Tracking travel startup investment trends in 2021

While 2021 has been another rough year for travel startups and the wider industry, funding rounds, both large and small, have given rise to optimism.

Standout sectors attracting investment such as alternative accommodation and ground transportation mark a similar trend to 2020 but tours and activities, business travel and hotel tech startups are also getting some love.

A report from Lufthansa Innovation Hub estimates investment in travel startups will be about $44 billion in 2021, up from 2020’s figure of $23 billion.

A further feature of 2021 has been exits via special purpose acquisition company (SPAC) and there’s likely more to come there.

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

Rental r(evolution)

Investment appetite has been clear for alternative accommodation startups and tuck-in businesses around the segment with the trend continuing from 2021.

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

Significant rounds have gone into vacation home co-ownership startup 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 excitement in the segment.

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

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

Meanwhile, Selina is heading for a $1.2 billion valuation when it floats next year and Sonder, also planning to go public via SPAC, has said it expects the combined company to be worth $2.2 billion.

Despite the investment pouring into alternative accommodation, hotel technology companies have also sparked considerable interest.

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

It was not the only Asia-Pacific company attracting investment with hotel technology specialist Xie Zhu landing $46 million.

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

Life House, which manages Kayak’s hotels, landed $60 million and Butler Hospitality attracted $35 million.

Mobility momentum

Ground transportation startups covering everything from e-bikes and e-scooters to rideshare, bus transport and autonomous driving is the other star of 2021 when it comes to funding.

Bus service platforms FlixMobiilty and Buser landed $650 million and $138 million respectively while rideshare and bike services such as Bolt and Lime received €600 million and $523 million respectively.

E-bike startup Tier and taxi-hailing service Gett were also conspicuous by the investment flowing in attracting $260 million and $115 million respectively.

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

Other notable rounds going into the segment include $88.5 million for autonomous driving technology specialist 42dot, $107 million for transport technology company Optibus and $500 million for aviation mobility company HT Aero.

Corporate travel

Funding momentum into corporate travel startups did not let up in 2021 despite ongoing uncertainty around COVID-19 and travel restrictions.

The usual suspects, TripActions and TravelPerk, continued to attract significant funding with TripActions landing more than $400 million and TravelPerk attracting $160 million.

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

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

Off exploring

While many tours & activities startups hunkered down in 2020 to save 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 received a bit of a boost from travelers, whether domestic, regional or international, looking to invest in experiences.

Most recently T&A platform Peek announced an $80 million round led by former Airbnb executives.

Easol, a technology platform for experiences providers, also recently attracted total funding of almost $30 million this year with its investment earmarked for recruitment and product development.

Looking back to earlier in 2021, Klook announced $200 million in funding in a bid to widen its platform to other travel services while GetYourGuide added an €80 million investment saying it was scoping out strategic investments.

SPACs, sales and shutters

Looking ahead while trends remain hard to call, activity around SPACs, mergers and acquisitions and business failures are more of a certainty.

Business travel specialists Upside and Lola both announced they were ceasing operations in September although Lola later found a home with Capital One.

Flight technology startup Trip Ninja also announced it was shutting its doors only to later be saved by Webjet.

The wider industry has seen a spate of further consolidation across segments with notable acquisitions including Booking Holdings’ acquisition of Getaroom and eTraveli, U.S. Bancorp buying TravelBank, FlixMobility purchasing Greyhound, PROS acquiring Everymundo and Hyatt buying Apple Leisure Group.

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

The final word goes to SPACS and while mentioned above in the context of accommodation, there are more to be done.

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

While other travel companies such as Inspirato and HotelPlanner have announced their intentions and identified their partners, other funds are waiting in the wings without a travel target so far.

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

Other notable rounds in 2021:

Flyr $150M

Ixigo $53M

Keenon Robotics $200M