This week we are taking a look at what the ‘new normal’ will look like for different startup sectors. In addition to our survey on what the EU-Startups community predict, and our rundown of ‘social distancing’ startups, we’re conducting interviews with startup leaders in the sectors of food delivery, smart cities and mobility, coworking, HR and travel.
With the ‘pause’ button being hit on the travel industry, there are many questions about how the sector will move forward as restrictions start opening up. Beyond the necessary safety measures like mask wearing and reduced passengers on flights, there are predictions spinning around on longer-term shifts, such as a focus on local travel, a rise in virtual reality or ‘cloud’ travel, immunity passports and more. But what does this mean specifically for business travel?
Avi Meir, CEO and co-founder of TravelPerk, a Barcelona-based business travel platform that has grown to 400+ employees in 5 years, has been hypothesising just this. Avi believes that now more than ever people understand the value of human connection, with the unique opportunities that you can only get from meeting in the same location. Having kept the team in shape, he bets that business travel will grow more in 2021, as predicted in 2019, with a delay caused by the pandemic.
Avi has published a few blog posts and on social media on his business travel predictions, but we wanted to jump deeper into the topic. We talked about how he believes local travel will be a temporary summer trend, why European train travel will be more attractive than flying, and how employees undertaking business travel will start expecting better care programmes, flexible travel options and more robust insurance options.
First up, let’s dive into the basics. How did you start TravelPerk, and what is your mission for business travel?
After selling my startup Hotel Ninjas to Booking.com, I was invited by my ex-Booking.com colleagues Ron Levin and Javier Suarez to join them in fixing business travel.
We initially thought to create a cost saving product, like Rocketrip for example, but quickly realized that the massive opportunity was in jumping head-first to the deep waters of providing a one-stop-shop for companies to book and manage every aspect of their business travel programme.
The industry is very fragmented, and is dominated by old-school travel agencies with negative NPS and practically no technology in place. We decided to create a new category of what we call “consumer-grade business travel”, combining the benefits of holiday websites like Booking.com, but built from the ground-up with business travel in mind.
Our mission at TravelPerk has been the same from the beginning—to make business travellers happy. This is what the entire team works towards everyday and we have this ultimate goal of having one million happy business travellers. That’s a very long term goal, but everyone who comes to the company learns about it during their first weeks and they’re all on board with the long journey we’re on to get to that place.
As we all know, the travel industry has been one of the hardest hit. Could you tell us how TravelPerk was affected, and what steps you took to be able to exit the crisis successfully?
It was around the 2nd week of March that we started to feel the pain of low bookings and cancellations. People generally tend to book twenty-one days in advance, but at the start of this thing we were seeing people book just one or two days in advance due to uncertainty around travel. Our Customer Care faced an onslaught of calls because of the amount of cancellations, and our booking volume dropped to about 60%. Then the lockdown policy started to spread across Europe and we faced huge drops in bookings—around 95%.
Seeing these types of numbers, I think many companies acted out of panic and started cutting jobs fast and deep, and perhaps this was the right decision for them – only time will tell whether their approach was the right thing to do versus what we decided to do at TravelPerk. I wanted to buy us some time to do things in a calm and disciplined way. The first thing was to survive, and we did that by cutting all non-essential costs like external consultants and putting a freeze on hiring for most teams. Then, the next thing was to focus on being able to emerge strong once this is over. I didn’t want to spend time rebuilding the capacity and the muscle that we lost, so the idea was to keep things in good shape, increase investment in the product, train teams to be in an even better place than where they were when we left off so we could come out ahead. We would have run the risk of having to also rebuild capital if we had cut too deep.
Of course, we’re still dealing with the crisis and the fallout from it so I don’t want to jump ahead and say anything about exiting successfully yet. There’s still a way to go. What’s encouraging to see is that there’s movement in terms of domestic business travel, and we’ve kept our team in good shape over this period in order to make sure everyone was supported. We’ve been transparent about everything – how difficult this period would be and how we’re being affected. Honest, transparent and open communication is a core part of how we work and this way of operating, sharing the challenges and struggles we’re all having is what has allowed us to stay resilient.
You’re based in Spain (like us!) which had one of the strictest lockdowns. How would you like to see travel restrictions opening up around Europe?
