travel’s comeback year
The 6 trends that will shape 2021, according to Amadeus, among which:
Nomadic travel - Employers and employees embrace working from anywhere
Loyalty - Better service for all
Touchless tech - To inspire traveler confidence
8. Plug and Play’s 12 travel startups to watch out for in 2021
With 3 startups, Spain is well represented in the list of 12 travel startups to watch out for in 2021 according to Plug and Play, one of the most active VCs in Travel Tech: Amenitiz and The Hotels Network in Barcelona, and Troop in Madrid. The United States also has 3: Ditto and Blueboard in San Francisco, and Butler Hospitality in New York.
Hopin, a startup bringing live events online acquired mobile app Topi for an undisclosed sum. Hopin saw rapid growth in 2020 rising from 6 employees to 300. It raised $125 million in a Series B in November after raising $40 million in the summer and $6.5 million in February. Read more.
Jupe is a hospitality startup that sells units that are easy to assemble anywhere and wifi-enabled, providing equal connection to the natural and digital world. A product well-aligned with the “live, study and work from anywhere” trend.
SmartNomad is a NY-based startup soft-launched in July 2020 that makes it easy and entertaining to plan personalized itineraries, helps travelers quickly book with a single click and provides digital assistance during the trip.
PS. Please leave you input to build our own Travel Sector Opportunity Matrix
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