TravelPerk CEO and co-founder Avi Meir.
LONDON — Venture capitalists are pumping hundreds of millions of dollars into corporate travel start-ups in the belief that business trips will rebound in 2021.
On Thursday, Barcelona-based TravelPerk announced it had raised $160 million in a new funding round. The investment comprised of both fresh equity and debt financing, and was led by Greyhound Capital. TravelPerk helps small and medium-sized enterprises book flights and manage their expenses through its online platform.
And it’s not the only business travel platform picking up large sums of cash. In January, California-based TripActions raised $155 million at a $5 billion valuation, 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 travel is coming back,” Meir told CNBC in an interview on Thursday. “It’s not a belief anymore, it’s actually visible in the numbers.”
In the U.S., for example, TravelPerk has seen a 70-75% recovery in domestic flights compared to pre-pandemic levels, Meir said. “Most flights are not 100% full yet but we’re talking about an industry that was 10-15% exactly one year ago,” he added. “Going from 10-15% of baseline to 75% shows the trend is definitely up.”
The travel industry as a whole was hammered by the coronavirus pandemic last year, as governments took measures to curb the spread of Covid-19 across borders. But some investors are betting on a resurgence in international travel as vaccine rollouts get underway and public health restrictions are gradually being lifted.
The recovery in travel is likely to be patchy, however. India, for example, has seen a devastating surge in cases lately, reporting more than 300,000 new infections a day in the past week. The country passed a grim milestone of 200,000 Covid-19 deaths on Wednesday. Meanwhile, Europe’s vaccine rollout got off to a painfully slow start but is beginning to gather pace.
“We’re going to live in this state of uncertainty for, I think, the next 12 months, if not longer,” Meir said.
Meir says TravelPerk took a “very different path” to other travel firms which slashed thousands of jobs in an effort to cut costs and survive the Covid crisis. “We didn’t do layoffs,” he said, adding the company maintained robust customer support operations “to be there waiting for the storm to pass.” As a result, Meir says, TravelPerk even managed to grow its customer base by 80% in 2020.
The company says it also invested in a couple new products to help its clients navigate coronavirus uncertainty. One, called TravelSafe, shows the latest data on Covid travel restrictions while another, FlexiPerk, guarantees 80% refunds on trips that get canceled at the last minute.
Corporate travel management is a competitive space with big incumbent players like SAP. But Meir says he doesn’t consider SAP’s Concur platform a direct competitor as it’s more focused on large enterprise customers. TravelPerk counts a number of start-ups as clients, including Revolut, Wise, GetYourGuide and Farfetch.
“There is no doubt that from 2021 onwards, the average business trip will look very different to how it did in 2019,” Ines Verschueren, an investor at Greyhound Capital, told CNBC. “Companies are looking for more efficient ways to manage their travel and will place high value on the technology platforms that offer superior choice, flexibility, customer service and duty of care.”