Traveltech innovation shapes the travel industry’s journey

Forecasts for the coming months point to tourism in Europe nearing pre-pandemic levels. The outlook for Spain is even more positive: estimates suggest that the country will welcome 85 million visitors over the course of 2023, up from the 83 million in 2019. Globally, the outlook for the sector is equally encouraging: international travel reached 80% of pre-pandemic levels in the first quarter of 2023, according to the National Tourism Organisation.

This confirms the recovery of a sector with massive economic clout. The global tourism industry is estimated to be worth $854.8 billion in 2023, and more than $1 trillion by 2027. Accelerated by the pandemic, the sector has a remarkably high rate of digitisation and some 74% of total revenues will come from online sales by 2027.

Entrepreneurship and innovation play a fundamental role in the industry’s modernisation, embodied by traveltech startups. From omni-channel management software to 100% virtual user experiences, there are multiple solutions on the market to make holidays easier for the 3.0 traveller.

Impactful entrepreneurship

The size of the industry’s global market has the potential to hit over $13.94 billion in 2030. The industry includes disruptive offerings such as Airbnb and its holiday rental model, whose success has been met with controversy, as well as OTAs (online travel agencies) such as Booking.com, Expedia and Skyscanner. In Spain, giants like Madrid-based eDreams, which posted record revenues of 621 million euros in fiscal year 2023; and Barcelona-based TravelPerk, which focuses on corporate travel and achieved unicorn status (companies that have raised $1 billion or more before going public) in 2022.

The success of companies like TravelPerk “helps attract talent and makes Barcelona a strong startup ecosystem, including in the eyes of investors”, says Alexandre Guinefolleau, CEO and founder of Amenitiz, which is also based out of Barcelona. Its hotel management platform, which  incorporates everything from website creation tools to a booking engine, raised €27 million in a Series A funding round in 2022. They used this capital to finance the acquisition of the online hotel training platform Ododo, a French leader in the sector. ” There are two main areas where we can empower the hospitality industry: the first is the technology to automate their day-to-day tasks, get direct bookings, and have the best possible processes in place; the second is the expertise for optimising their property”, explains Guinefolleau.

Providing a technology-driven competitive advantage is the key to success for traveltech companies. ” We can make the argument that, through technology, we can innovate in the premium travel segment and build a global leader in this category”, says Lluís Vidal, COO of Exoticca. This new-generation tour operator offers competitively priced tour packages with a fast, online booking process.

“Using technology, we leverage the advantages of simplicity and convenience, with a platform that lets you book in minutes. We also offer the best value for money by taking out the middle man in the value chain and connecting with service providers directly at the destination in a fully digital way”, explains Vidal.

The company raised €25 million in venture capital in a Series C funding round in 2021, plus €20 million in venture debt in 2022, which it used to underpin its expansion into US and Canadian markets. It has experienced spectacular growth, quadrupling sales in 2023 compared to 2019, and making inroads into several Latin American countries.

The COVID-19 pandemic: before and after

B2B and B2C are quickly gaining ground in the sector, driven by an openness to innovation precipitated by the pandemic. “COVID-19 was a catalyst because it changed the mentality of the industry”, says Iñaki Uriz, cofounder and CEO of traveltech company Caravelo. “There was the realisation that everything can change overnight, and that failing to evolve is a massive risk”. Caravelo opts for innovation whose emergence in the travel sector had its turning point during the pandemic: the subscription model applied to airlines.

This SaaS startup helps businesses design and manage subscription plans that allow them to generate recurring revenue and increase their profits, a key advantage for increasing resilience against crises in a sector that suffered $168 billion in losses in 2020. “Despite COVID, we’ve grown our subscription revenue line by more than 100% every year since 2019-2020”, says Uriz.

Traveltech startups hold other assets for attracting the attention of customers and investors in this new landscape: “From a financial point of view, the travel category is one of most exciting because there has been a post-pandemic movement from buying things to buying experiences”, says Juanjo Rodríguez, founder of The Hotels Network. Its software solution provides hotels with marketing and benchmarking tools that allow them to increase conversions and direct sales. “We build a layer of tech on top of the client’s website that provides analytics to find insights and untapped potential, benchmarking against competitors, as well as personalisation of the user’s shopping experience”, Rodriguez explains.

Destination traveltech: the five keys to the sector

Traveltech innovation helps to respond to the tourism industry’s major needs today, but it also shapes the features that will define the travel of the future. The value-added offerings in the sector include five that are set to be trendsetters:

• Everything about the (user) experience. “By definition, tourism involves travelling, exploring a new place in person. What technology does is make the user experience easier”, reflects Juanjo Rodríguez of The Hotels Network. This explains, for example, the surge in solutions that facilitate processes such as booking accommodation: “It used to be really complicated and very much offline, and proposals such as Airbnb revolutionised the booking of tourist flats because the experience is completely digital, simple and transactional”, says Exoticca’s Lluís Vidal.
• Cutting out the middlemen. “Large companies will continue to favour direct sales”, predicts Caravelo’s Iñaki Uriz. “After decades of indirect sales dominating the market, I believe that we’re now looking at a rebalancing of power between the distributor and the inventory owner”. Juanjo Rodríguez shares this point of view, noting: “The need for a closer and more direct relationship with the end customer is back”.

• New consumption models. In Uriz’s opinion, subscriptions are going to become entrenched in the sector. “The landscape, which has been dominated by revenue management and price volatility, is going to change. Alongside up-to-the-minute pricing, subscription programmes will be offered that provide a different experience, fixed prices and a more person-to-person approach”, he explains.
• An ally in artificial intelligence. “We witnessed the growth of chatbots a few years back, but the tech wasn’t quite mature at the time. Today we see chatbots powered by ChatGPT and similar, which make it possible to offer much better service to guests”, reflects Amenitiz’s Alexandre Guinefolleau. AI, he adds, “could also help hotels to better analyse all the data at their disposal and make more sense of it”.

• Personalisation and integration. The next evolution of technologies such as AI will be its application in integrated solutions, Guinefolleau believes. “The next step will be when it will also start to be applied to restaurant, activities and hotel bookings. The guest will be able to manage everything from a single platform”. Big data and advanced analytics also enable solutions to be fine-tuned to the customer’s needs. “Using data and predictive algorithms, we can monitor user behaviour and formulate hypotheses about what they like and offer it to them before they ask for it”, explains The Hotels Network’s Juanjo Rodríguez.

The entire notion of what travel is could experience a radical shift in the coming years (virtual and immersive reality, for example, is growing as a trend). At a time of technological transition and turmoil that is shaking up the entire travel industry, traveltech innovation is now the best travel partner for both companies and users.