A thriving start-up scene and strong investment provide a bright future for the traveltech sector, a new study has revealed.
© Traveltech is defined as the intersection of the tourism, hospitality and tech industries, encompass...
More than £1 billion has been raised by UK travel technology companies over the past three years, including £358 million in 2020 despite the impact of the pandemic on the industry.
Half of the UK’s traveltech ventures are at the seed investment stage, showing a pipeline of high-growth-potential companies in the sector, according to the Traveltech Report 2021, a collaboration between Tech Nation and Traveltech for Scotland.
Between 2015 and 2019, UK traveltech firms saw equity investment more than double to £504m – and investor appetite for the sector proved “remarkably resilient” throughout 2020, the research notes.
Traveltech is defined as the intersection of the tourism, hospitality and tech industries, encompassing innovations in the likes of artificial intelligence, virtual reality and specialised software. The term encompasses both the transformation of the travel industry by technology, and the co-creation of tech products and services.
The UK’s traveltech sector outperformed the international trend during the pandemic. There were 1,044 deals completed globally in 2019 with $10.8bn (£7.9bn) invested, which fell to $5.2bn in 2020 (January to November). This was a 51 per cent fall globally, while investment in the UK sector fell by just 29 per cent.
Traveltech for Scotland is a cluster organisation launched last year to make the country one of Europe’s leading traveltech hubs, hosted by the Edinburgh Futures Institute at the University of Edinburgh and supported by Edinburgh Innovations, the university’s commercialisation service. It 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).
The report, 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 the sector’s potential impact on the Scottish economy.
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.”
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 per cent of traveltech companies at seed stage, we look forward to supporting and charting the growth of these game changing firms over years to come.”
Ivan McKee, Scottish minister for business, trade, tourism and enterprise, added: “Scotland strives to become a European leader in traveltech innovation.
“With UK equity investment in this growing sector topping £350m 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 pandemic and embraces the challenge of driving truly sustainable tourism.”