The Pulse of the Ecosystem: January 2022
Welcome to 2022 and to the second installment of The Pulse of the Industry, our monthly recap of the biggest events that took place over the last month and how they impact the current and future state of our ecosystem.
Let’s dive right in.
Omicron and Travel Recovery
Omicron’s impact on global travel recovery has not been equal across borders and hinged on how certain governments chose to handle the new highly contagious variant. With a surge of cases taking grip of major European cities and even sending countries like the Netherlands into lockdown, hotel performance across Europe was down 40% from two years ago compared to Chinese hotels seeing only a 3% decline while US hotels are up 27%. Furthermore, during December 2021, around 12,000 flights were canceled globally owing to a boom in Omicron variant cases and staffing issues.
However, there is an abundance of reasons to remain optimistic about the industry’s bounce back throughout 2022, starting with the signals sent out from some of the most prominent players in the field. Q3 2021 saw significant online travel agencies continue to increase advertising and marketing spend. Airbnb increased sales and marketing expenses 156% to $291M y-o-y, and Expedia Group increased its sales and marketing expenses 150% y-o-y to $1.3B, bolstered by its strongest quarter since 2019. Moreover, more than 109 million Americans chose to travel this holiday season, with bookings 10% higher than in 2019. Lastly, at the time of writing, 50% of the globe’s population is fully vaccinated, with 59% receiving at least one dose leading to more confidence and more possibilities to travel internationally with fewer restrictions.
2021 was the year of the travel IPO with ten market debuts. But at least ten more travel companies are likely to go public in 2022. Despite disappointing Covid setbacks, investors continue to bet on the long-term strength of the travel industry; A few travel companies filed with regulators in 2021 to go public via traditional IPOs. These market launches are expected in 2022, and Sonder, which debuted on Nasdaq on January 14th, is leading the charge. Traveloka, Indonesia’s travel unicorn, had on-again-off-again talks about going public via a blank check company in 2021, which we might see taking shape this year.
Acquisitions and Funding Rounds
2022 started with a bang of acquisitions and funding rounds in the ecosystem. Here are just a few:
- Hipcamp, a San Francisco-based startup that offers campsites for booking, has acquired Cool Camping, an OTA in the UK. Hipcamp, which a year ago quietly raised $57 million in a Series C funding round, has been seeking international expansion. The startup acquired Australia’s Youcamp in 2020.
- HomeToGo, a travel startup focused on VR price comparison and software for PM which also went public last year, has acquired the VR business unit of the real estate group SeLoger (includes the acquisition of French sites amivac.com, vacances.com, and vacances.seloger.com).
- Tech-enabled upscale apartment startup The Guild has announced the acquisition of CREA Management, the PM division of multifamily developer Cypress Real Estate Advisors. The acquisition adds 5,000+ units to The Guild’s portfolio and pipeline, driven by the company’s desire to create an innovative, turnkey platform for living that can host all lengths and types of stay.
- London-based luxury villa rental brand The Thinking Traveler has enhanced its Greek portfolio (+70 exclusive villas) with the acquisition of White Key Villas. Founded in 2002, The Thinking Traveler’s business currently spans European destinations such as Mallorca, Sicily, Puglia, Corsica, The Minor Italian islands, and the Greek Ionian and Sporades islands.
In 2022, one of the “loudest” consumer demands is for businesses to address sustainability blindspots in their operations and provide tangible solutions to climate change concerns. In light of that, JetBlue has launched a program designed to help corporate customers reduce business travel emissions and meet sustainability targets offering participants sustainable aviation fuel (SAF) certificates. Microsoft is investing $50 million in a LanzaJet facility in Georgia that will produce jet fuel from ethanol next year. Oslo-based nature and sustainable accommodation booking platform, Campanyon, has raised €1.5M+ in funding in a bid to make nature accessible to all travelers.
Millennials contributed $200B to travel in the US in 2019, and forecasts predict that by 2025 this market segment will increase its total spend by 10%. Major hotel groups are already operating brands specifically to attract Millennials: Moxy by Marriott, Tru by Hilton, 25hrs by Accor, and Hotel Indigo by IHG, plus smaller chains including Mama Shelter, Motel One, and Citizen M. Hoteliers are changing the guest experience to meet the expectations of a younger, digitally-savvy crowd. Hotel operators currently offer or plan to offer content streaming (61%), mobile check-in (55%), voice-controlled devices (13%), and free Wi-Fi (90%) this year, among other technologies based on customer demand.
Airbnb CEO Brian Chesky turned to Twitter to ask his hundreds of thousands of followers what Airbnb should launch in 2022 and received an outpouring of great ideas for hosts and guests (e.g., more visible last-minute discounts, mid-booking cleanings, family reunion options, local recommendations, renting Airbnbs by the hour, global membership for nomads, and more). Airbnb is already working on some of these suggestions (e.g., booking insurance, personalization, live-now-pay-later, and more). Chesky also doubled down on his commitment to the company and the short-term rental ecosystem as a whole by pledging to only live in Airbnbs over the coming year, in an effort to push his theory of a Travel Revolution in which people will constantly move around over the coming decade from one location to another to work, meet, and play.