TravelPerk CEO and Co-Founder Avi Meir.
LONDON – Venture capitalists are pumping hundreds of millions of dollars into business travel startups, confident that business travel will bounce back in 2021.
On Thursday, Barcelona-based TravelPerk announced that it had raised $ 160 million in a new round of funding. The investment included both new equity and debt financing and was led by Greyhound Capital. TravelPerk helps small and medium-sized businesses book flights and manage their expenses through the online platform.
And it’s not the only business travel platform that is raising large sums of money. In January, California-based TripActions raised $ 155 million on a valuation of $ 5 billion, up from $ 4 billion in mid-2019. TravelPerk declined to disclose its valuation, but CEO and co-founder Avi Meir said the Deal was agreed on favorable terms for the start-up and its investors.
“The reality is that travel is coming back,” Meir said in an interview with CNBC on Thursday. “It is no longer a belief, it is actually visible in the numbers.”
In the US, for example, TravelPerk has seen a 70-75% recovery on domestic flights compared to pre-pandemic, Meir said. “Most flights are not yet 100% busy, but we’re talking about an industry that was 10-15% exactly a year ago,” he added. “A change from 10-15% of the baseline to 75% shows that the trend has definitely increased.”
The entire travel industry was hit by the coronavirus pandemic last year as governments took action to curb the cross-border spread of Covid-19. However, some investors are betting on a revitalization of international travel as vaccines rollout begins and public health restrictions are gradually lifted.
However, the recovery while traveling is likely to be inconsistent. India, for example, has seen devastating spikes in some cases recently, reporting more than 300,000 new infections per day over the past week. The country passed a dire milestone of 200,000 Covid-19 deaths on Wednesday. Meanwhile, the introduction of vaccines in Europe started painfully slowly but is slowly picking up pace.
“We will live in this state of uncertainty for the next 12 months, if not longer,” said Meir.
According to Meir, TravelPerk has taken a “very different route” to other travel agencies who have cut thousands of jobs to cut costs and weather the Covid crisis. “We haven’t made any layoffs,” he said, adding that the company had robust customer support “to be there and wait for the storm.” As a result, according to Meir, TravelPerk was able to increase its customer base by as much as 80% in 2020.
The company says it has also invested in some new products to help its customers cope with coronavirus uncertainty. One, called TravelSafe, displays the latest data on travel restrictions from Covid, while the other, FlexiPerk, guarantees 80% refund for trips canceled at the last minute.
Corporate travel management is a competitive environment for large established companies like SAP. But Meir says he doesn’t see SAP’s Concur platform as a direct competitor as it is more focused on large enterprise customers. TravelPerk has a number of startups as customers, including Revolut, Wise, GetYourGuide and Farfetch.
“There is no doubt that the average business trip from 2021 will be very different from 2019,” Ines Verschueren, investor at Greyhound Capital, told CNBC. “Companies are looking for more efficient ways to manage their travel and are placing great emphasis on technology platforms that offer superior choice, flexibility, customer service, and due diligence.”