Indian travel tech startups in focus as tourism comes back

Indian travel tech startups in focus as tourism comes back
Venture capital firms are looking to drive the expansion plans of travel tech startups in India, as business and leisure travel picks up across the globe with the easing of the coronavirus pandemic.
Investors betting big on the sector this year include marquee names such as Nexus Venture Partners, Matrix Partners and Tiger Global.
Late last month, Spotnana, a travel-as-a-service platform that helps companies and agencies personalize bookings, hit the headlines when it raised $75 million, led by Durable Capital Partners LP, with participation from existing backers.
According to data from research specialist Venture Intelligence, four more travel tech startups in India have raised cash in the first half of the year. These include Headout, Itilite and TravClan, which have together amassed $76 million. Meanwhile, HappyEasyGo raised an undisclosed amount from investors including Samsung Ventures and Korea Investment Partners.
According to industry estimates, globally, companies spent more than $1.4 trillion on travel in 2019, and the sector is quickly returning to those levels. Leisure travel is also rebounding, as risks associated with the pandemic appear to be waning.
"After two and a half years of practically nothing happening in travel and hospitality, there is now a lot of interest back. This can be clearly seen from the fact that everyone is traveling. Due to this 'revenge travel,' there is definitely a very clear interest in travel startups and the travel technology space," Kapil Chopra, chairman of EazyDiner and founder of The Postcard Hotel, told DealStreetAsia.
"There are a lot of opportunities to create new things around how people experience, and how travel, destinations and hotels touch their lives," added Chopra, who is also a former president of Oberoi Hotels.
Echoing that sentiment, Sarosh Waghmar, co-founder and CEO at Spotnana, said: "The infrastructure used by hundreds of millions of people to book travel every year was put in place in the 1960s and '70s. This infrastructure is archaic, and it limits innovation. Spotnana is rebuilding the infrastructure for the travel industry in order to bring freedom, simplicity and trust to travelers everywhere."
The startup, established in early 2020 just before the pandemic hit, plans to use its recently raised funds to speed the development of its platform and hire more people.
"We've more than doubled our employee head count over the past year to over 200, and we expect this growth rate to continue," said Waghmar.
Travel tech startups, which raised $1.08 billion in 2018, $295 million in 2019 and $553 million 2020, managed to garner only $125 million during the whole of last year.
Even as the COVID-19 crisis hit India's shores in early 2020, several deals sealed that year had already been in the works, said experts. However, as the pandemic dragged on and hit travel plans across the world, as many as seven startups brought in just $37 million during the first half of 2021, which is far less than the amount raised during the same period this year.
In the largest deal last year, Singapore sovereign wealth fund GIC had led a $53 million funding round for online travel aggregator Ixigo, which is moving toward an initial public offering.
After struggling with losses in the last two years, experts say it will take awhile for the travel and tourism sector to revive fully.
"There has been quite a lot of erosion in the past, so right now, it's all about survival. Even as people have started traveling again, startups are having to start from a lower base as there was hardly any action in 2020 and 2021," said an industry expert who declined to be identified.
In terms of exits by investors, the sector has not seen any traction so far this year. In 2021, private equity and venture capital investors cashed out of six startups, amassing $196 million. While the amount was much lower in 2020, at just $6 million, in 2019, investors pocketed $1.5 billion from three startups, according to Venture Intelligence.