🛫 The Future of Travel
🛫 The Future of Travel
+ 5 trends and 10 startups that will shape the future of travel
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Last month, I went on a trip to Zion and waited 1.5 hours at the TSA security line at San Francisco International Airport. I am not sure what it was like pre-pandemic, but this sure feels like travel is back and in full swing. Based on the checkpoint data provided by TSA, the number of travelers is almost at the 2019 level.
I am a big fan of the travel space because travel is a core need that we all have. It’s a means for us to reconnect with family and old friends, a channel for us to learn and explore the world around us, and a medium to escape day-to-day life and all the stress that comes with it. Because of this need, travel ranks high on consumers’ discretionary spending list. According to a recent survey done by Amadeus, 42% of respondents said international travel is a high-priority spending area for the coming year, followed by 32% for domestic travel - both are far higher than other areas such as fashion(25%), eating out(27%), or home improvements(20%).
However, even though travel is coming back, the past two covid years have also reshaped how we travel and live our lives in general. There are five trends that I have noticed, along with 10 emerging startups that are capitalizing on this shift:
Workcation and flexible living
The great outdoors
Unique experiences
Creator economy x travel
Fintech x travel
Let’s dive in.
1. Workcation and flexible living
The word “workcation” - a period where employees get away from their usual workplace while continuing to work from an alternative location - has been more and more commonly used since the start of 2020. The search volume for this word has grown by over 450% in the past five years, according to Exploding Topic.
The rise of remote work is likely the biggest driver of this trend. Since remote workers are no longer constrained by where they are physically located, many are trying to escape from their usual workplaces and experience other parts of the world throughout the year.
However, it can be very expensive and quite a hassle to do workcations, and as a result, many people are tied down to one place. There are several innovative solutions that are trying to empower remote workers to have more flexible living arrangements.
Model 1 - Home swapping
Home swapping is not new, but it has been relatively niche. There are Facebook groups and Reddit communities that frequently coordinate home swapping among their members.
Kindred is a members-only home swapping startup that is poised to bring this model to the mainstream. Kindred focuses on connecting members with people they trust and enabling people to live that digital nomad style without breaking the bank. Members can earn 1 night of travel for each night they host other members in their home, and they can use those earned credits to book stays at another Kindred home. Kindred handles end-to-end logistics like cleaning and host protection to reduce the risks of hosting others. In addition, you can use Kindred even if you are just renting a place which broadens the reach to a lot more people.
Traction & funding:
Kindred has seen strong viral growth according to Lenny.
Co-founders Justine Palefsky and Tasneem Amina are both Opendoor alum and have raised $7.75M from a16z, Bessemer, and many more.
Model 2 - Flexible lease
One of my least favorite parts of renting an apartment is that I often have to sign a one-year lease(at the minimum). In addition, after furnishing the apartment, I am a lot less likely to leave due to the amount of time and stress involved with moving.
One of the emerging startups solving this problem is Landing. Landing revolutionizes the rental process by offering furnished flexible apartments for renters. The experience is quite easy, just like ordering takeout from DoorDash. You put in the desired location along with the length and apartment type. After finding the apartment you want, you can simply click reserve to finalize the process. Members of Landing are also pre-approved to live in any home within the network - all you have to do is to give a 30 days notice and go on to the next adventure.
Traction & funding:
Landing was founded by serial entrepreneur Bill Smith, who sold his last startup Shipt for $550M to Target. To date, Landing has raised over $222M from Greycroft, Maveron, and many more.
The great outdoors
The uncertainty of COVID variants (and now monkeypox) has increased the demand for outdoor activities. According to the 2022 Viator Travel report, the 10 fastest growing experiences categories (and 18 out of 20) are all related to outdoor activities. As someone who works from home, I can certainly attest to this. I have been more eager to explore nature and do things outdoors now that I am spending the majority of my time stuck at home.
Many hashtags in this outdoor travel category are trending on TikTok. Some of the most popular ones include
#vanlife - 9.9B views
#glamping - 1.3B views
#cabin - 1.1B views
Several startups are capitalizing on this trend.
