Strong investment in traveltech companies and a thriving startup scene reveal traveltech is key to meeting the challenges facing the travel sector, according to a new report.
The Traveltech Report 2021, a collaboration between Tech Nation and Traveltech for Scotland, shows that more than £1 billion has been raised by UK traveltech companies over the past three years, including £358 million in 2020 despite the impact of the Covid-19 pandemic.
Half of the UK’s traveltech companies are at the seed investment stage, showing a pipeline of high-growth-potential companies in the sector.
Between 2015 and 2019, UK traveltech companies saw equity investment more than double from £190 million to £504 million – and investor appetite for the sector proved remarkably resilient in 2020.
Scotland a European leader
Traveltech for Scotland is a cluster organisation launched in 2020 to make Scotland one of Europe’s leading traveltech hubs, hosted by the Edinburgh Futures Institute at the University of Edinburgh and supported by Edinburgh Innovations.
The UK’s traveltech sector outperformed the international trend during the pandemic. There were 1,044 deals completed globally in 2019 with $10.8 billion invested, which fell to $5.2 billion in 2020 (January to November). This was a 51% fall globally, while investment in the UK sector fell only 29%.
Traveltech is defined as the intersection of tourism, hospitality and tech industries where innovations in artificial intelligence, virtual reality, specialised software and other areas are transforming services, outputs and processes in travel. The term encompasses both the transformation of the travel industry by technology, and the co-creation of tech products and services.
Traveltech for Scotland is jointly funded by Scottish Enterprise and the 2014–2020 European Structural and Investment Fund through SPRITE (Scottish Programme for Research, Innovation and Technology Ecosystem).
It is part of the University of Edinburgh’s wider drive to boost data-driven innovation through its role in the Edinburgh and South-East Scotland City Region Deal.
Responding to sector challenges
It has supported traveltech companies over the past year as they find innovative ways to respond to the challenges facing the travel industry caused by the pandemic and the need to meet carbon reduction imperatives.
Traveltech will be a key feature of meeting these challenges and there has been a surge in new traveltech companies over the past five years.
Travel and technology are seen as key contributors to Scotland’s economy, culture and society. Scotland is already home to Skyscanner, which is valued at more than £1.4 billion and has more than 1,500 staff according to Pitchbook data.
The Traveltech Report 2021, which aims to increase understanding of the fast-growing traveltech space, is the first stage of research. The next stage will be led by Traveltech for Scotland and will look in greater depth at traveltech’ s potential impact on the Scottish economy.
Ivan McKee MSP, Scottish Government Minister for Business, Trade, Tourism and Enterprise, commented: “Scotland strives to become a European leader in Traveltech innovation. With UK equity investment in this growing sector topping £350 million in 2020, amidst the greatest crisis the travel sector has ever faced, it is clear that traveltech will play a vital role as Scotland recovers from the challenges of the Covid-19 pandemic and embraces the challenge of driving truly sustainable tourism.
“The Scottish Government will continue to encourage and enable the growth of the traveltech sector in Scotland, and the Traveltech Report 2021 will help us better understand this innovative fast-growing space and support our entrepreneurs and businesses.”
Joshua Ryan-Saha, Director of Traveltech for Scotland, said: “The findings of this report are hugely encouraging and confirm that traveltech holds the key to a thriving future for travel, tourism and hospitality in Scotland and the UK.
“Traveltech for Scotland is here to maximise that opportunity and help businesses big and small, established and new, to realise their potential.”
Dr George Windsor, Head of Insights at Tech Nation, the growth platform for tech companies and leaders, said: “It’s clear that traveltech is a nascent and rapidly growing part of the UK’s tech economy.
“With 50% of traveltech companies at seed stage, we look forward to supporting and charting the growth of these game changing firms over years to come.”