Dear Startup Investor,
Buck Jordan here to talk to you about a sector that’s experiencing a mega boom: travel.
If you’ve been paying attention, you’d know that I’ve been keeping my eyes on travel data and forecasts for a while. In fact, back in December, it was one of three areas I mentioned as focuses for investment capital entering 2022.
Well, a lot has happened since December – perhaps nothing more substantial than the enormous Omicron wave.
Thankfully, this variant proved to be much milder compared to previous ones, and, increasingly, it looks like the pandemic is starting subside thanks to high vaccination rates and natural immunity. Also, better therapeutics – like Pfizer’s incredible COVID-19 pill – have beefed up the medical tools at our disposal to address COVID-19 infections more quickly and effectively.
All this good news explains why the CDC rolled back mask mandates for 70% of the United States just a few days ago. In addition to the U.S., countries like the United Kingdom, United Arab Emirates, India and others are dropping PCR test requirements for tourists.
So, what does the prospect of the pandemic’s end and easing of travel restrictions mean for the travel sector? Well, the CEO of Expedia recently summarized it well in an interview with Bloomberg: “Summer 2022 will be the busiest travel season ever.”
Early data from the industry backs this up. For example, the World Travel and Tourism Council forecasted that U.S. travel and tourism would be 6.2% higher in 2022 than it was pre-pandemic. Even more incredibly, the council’s data also shows that summer 2022 bookings are already 80% higher than 2021 levels.
The coming travel boom offers a ton of opportunities for angel investors to make smart investments. However, I’m focused on three areas I feel stand to most directly benefit from this growth in travel.
Earlier this month, I wrote about how I think remote work is here to stay.
Working from home during the pandemic has broken the taboo and stigma around not working from the office. The genie is out of the bottle on this one, and there is no putting it back.
Now, I do believe most companies will transition back to a hybrid work model where people spend a few days a week at home or a few weeks a year working remotely and the rest of the time in the office. However, all kinds of companies are allowing full remote work or hybrid work, from tech companies like Shopify, Box and Google to traditional companies like Siemens, REI and Deutsche Bank.
The permanence of remote work represents a whole new wave of demand in a post-pandemic world. When travel fully returns to normal, there will be millions of workers staying in destinations all around the world working remotely for a week or two at a time.
There are so many new kinds of services that this global group of remote workers will need, from medical insurance to tax tools and much more. Catering to these remote workers is a compelling area for startups looking to build new products. For example, Wander is a new startup that caters to remote workers by offering luxury rental homes around the world.
The Airbnb Effect
One of the biggest milestones for startups during the pandemic was Airbnb’s enormous IPO in December 2020.
This IPO capped years of rapid growth for the company, as it’s helped dramatically increase the number of people staying in apartments and homes when travelling instead of hotels. Airbnb is now a category-defining company, and it has only continued its rapid growth since the aforementioned IPO.
Airbnb is truly a platform business, where multiple parties get together to exchange value. This includes hosts, guests, Airbnb experience guides and more. These businesses typically offer people multiple ways to participate in their platforms – and make money in the process.
One novel way to take advantage of shifting lodging preferences is to invest in apartments and homes. Of course, buying a second apartment or home to rent on Airbnb is not something most people can just do at the snap of their fingers. It’s expensive, requires tons of research and management, and the housing market is extremely competitive.
However, crowdfunding has grown a lot in the last few years, and you can now invest in real estate through platforms like Republic. On these platforms, you can invest with much smaller ticket sizes (instead of buying a whole apartment) and still participate in the upside of this trend.
For example, you can invest in a portfolio of beach rental homes in North Carolina or a membership-based eco-living platform. In the past, other projects have included luxury rental apartments in Mexico and more.
At its core, investing smaller stakes in great projects is the very essence of crowdfunding.
Camping and Glamping
Remote work isn’t the only new habit we picked up during the pandemic. Many of us started camping for the first time since we were kids (or ever).
While camping grew a lot before the pandemic – it increased 68% in the 5 years leading up to 2020 – this growth only continued during the pandemic, as we tried our best at socially-distanced vacations. In fact, in 2020, the number of first-time campers increased five-fold relative to 2019, and the number of households that own an RV increased by 2.6 million.
This new habit figures to stick around post-pandemic for many people, shifting demand away from traditional hotel stays and toward more outdoorsy vacations.
Fortunately for us, as with any trend, investment opportunities arise.
This year, we have a record summer of travel ahead of us.
We’ve all been waiting for the pandemic to come to an end and travel to get back to normal. Many of the new habits we’ve picked up during the pandemic will stay with us, and the travel industry will have to adapt.
This offers opportunities for angel investors and entrepreneurs to play a part in travel’s evolution. Why not enjoy traveling in more ways than one?