Travel Tech Essentialist #61: Money
A couple of newsletters ago, I mentioned how Booking.com is creating a new Fintech business unit that will grow to 400+ cross-functional fintech experts by the end of this year (you can find some of these jobs at the end of this newsletter). Daniel Marovitz leads this unit and has called the financial and payment challenge as the “last big mountain” and one that the company wants to climb. This week’s newsletter brings additional data points of the upside of fintech in the travel space and the hyper-activity taking place around IPOs, M&A and fundraising rounds.
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1. The hidden world of pricing
"What is the one book you wish I had told you about when we started working together?" VC Mike Maples asked this question to entrepreneurs he's worked with and Monetizing Innovation (by Madhavan Ramanujam) was one of the most frequent responses. World renowned VC Bill Gurley refers to Madhavan as"he is to monetization strategy what Bob Marley is to reggae music". In a conversation with Pete Flint (General Partner of NfX), Madhavan shares frameworks, tactics, and hidden truths that founders need to know about pricing — and how, when done correctly, it can dramatically lever-up growth. Read + NfX.
2. Hopper partners with Amadeus to distribute its fintech products to OTAs and airlines
Amadeus is adding Hopper’s fintech offerings to its product line while sharing its extensive car rental inventory in return. The Hopper Cloud products Amadeus is deploying include Cancel for Any Reason, which lets passengers instantly cancel any flight reservation up to 24 hours before departure and get at least 80% of the fare back, and Price Freeze, which allows travelers to hold a price for up to 14 days. Any travel seller (such as OTAs and airlines) using the Amadeus Travel Platform will be able to offer customers these fintech products, for which Hopper underwrites all the risk. Hopper has been vocal about their transformation from a travel to a financial company. Hopper’s CEO estimated the total potential market for travel-related financial services is at least $200 billion. “That’s larger than gaming”, he noted. Hopper started its fintech development efforts in 2018, and a year later fintech accounted for 50% of their revenue. Hopper might be the only OTA in the world that grew revenues during the pandemic, and expects to have $1 billion in sales this year. Read more.
3. Digital payments company Square taps into the lucrative Buy Now Pay Later space with its $29 billion acquisition of Afterpay
Square — the San Francisco-based payments processing company — will pay $29 billion in stock to acquire Australia-based Afterpay, a provider of installment payment services. Square is paying 25% of its stock market capitalization to buy a company that’s growing more slowly and generated only 4% of Square revenues in 2020. Yeah, but the minute that Square announced this deal, the market cap of Square went up by 25%, making the acquisition of a $29 billion company essentially free. “Buy now pay later is not a company, it’s a valuable feature within a much larger financial payments platform. Square is proving that and everyone else will soon realize it”, said Chamath Palihapitiya about the deal. This acquisition might make some of the large travel players see the likes of Uplift and Fly Now Pay Later (and even Hopper) with particular attention.
4. Vacasa to go public at $4.5 billion valuation
Vacasa announced it would merge with TPG Pace Solutions, a SPAC created by the investment firm TPG, in a deal that values the business at approximately $4.5 billion. Vacasa had revenues of $300 million in 2019 and $492 million 2020, with a net loss of $85 million in 2019 and $92 million in 2020. The company expects to close 2021 with $1.6 billion in gross bookings and $750 million in revenue. Vacasa’s net loss in Q1 2021 was $49 million, up from $37 million in Q1 2020. Valuation is 6x 2021 estimated revenues. Steep. Great information in the Vacasa deck. Here's an insane metric highlighted by Ian McHenry (founder of Beyond Pricing) in a LinkedIn post: Vacasa is valued at $150k per property which is nearly 10x what most vacation rental property managers are valued at. The 9000 properties that Vacasa acquired from Wyndham were at $18k per property. “Any property managers want to join their inventories together and we can put together 30,000 properties and make everyone a 10x when we take it public?”, asks Ian.
