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Travel startup investments 2019 – a year in review

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Investors were pouring money into travel startups in 2019.

This is especially true with late-stage funding, where well-versed startups navigated their way to new capital.

Venture capitalists also looked beyond the United States in 2019 for value, with the Asia Pacific region becoming a focal point for investments.

This year saw several $100 million-plus investment rounds – with five new companies achieving unicorn status in the process.

In September, Phocuswright published its annual State of Travel Startups report, which documented the 55% year-over-year increase in funding to travel startups.

Additionally, Phocuswright also released The State of Travel Startups Interactive Database, which allows users to sort and filter funding in travel startups dating back to 2005.

Here are some of the most significant areas of funding in 2019:

Lodging

Buoyed by its booming supply, fragmented market and high margins, the lodging sector continued to be the apple of investors’ eyes.

The most well-known example was OYO, which achieved a $1.5 billion Series F round in 2019, including $700 million from founder and CEO Ritesh Agarwal. This latest move, which included the backing of SoftBank Group, resulted in a company valuation of $10 billion.

Since launching in 2013, OYO has evolved from being a provider of budget hotels to a global hotel management company – which has left some in the travel industry skeptical of its business practices.

While OYO might be the fastest-growing lodging company, it’s far from being the only major recipient of funding.

Life House, another newcomer in lodging, raised $100 million in private equity this year. The New York-based company, which manages both branded hotels and offers technology to hotel owners, previously raised $10.4 since its launch in 2017.

Hotel booking company RedDoorz has also emerged as a leading lodging startup, thanks in part to its $45 million Series B round announced in July and a $70 million Series C round a few weeks later. With $115 million in new funding in 2019, the Singapore-based company is poised to expand into new markets in 2020.

Nearly half of all hotel and lodging startups identified as B2B-oriented, which have also received a lot of attention from investors in 2019.

Notable investments among B2B startups in 2019 included hotel staff communication platform Beekeeper ($45 million raised in 2019), hospitality staff and guest platform Intelity ($44 million raised in 2019) and hotel property management software provider Mews ($33 million raised in 2019).

B2B startups serve an underserved niche in lodging, especially among hotel operators who are determined to modernize outdated technology.

Private accommodation

Private accommodation (or short-term rental), was once an underutilized aspect of online travel. But thanks in part to brands like Airbnb and Vrbo, the segment has gone mainstream, and investors recognize the potential value in private accommodation startups.

In October, vacation management company Vacasa achieved unicorn status after securing a $319 million investment – the largest Series C round in private accommodation.

This funding round was announced just a week after the Portland, Oregon-based company closed a deal to acquire Wyndham Vacation Rentals for $162 million.

It was a busy year for Vacasa, which also become the first vacation rental company to partner with Google to showcase available properties.

But Vacasa was not the only new unicorn in the space.

Sonder reached the status after closing a $210 million Series D round in July. The San Francisco-based company, which offer hospitable amenities in short-term rentals, hopes to reach $400 million in revenue by the end of 2019.

A few months before Sonder received its big investment, business travel short-term rental Lyric received the backing of Airbnb. This $160 million Series B investment from April brought Lyric’s fundraising total to over $179 million.

Generally, some of the most well-funded startups in private accommodation serve specific niches, such as premium listings (TurnKey Vacation Rental’s $48 million round) and corporate travelers (Zeus Living’s $55 million round).

Although B2C-oriented startups are getting the bulk of the capital, B2B startups (such as property management platform Guesty) gained more investment momentum in 2019.

Ground transportation

Ground transportation continued to be a major area of investment for VCs in 2019, with ride-sharing/taxi-hailing startups once again the recipients of the bulk of major funding.

Weeks before its IPO, Uber received a $1 billion investment for its autonomous vehicle unit.

With Uber and Lyft in the public markets, private investors were looking for the next big startups in the space.

Indonesian-based ride-sharing startup GoJek raised more than $100 million, and India-based Drivezy declared intentions to secure the same capital.

In 2019, investors also focused on alternative ground transportation startups aimed at improving travel within urban destinations.

Intercity bus startup FlixMobility secured a $500 million investment in July. The company plans to use the funds to expand its operations to the United States.

Last-mile transportation services also saw an uptick of investments in 2019, most notably electric scooter and bike company Lime ($310 million), e-scooter provider Voi Technology ($85 million) and autonomous bus shuttle service May Mobility ($55 mobility).

Tours and activities

Despite the fragmentation, the tours and activities segment continued to make inroads in 2019 as a growing component of online travel.

GetYourGuide bagged $484 million in May 2019, bringing its total funds raised to over $650 million. The Berlin, Germany-based company, which dates back to 2008, is hoping to expand into new markets in 2020.

One month before GetYourGuide closed its big round, Hong Kong-based Klook raised another $225 million. The company has over $500 million since launching in 2014, and is aiming to have 60 million bookings by the end of the year.

A notable connection here: SoftBank invested in both rounds, fueling speculation about the futures of both companies.

Also in 2019, Beijing-China based Huangbaoche, a guided tour driver platform, raised $50 million.

Other notable rounds in 2019:

Business travel platform TripActions – $250 million
Travel website Mafengwo – $250 million
Travel payment brand Uplift – $123 million
Hotel booking website Yanolja – $180 million
Attraction booking platform Tiqets – $60 million
Corporate Travel platform Travelperk – $60 million
Online booking/tour agent service Tourlane  – $47 million

Looking ahead to 2020

Will these trends in funding for travel startups continue in 2020?

“I don’t see the momentum in online travel investing slowing down anytime soon,” says Erik Blachford, venture partner at Technology Crossover Ventures. “I think the focus is shifting from the booking experience to the in-destination experience.”

Blachford adds: “I think that we’re just scratching the surface in terms of the application of 5G, geo-targeting and really interested content development all coming together to make for a better in-destination experience.”

Learn more…

Read the 2019 Phocuswright State of Travel Startups report to gain insights about the evolving travel startup landscape.

The report includes details such as the market trends driving investment, as well highlights of the top funded companies and the investors behind them.

Access to the report is FREE for existing Phocuswright Open Access and Innovation subscribers. For non-subscribers, it is available for purchase for $495.

Also check out PhocusWire and Voyager HQ’s list of the Hot 25 Startups for 2020 – our list of brands we think will have the biggest impact on their respective sectors in the coming year.

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