Venture capitalists are investing hundreds of millions of dollars in corporate travel start-ups, betting on a revival in business travel in 2021.
TravelPerk, based in Barcelona, revealed on Thursday that it had raised $160 million in a new funding round. Greyhound Capital led the venture, which included both new equity and debt funding. Via its online platform, TravelPerk assists small and medium-sized businesses in booking flights and managing their expenses.
And it is not the only business travel site that is raking in the dough. TripActions, based in California, raised $155 million in January at a valuation of $5 billion, up from $4 billion in mid-2019. TravelPerk refused to reveal its valuation, but CEO and co-founder Avi Meir stated that the transaction was structured in a way that benefited both the startup and its investors.
“The truth is that travel is reviving,” Meir said in an interview with CNBC on Thursday. “It is no longer a belief; it is quantifiable.”
TravelPerk has seen a 70-75 percent recovery in domestic flights in the United States, for example, relative to pre-pandemic levels, Meir said. “While not all flights are fully booked yet, we’re talking about an industry that was just 10-15% complete exactly one year ago,” he said. “Going from 10-15% of baseline to 75% demonstrates that the trend is unmistakably upward.”
The travel industry as a whole was battered last year by the coronavirus pandemic, as policymakers took steps to contain the virus’s spread across borders. However, some investors anticipate a revival in international travel as vaccine rollouts begin and public health restrictions gradually ease.
However, the recovery in travel is likely to be patchy. India, for example, has experienced a devastating surge in recent weeks, registering more than 300,000 new infections every day. On Wednesday, the nation reached the somber landmark of 200,000 Covid-19 deaths. Meanwhile, Europe’s vaccine rollout has been painfully slow to begin with but is gaining momentum.
“I believe we will continue to live in a state of uncertainty for the next 12 months, if not longer,” Meir said.
According to Meir, TravelPerk followed a “completely different direction” from other travel companies, which cut thousands of jobs in an attempt to cut costs and survive the Covid crisis. “We did not lay off any employees,” he said, adding that the company retained strong customer service operations “to be there waiting for the storm to pass.” As a result, Meir claims that TravelPerk will increase its customer base by an astounding 80 percent by 2020.
Additionally, the company reports that it has invested in a couple of new products to assist its clients in navigating coronavirus instability. One, TravelSafe, provides up-to-date information on Covid travel restrictions, while another, FlexiPerk, guarantees refunds of up to 80% for last-minute trip cancellations.
Corporate travel management is a dynamic space that is dominated by large incumbents such as SAP. However, Meir asserts that SAP’s Concur platform is not a direct competitor since it is geared toward large enterprise customers. TravelPerk’s clients include Revolut, Wise, GetYourGuide, and Farfetch.
“There is no doubt that the average business trip in 2021 will look significantly different than it did in 2019,” Ines Verschueren, an investor at Greyhound Capital, told CNBC. “Companies are seeking more efficient methods of managing travel and will place a premium on technology platforms that provide superior choice, versatility, customer support, and duty of care.”