Tracking investment trends in travel startups in 2021

While 2021 has been another tough year for travel startups and the industry at large, funding rounds large and small have sparked optimism.

Noteworthy sectors attracting investment such as alternative accommodation and ground transportation mark a similar trend in 2020, but tours and activities, business travel, and hospitality technology startups are also popular.

A report by Lufthansa Innovation Hub estimates that investment in travel startups will be around $44 billion in 2021, up from $23 billion in 2020.

Another feature of 2021 has been releases through a Special Purpose Acquisition Company (SPAC) and there are likely more to come.

Below, we look at some of the highlights of 2021 travel seed funding as well as SPAC deals and M&A activity.

Rental r(evolution)

The investment appetite is clear for alternative hosting startups and complementary businesses in the segment, with the trend continuing from 2021.

While much of the excitement in 2020 was around Airbnb’s initial public offering, this year it was more about vacation rental startups and RV services.

Significant rounds were invested in vacation home co-ownership Pacaso with $125 million and Outdoorsy with $120 million, while luxury rental company Kocomo with $56 million, Holidu with $45 million and Getaway with $42 million, also benefited from segment enthusiasm.

Smaller rounds were announced for rental property management platform Guesty $50m, while Cosi raised €20m, Cabana $10m, Collective Retreats $23m and RVezy €20m of dollars.

Also noteworthy are SPAC’s exits across the segment, with Vacasa going public earlier this month at a $4.4 billion valuation, while vacation rental metasearch company HomeToGo was listed in September.

Meanwhile, Selina is heading for a $1.2 billion valuation when it goes public next year and Sonder, who also plans to go public via SPAC, said he expects the combined company is worth $2.2 billion.

Despite the influx of investment in alternative lodging, there has also been considerable interest in hotel technology companies.

Channel management specialist SiteMinder attracted $74 million in September ahead of its listing on the Australian Stock Exchange in early November.

It wasn’t the only Asia-Pacific company to attract investment with hotel tech specialist Xie Zhu snagging $46 million.

Meanwhile, Cloudbeds raised $150 million while hotel market intelligence firm OTA Insight saw an investment of $80 million.

Life House, which manages Kayak’s hotels, snagged $60 million and Butler Hospitality brought in $35 million.

Mobility dynamics

Ground transportation startups covering everything from e-bikes and e-scooters to carpooling, bus transportation and self-driving are the other star of 2021 when it comes to funding.

Bus service platforms FlixMobiilty and Buser snagged $650 million and $138 million, respectively, while ride-sharing and bike services such as Bolt and Lime took in $600 million and $523 million, respectively.

E-bike startup Tier and taxi service Gett also stood out with investments that attracted $260 million and $115 million, respectively.

Developing the technology around autonomous driving takes time and costs billions rather than millions, which explains the major funding rounds invested in Waymo with $2.5 billion, Cruise with $750 million, Momenta with $500 million and DeepRoute with $300 million.

Other notable rounds entering the segment include $88.5 million for self-driving technology specialist 42dot, $107 million for transportation technology company Optibus and $500 million for mobility company airline HT Aero.

Company trip

Funding momentum for business travel startups has not faltered in 2021 despite continued uncertainty around COVID-19 and travel restrictions.

The usual suspects, TripActions and TravelPerk, continued to attract major funding, with TripActions snagging over $400 million and TravelPerk attracting $160 million.

New to the segment, SpotNana, announced $41 million in funding, including an investment from Concur founder Steve Singh.

A $65 million investment in enterprise accommodation management platform Hotel Engine also signaled confidence in the segment.

Excluding exploration

While many tour and activity startups hunkered down in 2020 to cut costs and devote energy to development, this year there has been a bit of a revival in their fortunes.

Startups in the segment will have been given a bit of a boost by travelers, whether domestic, regional or international, looking to invest in experiences.

More recently, the T&A Peek platform announced an $80 million seed round led by former Airbnb executives.

Easol, a technology platform for experience providers, also recently attracted nearly $30 million in total funding this year with its investment for recruitment and product development.

Looking back to early 2021, Klook announced $200 million in funding to expand its platform to other travel services, while GetYourGuide added an €80 million investment, saying that he was considering strategic investments.

SPAC, sales and shutters

Looking ahead, while trends remain elusive, activity around SPACs, mergers and acquisitions and corporate bankruptcies are more of a certainty.

Business travel specialists Upside and Lola both announced they would cease operations in September, although Lola subsequently found a home with Capital One.

Flight tech startup Trip Ninja also announced it was shutting down only to be rescued by Webjet.

The wider industry has seen a series of further consolidations across all segments with notable acquisitions including the acquisition of Getaroom and eTraveli by Booking Holdings, US Bancorp buying TravelBank, FlixMobility buying Greyhound, PROS acquiring Everymundo and Hyatt buying Apple Leisure Group.

There are too many more to name and there will be more down the line and in all segments as a smaller and hopefully smarter travel industry emerges.

The last word goes to SPACS and although mentioned above in the context of hosting, there is still a lot to do.

American Express GBT’s deal with Apollo Strategic Growth Capital, which is expected to close in the first half of 2022, will be one that will generate the most interest.

While other tour operators like Inspirato and HotelPlanner have announced their intentions and identified their partners, other funds are waiting in the wings with no travel target so far.

New regulations coming for SPACs and a dip in the excitement around them could leave some dry.

Other notable rounds in 2021:

$150M flyer

Ixigo $53 million

Keenon Robotics $200 million

Pudu robotics $77 million

Kakao Mobility $200 million

Hopper $345M

AllTrails $150 million

Easy Mile €55 million