Travel startups attracted billions of dollars in funding last year, and the travel booking sector attracted some of the most investment — more than $650 million.
Skift has tracked travel startup funding over the last year and found that startups involved with helping travelers book hotels, alternative accommodations, and air travel garnered the most funding of any travel sector and the most individual investments.
By Skift’s count, there were at least 50 separate investments made in travel booking startups in 2015 with India’s Tuija and Oyo Rooms receiving some of the largest single investments at $300 million and $100 million, respectively. Ground transportation startups were next, receiving a collective $444 million, and these included peer-to-peer on-demand ride and car-pooling apps.
We didn’t include the huge funding rounds for existing companies like Uber, Lyft, GrabTaxi, and Didi Kuaidi in that total as we wanted to illustrate what’s happening with smaller mobile on-demand ride companies just breaking into the sector. We’ve also left out Airbnb, which raised $1.5 billion in 2015. Needless to say, what these existing companies raised in 2015 was significant, and you can read more about the activity in this story.
B2B-related startups attracted the third highest funding level at about $192 million. We’re basing our analysis only on funding rounds that were disclosed and that were at least $1 million or more for a single round. While not every funding round for every travel startup is included in our data, these numbers are still representative of what took place in 2015.
The Five Travel Sectors That Attracted the Most Funding in 2015
It’s worth emphasizing that startups within these sectors aren’t guaranteed success simply because investors threw large sums of money at vacation rental or hotel metasearch and tours and activities companies, for example. The vast majority of travel startups fail.
As the chart highlights, the tours and activities sector hasn’t withered away despite huge challenges such as fragmentation and lack of consumer adoption that still befuddles it. GetYourGuide attracted a $50 million investment in November, for example, and Skift estimates that tours and activities startups received nearly twice as much funding as trip planning and inspiration companies in 2015.
Reflecting on the challenges, Rod Cuthbert, founder of Viator and now CEO of Rome2Rio, told Skift, “There are tens of thousands of small operators, and they don’t think collectively at all. The owners of hotels and other businesses in the travel industry are often principally business people, but tour operators are often close to their offering.”
Holidu, a vacation rental metasearch site which launched in 2014 but implemented its current site design and marketing last year, exemplifies the torrent of investment activity happening in vacation rental booking. It received a little more than $6 million since launch with former Booking.com CEO Kees Koolen leading Holidu’s most recent Series A funding of $5.3 million.
Holidu’s founder, Johannes Siebers, was also an investment analyst at Siemens Venture Capital in Munich, Germany and was previously an analyst at Sirius Venture Partners. The site searches more than three million vacation rentals in 35,000 cities and 201 countries from hundreds of travel sites.
“Startups need to focus on making things right first for the customer with user experience rather than going after dollar valuation and revenue when they launch,” said Siebers. “Metasearch for flights and hotels won’t look the same in five years as it does today because of mobile.”
“Startups that help travelers book travel on mobile have the biggest opportunity. Travel is a big market but it’s also a very crowded market. With trip inspiration, I think this is a very tough one to approach but there are lots of user pain and problems to be solved there. But I think it’s hard to point to one clear winner so far.”
Five Early-Stage Startups to Watch
Every day Skift tracks new startup launches listed on Angellist and we see the onslaught of trip-planning and accommodations booking companies, many of which will likely fizzle out within a year or so when the money runs out.
Hundreds of travel startups launched in 2015 and we combed through our Angejlist coverage to highlight five that launched within the past year. I believe these companies have a shot at helping to define the future of travel; I considered the backgrounds of founders, investors involved, and overall themes that the startups fit into that have already shown momentum.
1. ChatSim ($2.6 million total funding to date) sells travelers SIM cards for smartphones that they can use to chat with family and friends through messaging apps free of charge and with no data limits. Not only is messaging more pervasive than ever — this is a solution that travelers have yearned for since the dawn of smartphones. Calling and using data internationally, where Wi-Fi isn’t always readily available, can still be a nightmare and costly.
2. Grab ($1 million total funding to date) offers travelers VIP access to airport stores, restaurants and lounges. It uses beacons to offer relevant deals and content based on personal preferences and how travelers move through an airport. There are still so many missed monetizing opportunities at airports, which basically have captive audiences with money to spend. With some guidance, that money can be spent more readily and wisely. Grab has also inked a deal with American Airlines to offer its content through the carrier’s app.
3. Tinflur helps destination marketing organizations source social media influencers who best identify with their target markets. Given that practically every destination has worked with an influencer, though not always successfully, there’s room for a middleman here. Brands need a team that’s removed from their destination that can look at the bigger picture and analyze what’s worked in similar markets and truly find the best personalities.
4. HotelFeedback is a Greek company that sends feedback surveys to guests while they’re in the hotel and connected to Wi-Fi. This allows for more immediate and fresher feedback that hotels want but there are also several other implications for how hotels could use this technology to communicate with guests.
5. Pillow ($2.65 million-plus total funding to date) helps short-term and vacation rental property owners and hosts manage their properties. Pillow offers revenue management, housekeeping, and 24/7 guest support services. With some hosts managing multiple properties or actively renting out their spaces while working full-time, people realize they can’t do this hospitality thing alone. There’s no real guidebook yet for how it’s done and no uniformity. A company like Pillow can help hosts understand how to treat guests the right way.
Read original article