Trend 1 - Van life
Van life is a new lifestyle of living in a van full-time or part-time. It’s not entirely glamorous (e.g. inconvenience with finding a place to shower), but it certainly has its appeal such as the flexible nature and the cost savings of not having to pay rent. One of the emerging startups involved in the van life movement is Cabana.
Cabana is a mix of a car-sharing company and a boutique hotel. People can rent a van for ~$200 a night through an app, and the van comes with a bed, kitchen, shower, wifi, and many other amenities you would expect from a hotel. According to the CEO of Cabana, Scott Kubly, “Trips and vacations are inclusive of two key elements – the travel to the destination and the destination itself. We are tightly integrating the two by providing travelers both a comfortable mobile hotel room and a unique experience that meets their needs.”
Traction & funding:
Cabana currently operates in LA and Seattle and has plans to expand to SF this summer. It raised a $10M Series A last summer, led by Craft and Goldcrest.
Trend 2 - Glamping
Glamping (aka glamorous camping) is camping with comfort and amenities. It’s another search term exploding in popularity. One of the interesting models I have found is the tiny cabin experience, popularized by Getaway House.
Getaway House started as an idea of two college friends, Pete Davis and John Staff, who built a fully furnished tiny cabin outside of Boston. They advertised the cabin to millennial city dwellers who are looking to live in the outdoors without the gear. Guests could just book the cabin online and show up at their designated time. Over the past two years, it has grown exponentially, mainly due to the viral buzz it has generated on TikTok and Instagram. I went to one in Michigan last year and was amazed by the ease of the entire experience and the number of amenities they were able to offer in the tiny cabin such as a fully stocked kitchen.
Traction & funding:
Getaway has launched close to 30 locations in the US and has raised $81M from Certares, L Catterton, and more.
Unique experiences
One behavior that never gets old is that, as humans, we are always looking for new experiences, whether it’s immersing ourselves in a new culture or trying something new on our bucket list. Over the past few months, I have seen a plethora of new startups that aim to help people to find more unique experiences.
Model 1 - Passion-driven experiences
One model is around connecting people with places that allow them to have experiences related to their passion. Thermal is a startup that is building a marketplace for this type of passion-driven travel, with an initial focus on the surfer community.
Surfing is a big community with more than 35M+ active surfers worldwide, and I suspect the number is even bigger if counting casual surfers who surf once every few years. However, planning a surfing trip can be painful, whether it’s wiring money around the world, spending time with travel agents, or finding the best surfing experience. Thermal makes it better for travelers by connecting them with passionate local guides, who will host them and provide the best surfing advice. Travelers can choose the right guide based on the region and the type of surfing experience they are looking for.
Traction & funding:
Thermal has 400+ surfing trips on the platform and has attracted tens of thousands of surfers worldwide since its inception in 2021.
Model 2 - Serendipitous experiences
Another cool model I have seen is around connecting people with serendipitous experiences, whether it’s a trip to a surprise location or a trip with strangers. One example of that is Your Friends are Boring, a startup founded in San Francisco just earlier this year.
Their vision is to create the “biggest (unboring community) of young professionals that don't think that meeting, traveling, and bonding with strangers is such a crazy idea”. They are building on top of the idea of the summer camp effect, which is when you meet a bunch of strangers and in just a few days you feel like you really know them, and they instantly become your best friends. They are currently focusing on trips like this one departing from San Francisco. You get to enjoy unique experiences and also make friends that last a lifetime.
Traction & funding:
Pre-seed / accelerator phase; not much info on the website.
Creator economy x travel
Creator economy has garnered a ton of interest over the past couple of years and is one of my favorite topics to cover in this newsletter. There are many creator economy-related innovations in the travel tech industry as well.
Model 1 - travel agent empowerment
There are over 100,000 travel agents in the US and it’s an underserved market with a relatively low level of tech innovation. Fora is a startup that’s changing the game for travel agents while making the travel experience more tailored and convenient without costing more.
