The travel startup industry has never been more vibrant, with a record level of investment last year, according to recent reports. With the likes of startup Mezi - the virtual travel assistant - being acquired by financial giant American Express, there is clearly an appetite for travel innovation that stretches far and wide. Ensuring these startups get access to the right people has never been more important.
We caught up with John Matson, Managing Director of Voyager HQ, a New York based “travel tech startup club” that acts as a matchmaker between startups and corporates, opening up access to knowledge, resources and funding. It has more than 800 members around the world and its co-working space holds 25 startups.
Here’s what he had to say about the challenges and opportunities in the travel startup scene...
Click.: Describe Voyager HQ in a couple sentences?
Matson: It’s a club for innovators in the travel, tourism and hospitality industry. In other words we represent a community of startup founders and connect them with travel industry advisors, partners and investors. We operate in a similar way to an incubator, but we don’t have a timeline because we believe in connecting founders at the right time and place.
Click:. Why are startups in travel so important?
Matson: Startups are important to any industry because it’s out of these new ideas that society is driven forward. In travel in particular, startups bring about the advances to both the experience of travelling on the consumer side, and improvements of how the business operates. Almost anyone has a travel horror story, and it’s out of these pain points that new opportunities are created.
Simply put, there is a lot of room for improvement. For the existing travel companies, not only is the industry immensely competitive and commoditised, but the business is operationally heavy - think of customer support costs and staffing. There’s a huge capital expenditure involved with mostly all of it. Creating efficiencies through emerging technologies and by implementing new ways of approaching solutions, companies can increase their margins and reinvest capital into aspects of the business that create a better consumer experience.
Click.: Are there any startups we should be looking out for?
Matson: Picking a startup to watch is always hard for me because I truly admire so many from our community, but a few to name would be SkyHi, who is doing an incredibly ambitious, but impressive B2C play by providing a bundle of one-way flights for a monthly subscription fee. LuggageHero is another. They’re creating luggage drop-off stations at small businesses (so you don’t have to carry your luggage everywhere you go), and Bellhop, who connects the major ride hailing apps. It gives you the ability to pick the best ride at the best price.
Almost anyone has a travel horror story, and it’s out of these pain points that new opportunities are created
Click.: How important is the marriage between travel and tech?
Matson: Paramount! It’s not only what allowed us to travel in the first place, but also what made travel more accessible to a wider audience. Without global distribution systems, we wouldn’t be able to handle the massive reservation logistics for airlines and hotels. Without Online Travel Agencies and meta-search engines, we wouldn’t be able to book travel on our own. And now, tech provides the answer to finer intricacies of the industry.
Click.: What’s the biggest challenge you see for the companies you work with?
Matson: Access and funding. Access impacts founders on multiple levels. If they are working on a B2B company, the sales cycles are some of the most extensive in the world. Sometimes, one partnership or deal can make or break the travel startup. Also, ventures in travel require existing relationships with suppliers and technology providers, which are extremely difficult for most startups to get. I’ve also seen brilliant technologists come up with solutions but not have the right connection to be able to implement it. In almost any situation, you have to work with incumbents.
Funding is a unique challenge for travel startups because they are typically considered high-risk investments, for all the aforementioned reasons and also because travel content is expensive to implement which increases their capital expenditures right out of the gate.
[The biggest lesson I've learned is] realising just how important strategic partnerships are in the travel industry, particularly in the funding landscape for startups
Click.: What has been the biggest lesson you’ve learned so far?
Matson: Realising just how important strategic partnerships are in the travel industry, particularly in the funding landscape for startups. It usually benefits a company to get a strategic industry investor to line up the relationships with the right players. There is a select group of investors and companies who focus on the travel industry. In hindsight, I would have put more attention into educating the general venture community on the opportunities and dynamics of the industry to grow this pool - something that we are putting effort into now.
Click.: Finally, where do you see the industry heading?
Matson: So many interesting places! I can think of instantaneous walk-in, check-in and concierge for hospitality and hotel companies becoming the norm. I can see no layovers, on-demand shuttle flights, and zero-emission engines also going that way. I can see not just driverless cars, but also overhauled road infrastructure and pathfinding, and a whole new function of discoverability for activities. Generally speaking, I believe the travel experience will become a much more personalised and seamless experience. The next 10 years could bring the next golden era for travel.
- Voyager HQ connects startup founders with travel industry advisors, partners and investors
- Access and funding are the biggest challenges for startups, according to John Matson, with these companies often seen as "high risk investments"
- Highlighting the appetite for innovative thinking, at the end of January AI travel assistant Mezi was acquired by American Express for an undisclosed amount