We are seeing travel evolve greatly from the time of mostly falling in the binary of either meticulously planned family vacations or cut-and-dry business trips. The archetype of the leisure traveler is changing; today this looks more like a Gen Z/Millennial audience traveling for social discovery. As backpacking to remote locations and solo trips to the most instagrammable spots become the norm, the era of packaged tours shuttling people between the Eiffel Tower and the Louvre seems to be waning away. Empowering the leisure traveler of today is an arsenal of leaps that we have made on the travel infrastructure front. Ease of access to information for itinerary planning, a host of low-cost carriers, a network of Online Travel Agents (OTAs) solving for discovery and interoperability of payments solutions across the globe are just a few examples of how technology has made travel today more dynamic and cheaper than ever before. On the other hand, although slower to recover than leisure travel, corporate travel is bound to bounce back as the world settles into Zoom fatigue. Business travelers however now expect a solution to deliver both the flexibility to iterate quickly and solve for externalities. Ease of use and agility are top-of-mind priorities for business travelers as they navigate the post-pandemic world.

We believe that these behaviours are now a feature rather than a bug of modern life. Following are a few trends and opportunities that we are closely tracking in the space.

1. Shift towards curated and community-led experiences

The traveler of today prioritizes spending on experiences over luxury. We perceive this target group as being highly experimental, yet purpose-driven. This creates interesting opportunities in solving for curated experiences such as sustainable travel offerings. An example of a curated platform would be Tourlane, offering a personalized travel itinerary, 24x7 helpline, and consultation with travel experts. It reported 200K+ MAUs, operating in around 30 countries worldwide.

Another emerging theme that we are excited about is the popularity of community-focused experiences and creator-led travel. Platforms such as Trova Trip allow hosts to curate trips on the basis of travel insights from their communities and use those insights to curate travel itineraries certified by tour operators.

We also note that the pandemic has expedited people's willingness to pay a premium for a better quality of service and comfort. We see multiple opportunities in the premiumization of customer experience - including at-home check-in by leading airlines such as Emirates, reducing friction in the visa application process, and upselling lounge services and upgrades among others.

2. Chasing simplicity in paperwork and processes

The experience of planning for travel is riddled with paperwork and dealing with multiple moving parts and vendors. Add to that the complexity induced by pandemic-specific travel norms and vaccination requirements. One must invariably rely on a network of disjointed vendors for individual tasks, ranging from furnishing visa requirements to booking travel/accommodation etc. The experience is one that induces great anxiety on part of the traveler from the time of planning for the trip, many months in advance, to landing at the destination. We believe that whilst OTAs have solved for discovery of accommodation and travel options to a fair extent, building digital solutions that sit on top of and adapt to the complexity of travel-related paperwork, are yet to be explored.

3. Flexible work policies are redefining the concept of a vacation

We believe that as companies encourage employees to set their own cadence of working from office v/s home, remote work is here to stay. Some interesting data points that convinced us were guest trends on Airbnb - Airbnb reported that around 21% of the total gross nights booked were for stays of 28 nights or longer in Q4CY22, as against 14% pre-COVID. We see this trend as lending itself well to the rise of ‘vacation home experiences’ as a new asset class. We believe that this has the potential to create multiple opportunities to solve for the discovery, ownership and maintenance of these homes. We have seen global comparable companies such as Pacaso here attaining $300 million+ ARR scale by offering fractional co-ownership of vacation homes and charging property management fees for $2 Million - $14 Million homes.

4. Corporates want tighter control and tools that deliver a superior booking experience

As the world settles into a remote-first work environment, business travel is set to post a slow recovery. Domestic corporate travel in the US recovered to 80% of Q4CY19 levels in Q4CY22, mainly driven by the rise in prices of the airfare per Airlines Reporting Corporation. The environment today has prodded companies to make cost optimization a top-of-mind priority. On the contrary, all travel that is being undertaken now has become commensurately more important. We believe that corporates will remain on the lookout for better tools designed for delivering incremental cost savings, flexible booking experiences, and multiple customer service. Trip Actions, a SaaS-driven end-to-end travel management solution for businesses was recently valued at $9 billion+. It offers online booking, inventory management, payments, and expense reporting tools to enterprises.

5. Artificial Intelligence will decide where and when we travel

We believe that AI has the potential to overlay widely available public information (reviews, pricing, availability etc.) with personal information (work calendar, places that one has visited, budget etc.) to solve every step of the travel planning process. Since the launch of Chat GPT, companies and individuals alike have been experimenting with innovative ways to use AI across the breadth of travel decisions. One such successful experiment has been the launch of TripGen – Trip.com’s real-time chatbot answers questions and makes suggestions relating to travel inspiration, itinerary, and booking in real-time.

We at Elevation have been early believers in companies building platforms around simplifying travel and making it more engaging. We have been fortunate enough to have a front-row seat to witness how the space has evolved, through the stellar journeys of our portfolio companies across MakeMyTrip, Ixigo and Treebo. We believe that the habits that we as people settled into during the pandemic are here to stay, hence remain very excited to work with founders building for the future of travel!

Our Team

Our team comprises Mayank Khanduja, Amit Aggarwal, Chirag Chadha and Srishti Bhandari who have a deep understanding and strong conviction on the travel sector. We’d love to hear from you if you’re thinking of building in this space. Please reach out to us for a chat at srishti@elevationcapital.com.