Fora travel advisors work with their customers to craft a plan for their next trips and try to help them to secure the best pricing and perks no matter where they want to go. On the other side of the marketplace, Fora is empowering hobbyist-entrepreneurs who are looking for flexible work and are interested in helping others plan trips. Fora seeks to engage mostly stay-at-home moms in the US who are seeking either full-time or part-time work arrangements. Fora travel agents make money mostly from commission fees from the properties and travel providers they refer to their clients.
Traction & funding:
The Fora team has raised over $18M in total from VCs like Forerunners and Heartcore. According to Forerunners, “in just two months post-launch, Fora has booked over $1 million in travel, with their top advisor representing ⅕ of total volume.”
Model 2 - private-label travel brands
Many celebrities and influencers are already setting up shops to sell physical products. Now, many of them are also selling trips, empowered by startups like Dharma.
Dharma’s mission is to empower iconic people and brands to create and sell travel experiences. They create, build, launch, and operate private-label travel brands for celebrities like athletes and influential brands like Equinox. One travel brand they have built is called Looking FC by Eric Cantona (one of the greatest soccer players). Dharma helped Eric to launch a travel brand that serves passionate soccer fans. Looking FC provides an authentic soccer experience for fans by taking them to the sport’s greatest cities, providing unique encounters with their favorite clubs, and helping them to enjoy the local football experience.
Traction & funding:
Dharma has raised $3.5M to date and partnered with many well-known brands (e.g. Equinox, Pernod Ricard) and celebrities like Eric Cantona, and many undisclosed ones.
Fintech x travel
Despite the rise in travel demand, consumers are also feeling the impact of COVID-induced travel disruptions along with economic uncertainty. Many airlines are short staffed and several regions in the world still have strict travel limitations. These travel disruptions have caused significant stress for travelers. At the same time, many macroeconomic factors are affecting the spending power of consumers. The global economy is in turmoil due to increasing geopolitical conflicts and inflation, reducing the spending power of consumers.
These macro factors have spurred the growth of many fintech products that aim to reduce stress related to travel disruptions and increase the affordability of traveling.
Model 1 - Global travel insurance
To reduce the stress related to disruptions such as flight delays and trip cancellations, consumers are increasingly more inclined to purchase trip insurance to hedge travel risks. The global travel insurance market was valued at ~$12B in 2020 and is expected to reach $119B by 2030 at a whopping 26% CAGR, according to allied research.
Battleface is a full-stack global insurance startup founded right before the pandemic. It helps travelers by connecting them to customized insurance solutions that provide coverage that matters. Most traditional insurances are hard to navigate, difficult to understand, and not customizable to the actual needs of travelers. Battleface makes buying travel insurance easy and transparent - they are Lemonade for travel insurance.
Tracton & funding:
The team has raised $14M to date from investors like Drive Capital and Fintech Ventures Fund. It recently partnered with Tripaction, whose users can now access customizable travel insurance on the Tripacton platform.
Model 2 - BNPL x Travel
The same study by Amadeus mentioned earlier also found that half of the travelers today are more likely to “economize by choosing lower-cost hotels, flights, or destinations due to cost of living pressures when they travel in the next twelve months”. Many startups have also identified this trend and launched fintech products to address this issue.
One model is to offer more flexible payment terms for travelers through offering the “buy now pay later (BNPL)’ option, a trend popularized by companies like Klarna and Affirm. It’s an offering that consumers are familiar with - 50% of consumers have tried a BNPL service in the past. One of the leading players in the space is Fly Now Pay Later. Founded in 2015, the company initially focused on B2B, enabling enterprises like airlines and flight aggregator platforms to offer installment financing options. It has since launched its own consumer-facing mobile app. Each traveler will get a credit limit on the app which they can use to book trips directly in the app and spread the cost over 3 to 12 months.
Tracton & funding:
The Fly Now Pay Later team has raised $177M to date and has built partnerships with KAYAK, Malaysia Airlines, and airlines payments network Universal Air Travel Plan (UATP) for EU merchants.
Special shout out to Mauricio Prieto for sharing with me some amazing insight regarding the space. He is a seasoned travel tech entrepreneur and writes a Substack called Travel Tech Essentialist Substack - one of the best in the game. Make sure to subscribe if you are interested in learning more about travel tech.
See you all soon 👋,
Leo