I wasn’t against the idea of lockdown when it started, actually we decided to close all our offices and go fully remote 1 to 2 weeks before the official lockdown began. Right now though, I think we need to start looking at the costs of keeping lockdown going and start assessing the risk vs reward. Unfortunately, I don’t think there’s a perfect solution, however I think we can be responsible as a society and use common sense. As long as we encourage people to understand the risks involved with moving freely and as long as we keep the curve getting flatter, I think we should open up and open up faster.
Definitely moving freely around the country is something I feel should be allowed now, and we see this happening in Germany and South Korea for example. Trains are a great option for this and less hassle while people are still worried about air travel restrictions and logistics. There’s more room to social distance and more breathing space with windows that can be opened and doors opening whenever the train stops. People are sensible – I don’t believe they’re going to do anything reckless that endangers their lives and I think governments should trust that and allow more freedom to travel within reason.
What are your predictions for how corporate travel will change after the pandemic? i.e. the ‘new normal’.
I’ve actually written a couple of articles on this recently. The first was me making certain predictions for how travel in general would look and the second was a follow up using new data that had emerged to see whether those predictions were true or not.
I don’t buy into this idea that everything will be remote. I think many things will be remote, but I believe people more than ever understand the value of human connection and meeting people in person and I’m willing to bet business travel will grow more in 2021, based on 2019 projections.
That being said, I think we’ll see an uptake in train travel and companies monitoring their travel management programmes more closely in the name of traveller safety. They’ll make sure trips are really essential while there’s still this uncertainty in the air about the virus and good corporate travel providers will make sure they’ve got robust travel safety options and duty of care solutions available to their customers.
I think increased flexibility and insurance is going to be one of the biggest things people are looking for when booking trips after the pandemic subsides. A lot of people will be ticking that little box they usually skipped before this happened, but they’ll be looking for airline providers and insurers to step up and ensure they’re covered for pandemics, which wasn’t necessarily the case before.
At TravelPerk, we saw the need for more flexible business travel even before the crisis. Because of this we created a different solution called FlexiPerk, which allows travellers to cancel a trip for any reason, up to a couple of hours before take-off. We’ve seen a huge demand for FlexiPerk since we launched it, which has increased massively since the beginning of the outbreak.
You’re positive about what’s to come, having predicted 2021 will be a record year for travel. Could you expand?
Yes, as I said, I’m even willing to bet on it! It goes into what I said before—I think that people value human connection now more than ever. I can’t see companies having a remote only policy when it comes to meetings. Many business meetings will always need to be done in person, there are more opportunities that arise from having experiences where people are in the same location. The projections for business travel in 2019 were that business travel was going to rise and I still believe this to be true—we’ve just experienced a delay.
There are some new trends emerging for travel, like ‘virtual’ tourism and local/domestic travel. Do you have any thoughts?
I believe domestic travel is going to be the big thing of the summer, despite Europe opening up to more travel being allowed in the Schengen area. I think many people – while there is still uncertainty about virus handling in countries, available routes, different geographical travel restrictions -will make the most of their surroundings and explore their resident countries more via train or car, with the novel experience of having less tourists to deal with. I think, for example, it will be a great time to go camping in Europe.
I’m not so sure virtual tourism will be a lasting trend once restrictions are fully lifted. I understand it being something people turned to with travel stopping so abruptly and being stuck indoors with no certainty about when they could move freely again. But, as lockdowns are lifted and the weather gets nicer, I think people will be extremely keen to get outdoors finally without restrictions, see each other, explore their local areas and start living their normal lives again. The Louvre has been available to visit inVR for years now, yet it’s always full of people. There is nothing like being there in person.
Finally, what advice would you give to early stage, European, travel tech startups right now?
The top four pieces of advice I’d give would be this:
- Make sure you have runway, at least 18 months. You can do this either by increasing revenue (the best way to fund your business!), or raising money if you can, cutting costs, or all of these combined. This health crisis will almost certainly be followed by an economic crisis—be ready for that.
- Focus on the pain point of your paying customers, and don’t get distracted or do anything else except for solving the big pain points for your paying customers.
- Look at other geographies for customers. Asia Pacific is coming back, and the US domestic market is coming back too. Diversify geographies to find multiple pockets of revenue.
- Despite the constant bombardment of news, keep calm, disciplined, and think long term while protecting your business short-term.