5. The Cadence: How to Operate a SaaS Startup
In the last newsletter, a few of you reached out to me to let me know that you enjoyed the article I shared by David Sachs on the SaaS startup org chart and rules of thumb. So, here’s another piece by David Sachs that I think you’ll find interesting. He proposes an operating philosophy, The Cadence, designed to synchronize the major functions of a SaaS startup so that the team works together in lockstep. It brings order to the chaos and brings together disconnected areas so everyone understands what is happening and what they should work on. It replaces erratic release dates and sales targets with concrete milestones for shipping and selling. By the Way, Craft (David Sachs’ VC) launched its 3rd fund last week, a $1.1 billion fund exclusively focused on SaaS and marketplaces.
6. Hopin, a startup that powers online events, is in talks to raise a new funding at a $7 billion valuation
This, according to a Bloomberg report. The new round comes 5 months after Hopin announced a $400 million Series C co-led by Andreessen Horowitz and General Catalyst, which valued the London-based startup at $5.6 billion. Hopin was founded in the summer of 2019 and has expanded from 8 people in March 2020 to more than 400 as of March 2021. It’s raised nearly $700 million in VC funding in under 2 years, not including its newest funding round. It has grown in 2021 through acquisitions, adding StreamYard, Streamable, Jamm and Attendify to boost its suite of video technology.
7. Are we approaching the death of the hotel lobby?
Over the last decade, we’ve seen airport check-ins transition to mostly self-service. The same trend might be happening for hotel check-ins, as this Architectural Digest article suggests.
8. The next evolution of hotel room service
For some travelers, app-based food delivery companies have rendered hotel room service nearly obsolete, but a few pioneering players in the hospitality space have found ways to use delivery apps to their advantage, leveraging partnerships with startups to improve the traditional room service concept. The Chicago-based 2nd Kitchen is one of such startups providing a hotel-focused room service product. Read more.
9. Rail + Plane Connected Trip
easyJet has partnered with German rail operator Deutsche Bahn to give its customers seamless connectivity between flights and onward train journeys. DB and easyJet work with travel search engine Dohop to provide connecting itineraries. Lufthansa also has a long-standing relationship with Deutsche Bahn. Read +. Air France is also moving to streamline its Train + Air partnership with French rail operator SNCF. Air France doesn’t expect domestic air capacity ever to recover, in part because the French government has prohibited flights on routes where competing train service takes less than two-and-a-half hours (as a condition of its aid to Air France-KLM).
Mobility company Bolt closed a €600 million round from Sequoia and other investors, increasing Bolt’s valuation to more than €4 billion.
Vietnam-based VNLife, a technology company that operates in travel (VNTravel), banking and retail raised a Series B round of $250 million led by General Atlantic.
Indian OTA Ixigo raised $53 million from investors led by Singapore sovereign wealth fund. Ixigo’s previous funding round was a $15 million Series B in 2017 from Sequoia Capital India.
Russian travel metasearch platform Aviasales announced a $43 million investment from Elbrus Capital Funds and iTech Capital.
Barcelona-based Exoticca, a tour operator / OTA specialized in multi-day package tours, announced a €25 million round.
Tech-enabled short-term rental startup Frontdesk a $7 million round led by Stormbreaker Ventures, bringing its total funding to date to $18 million.
Microsoft is talks to invest in Oyo, apparently valuing the Indian startup at about $9 billion. Oyo was valued at about $10 billion in 2019, though SoftBank had slashed the valuation to $3 billion in recent quarters. Read +.
Travel Tech Essentialist job board
Today, I’m featuring these amazing jobs
Amazon: Principal Development Manager - Travel & Hospitality (Atlanta)
Amazon: Principal Travel & Hospitality Industry Advisor (Atlanta)
Booking.com: Director of Customer Product Fintech (Amsterdam)
Booking.com Senior Engineering Manager Fintech (Amsterdam)
Selina: General Manager - Mexico (Puerto Escondido)
Expedia: Senior Market Manager (Puerto Vallarta)
Browse many more open roles (or add your own open roles) at Travel Tech Essentialist Job Board
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Have a great week,