2017 was the biggest year for travel tech startups in terms of deals and investment. There were an estimated $5.3 billion across 348 deals; setting an all-time record for the rapidly growing sector.
This year too, business continued speeding through the fast lane.
According to recent research, investments and deals hit $36 billion during the two-year period 2015 to 2016. This figure, however, has already been surpassed in the past year and a half leading up to to the end of the second quarter of 2018.
The second and third quarters of 2018 have especially seen a massive increase in investment in travel tech startups.
Two main reasons for this is the adoption of new technologies and the expansion of potential geographical areas for startups to do business.
- Travel tech is finally moving from traditional areas like online booking & search platforms to newer technologies like AI, VR and machine learning. There is also a pronounced trend towards creativity in doing old things. Chatbots and SaaS tools for hotels are examples of such innovation. This has led to a renewed excitement in travel tech startups which has led to higher numbers this year.
- Another reason is that the commoditization of software and hardware development has democratized the creation of technology companies. This means that exciting travel tech startups are emerging all over the world and not just in Silicon Valley. In fact, 44% of the total VC investment in travel tech in Quarter 2 of 2018 has been in Asian startups. This nearly matches the investment in US-based travel tech companies.
To have a better sense of the companies leading this rapid growth, here are a few of the hottest travel tech startups that have received investment in the last few months.
Stay Alfred (Highlight- Travel apartments)
Round: Series B
Funds Raised: $47 Million
Round Led By Nine Four Ventures
Stay Alfred is based out of Washington, USA and has 2000 travel apartments in 28 US cities. The company believes that in the future, multifamily apartment complexes will keep a few apartments aside for short-term travelers in addition to long-term rentals for residential purposes. The company’s travel apartments consist of multiple apartments or even entire buildings mostly owned by real estate developers. Stay Alfred has had more than 500 thousand guests. It has raised this round to double the number of apartments in the next 12 months.
Crowdriff (Highlight- Online presence for better marketing)
Round: Series A
Funds Raised: $9 Million
Round Led By Leaders Fund
The past few years have seen traditional hospitality and tourism businesses wake up to the need for having an effective online presence. Crowdriff, based in Toronto, has created a tool that helps travel companies get access to visual content. This gives them more visibility amongst customers making their marketing more effective. Crowdriff has more than 500 travel and tourism brands as clients in over 24 countries. Some of its clients are Westjet, Visit Indy, Destination BC, and Colorado Tourism Office.
Travel Appeal (Highlight- AI for travel data analysis)
Round: Series A
Funds Raised: $3.45 Million
Round Led By Indaco Ventures I and Airbridge Equity
Travel Appeal too is part of an emerging trend in travel tech which seeks to empower hotels and traditional travel businesses. Travel Appeal uses artificial intelligence to analyze online travel data of customers. It uses this analysis to recommend online strategies and positioning to tour operators. Travel Appeal wants to use this round of funds to double the year on year revenue to €25 million by 2021.
Hopper (Highlight- Airfare prediction)
Round: Series D
Funds Raised: $100 Million
Round Led By Omers
Hopper uses AI and ML-based algorithms to predict airfares. It claims that in 95% of cases, customers have saved money using its airfare prediction services. It is definitely one of the few companies that seem to have succeeded in the airfare prediction domain and has grown to a whopping $750 million valuation.
While the number of startups being built has gone down drastically in the last two years compared to 2015 and before; there is a healthy growth in investment. This is a good sign for all travel tech companies that are bringing new technologies to the travel industry as many good companies will now receive initial and further rounds of investment.