Travel Tech Essentialist #59: Cruising Speed
This week, I’m glad to share with you an analysis that Mario Gavira and I worked on: Online Travel Trend Report. In it, you’ll find the main dynamics we think will play a big role in this sector. I hope you find it useful.
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1. Travel Tech Essentialist online travel trends report
Mario Gavira (good friend, former eDreams Odigeo colleague, and now VP of growth at Kiwi.com) and I decided to work together on an analysis of the driving forces in online travel. We stayed away from the usual suspects. You will NOT see over-reported topics such as outdoor travel, digital nomads, health & hygiene, flexible bookings, touchless, etc... Our report seeks to uncover the 11 essential trends that are reshaping the online travel industry as it emerges from the worst crisis in its history. We hope you enjoy the report and we look forward to hearing your thoughts and feedback. And we think you’ll like the illustrations by our friend Victor Tofiño.
2. The Latin American startup opportunity
Ten years ago, Sequoia decided against opening up for business in Latin America. Despite the compelling market opportunity, they felt that the startup ecosystem was underwhelming. Fast forward to today. The startup ecosystem in Latin America is flourishing. Founders are emboldened to think big by the success of companies like Nubank and Rappi (both funded by Sequoia). Engineers are leaving their safe jobs to chase the startup opportunity. There is optimism about the potential for technology to change lives. Sequoia is now bullish on Latin America: “Our mission at Sequoia is to help the daring build legendary companies. Now more than ever, we see that opportunity in Latin America.” Read this great post on how Sequoia is thinking about Latam, and the sectors where they see the brightest opportunities. Last week, Bloomberg reported that SoftBank is planning to invest an additional $5 billion in companies in Latin America, which would double its commitment to the region.
3. Why Lighthouse invested in Buser
In this post, Lighthouse explains the reasons why they led the $138 million Series C round of Buser, the Brazilian bus travel platform. Founded in 2017 by Marcelo Abritta and Marcelo Vasconcellos, Buser is leading the disruption in the bus transportation market in Brazil by offering a collaborative charter model tailored to offer passengers a superior experience. With lower prices compared to competitors, Buser combines innovative ticketing-systems, flexible online booking, smartphone app and top safety standards with 24/7 support, providing users with an affordable, convenient, and comfortable alternative to private transportation.
4. Booking.com creates a Fintech unit
Booking.com announced the creation of a new Fintech business unit, headed by Daniel Marovitz, who has been leading the company’s payments products strategy since 2017. With a cross-functional team based in Amsterdam and Shanghai, he plans to expand the unit to 400+ Fintech experts by the end of 2021. A few months ago I wrote about Hopper, the travel unicorn that doubled in size in 2020 and that identifies itself more as a financial services company rather than a travel company. Around 75% of its revenues come from financial products that help customers make better travel decisions. More and more travel companies are incorporating flexible payment terms, customized insurance, price freezes and guarantees in an attempt to nudge consumers to buy with more peace of mind.
5. Travel startups are hiring again
By the end of the year, Hopper expects to add 400 customer support agents and 150 full-time employees. TravelPerk has 500 employees globally and expects to finish the year with more than 1000, hiring heavily in the US. London-based Duffel had a team of 15 at the beginning of 2020 and today they’re 42 and growing, with a heavy focus on engineering. Read + WSJ. This is a good reminder to look at the Travel Essentialist Job Board to browse open roles or add your own.
6. The comeback of corporate travel
This McKinsey report updates its corporate travel recovery estimations from a year ago and provides recommendations for how key players in the corporate-travel ecosystem can make effective plans. McKinsey also identify four categories of business travelers
The “never left”: Employees for whom travel is deemed essential for conducting business. This category accounted for around 15% of all corporate travel expenses in 2019.
The “never returning”: Digital adopters who are able to maintain high levels of effectiveness while working remotely may never return to corporate travel. Contributed to 20% of business travel spending in 2019.
The “fear of missing out”: The bulk of business travel (60% of business-travel expenditure in 2019) which will likely drive the rebound of corporate travel and who travel to cultivate important client relationships.
The “wait and see”: consists of workers in relatively noncompetitive industries and roles; it contributed 5% of total business-travel spending in 2019.
7. The next travel IPO
Luxury travel subscription brand Inspirato confirmed that it entered into a merger agreement with the SPAC of Thayer Ventures, in a transaction that will take Inspirato public and value it at an estimated $1.1 billion. You can see Inspirato’s detailed investor presentation here. 2020 data shows 12.300 subscribers (‘12-’19 CAGR: 29%), $165 million revenue (‘12-’19 CAGR: 39%), 85.000 total nights delivered (‘12-’19 CAGR: 26%), $95 million Annual Recurring Revenue (‘12-’19 CAGR: 58%).
8. The startup helping OTAs sell airline ancillaries
Insightful article by Sean O’Neill on Gordian Software, a startup that helps more than 90 airlines upsell passengers on Hopper, Lastminute, Trip.com, Kiwi.com, TravelPerk, Atrápalo and 200 other travel agencies and resellers. Gordian is now at an ARR of $70 million, 14 times what it was at the start of 2021. The startup offers a single integration for intermediaries to sell airline ancillaries. Low-cost carriers generate between 1/3 to nearly 50% of their top-line revenues from the sales of extras such as reserved seats, priority baggage, and in-flight meals. Read on to learn more about Gordian Software and its how it helps OTAs sell more ancillaries.
9. The ABCs of DAOs
On July 1st, Wyoming became the first US state that legally recognized Decentralized Autonomous Organizations (DAO). Prior to the law, which passed in April, no formal legal recognition of DAOs existed anywhere in the world. In my last newsletter, I wrote about a new DAO in travel called Dtravel (see their whitepaper here), aiming to compete against the likes of Airbnb. I believe that we will start to see more new initiatives born as DAOs, run by and for the community. A centralized network works to maximize returns for shareholders, while a decentralized network works to maximize returns for stakeholders. Or, imagine if the first 100.000 hosts at Airbnb had been given native tokens as incentive. Today, those tokens (plus the ones they would’ve accumulated) would be worth quite a bit of money. That’s more valuable than a Superhost status, for sure. I recommend that you take a look at this article, The ABCs of DAOs, if you want to learn more about DAOs.
10. Funding and other news
AirAsia takes another step on its intention to become a Southeast Asian super-app with the acquisition of Indonesian ride-hailing firm Gojek’s business in Thailand. The purchase is made through AirAsia’s digital arm in a deal that will get Gojek $50 million worth in the AirAsia super app. Read +.
TravelPerk acquired UK-based TMC Click Travel, its second TMC acquisition this year following its January purchase of US-headquartered NexTravel. The deal is TravelPerk's first since closing a $160 million funding round in April.
eDreams announced that the number of bookings in June 2021 were 2% above June 2019. Reservations in April and May 2021 were 51% and 22% below the same months in 2019. Read +.
Mexican low-cost airline Volaris reported that its demand in the domestic Mexican and international markets increased in June 18.9% and 15.5%, compared to June 2019, respectively. Read +.
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