A new wave of travel tech arrives for growth equity

1. A New Wave of Travel Tech Takes Off for
Growth Equity
October 2017
Briehan Burke, Dave Gordon & Ryan McNally

2. 2
• Large number of growth-stage businesses in B2B & B2B2C travel tech
• The focus of this report is on the transportation, lodging, and activities sectors
• In the future, we plan to focus on adjacent areas (i.e., corporate travel, loyalty, etc.)
• Massive sector: $2.3 trillion of global T&T spend, or 3.1% of global GDP
• By 2027, forecast to grow to $3.5 trillion, or 3.5% of global GDP (1)
• Mature B2C tech adoption: global online travel sales account for ~$600 billion annually (~30% of total global
T&T spend) (2)(3)
Travel Tech Arrives for Growth Equity
(1) World Travel and Tourism Council.
(2) Statista.
(3) World Travel and Tourism Council.
Significant investment opportunity for growth equity:
• New Wave of startups going after new audiences, inventory, and SMB players by leveraging existing travel
ecosystems, unlocking underutilized supply, and repeating / improving on successes of incumbents
• Opportunity to offer vertically-tailored software platforms (i.e. Tours & Activities, Lodging) or best-of-breed
point solutions (i.e. marketing automation, analytics & BI) at a fraction of the cost of legacy providers
• Investments in B2B and B2B2C travel software historically focused on solutions for larger players (e.g., hotel
chains vs. smaller, independent hoteliers)
• Space dominated by a handful of software platform vendors, including Amadeus, Sabre, and Travelport, with a
combined ~$10.4 billion of annual revenue
• Opportunity for business models enabled by First Wave players and software focused on long tail of SMB
travel
The Travel Technology industry (“Travel Tech”) is comprised of tech-enabled businesses that offer services and
products focused on the travel and tourism sector (“T&T”)

3. 3
Established Players Disrupted by New Wave
(1) Airbnb Fast Facts.
(2) Certify, Q2 2017.
(3) Morgan Stanley.
(4) Bureau of Labor Statistics Occupational Outlook Handbook.
Waves of Travel Tech Innovation
Brick & Mortar Tech-Enablers First Wave New Wave
Lodging:
• Airbnb has more listings worldwide than
top five hotel brands combined (4mm vs.
3.3mm listings, respectively) (1)
• Hotels and resorts face several
challenges as they attempt to keep up
and expand tech platforms: connection
issues, integration problems with legacy
systems, staff training, etc.
Transportation :
• Uber and Lyft accounted for 63% of
receipts and expenses vs. 8% for taxis
(first instance where the latter
commanded a single digit percentage) (2)
• Taxi’s share of trips in NYC shrank from
84% to 65% from 2015-2016 (3)
• Consumers continue to prioritize instant,
personalized travel that provides a
consistent experience nationwide
Travel Agents:
• Emergence of OTAs
led to the decline of
the traditional travel
agent
• Travel agent
employment
projected to decline
12% from 2014 to
2024 (4)
Significant
opportunity
for the New
Wave to
enter the
market and
succeed
Technology continues to reshape the travel ecosystem:
~2002-2009~1985-2001 ~2010-present

4. 4
Leverage Ecosystems
• Build businesses that leverage incumbent’s existing
ecosystems
• Evaluate existing business models or go-to-market strategies
and enhance or make whole the offerings of competitors
• Companies: Guesty, VirtualKey, HyreCar
Unlock Underutilized Supply
• Put pressure on larger competitors that have been slow to
innovate
• Companies that look to reinvent business models and have a
novel approach to taking marketspace currently occupied by
First Wave
• Companies: HotelTonight, LoungeBuddy, KillerRezzy
Repeat / Improve
• Companies repeating successes of incumbents in well trodden
areas, democratizing enterprise software for SMB players
• Launching similar products, services, or business models in
segments that have been much slower to innovate
• Companies: Peek, Adventure Bucket List,
BookingPal
Emergence of the New Wave
1
2
3
• Significant scale (fundraising,
valuation, revenue, etc.)
• Established in the marketplace (user
adoption, market share)
• Frequently moving up the value
chain to further capture market share
• Airbnb launched its Trips
platform in 2016 and entered
the restaurant reservation
marketplace via Resy
• Booking.com launched
Booking Experiences in 2016
so travelers can instantly book
and pay for attractions in app
• Market is becoming increasingly
crowded for First Wave
Companies
First Wave Players Are Now The
Incumbents
Opportunity for New Wave Companies That Look To:

5. 5
Today’s
travelers have
high
expectations
Spend shifting
from offline to
online and mobile
Rise of on-
demand and
sharing
economies
Larger travel
companies
starting their
own incubators
to speed up tech
advances
Travel
habits are
evolving (1)
Hospitality is
data-rich but
information-
poor
Travel Tech Themes
(1) National Travel & Tourism Office.
They want tailored and customizable
experiences based on their specific
preferences, automated and
streamlined processes, and
immediate and accurate information
and services
Consumers expect instant booking
capabilities
E.g., jetBlue Ventures &
Amadeus Ventures
• U.S. international air traffic
hit a new record in 2016
(221mm passengers vs.
2015’s 209mm)
• Record number of
Americans traveling abroad
• ~73mm Americans
traveled abroad in
2016, up 8% from
2015
• Oceania and Asia saw
biggest changes YoY,
with increases of
11.5% and 9.5%,
respectively
Companies will need to close the
gap through process automation
and enhanced customer
experiences in order to win and
maintain market share

6. 6
Activities
Opportunities and Interest Areas for Growth
Equity
• Even with the aid of OTAs, transportation
options leave much to be desired
• As ride sharing and on-demand travel grow
in popularity, user experiences become
choppy as consumers jump between
platforms
• Majority of activity still happens offline
(~85% in 2016) (1)
• Businesses are only now starting to adopt
technology to improve their marketing,
payments, bookings, inventory, etc.
• Aspects of lodging remain in the stone
ages for both consumers and employees
• Consumer experience lacks digital
enhancement and personalization
• Back-end relies on outdated
technology and underutilizes mobile
and wifi-enabled tech
(1) Phocuswright.
Transportation Lodging
‒ Ride-sharing
‒ Transportation-specific booking
‒ OTAs and metasearch
‒ Bookings by phone
‒ Disparate, individual listings
‒ Spreadsheet or paper
comparisons when evaluating
opportunities
‒ Offline bookings
‒ Offline bookings
‒ OTAs
‒ Generic peer to peer sites
• Third-party rentals for the
sharing economy
• Trip planning and itinerary
management workspaces
• On-demand, IoT-fueled
transportation
• Transportation aggregators
• Connected hotels and on-demand
services (i.e., room service,
check-in, keyless entry)
• Technology that supports the
sharing economy
• Hospitality training and
continuity services software
• Property management platforms
• Activity aggregators
• On-demand and instant bookings
• B2B services
• Discovery and marketplace
functionality

7. 7
Note: this landscape is intended to be a representative sampling and is not an exhaustive list.
Please direct inquiries to briehan@catalyst.com.
Travel Tech Landscape

8. 8
Investment Trends
Source: Data courtesy of CB Insights.
Investment Trends Strong History of B2B/B2B2C Exits
Steady uptick in VC financing activity
• $11.9bn dollars invested in 1,230 deals since 2013
• 2016 saw a record 361 deals, up 12% from 323 in 2015
Funding is highly concentrated
• Top 10 most funded companies (incl. Airbnb and LY.com)
raised $7.7bn since 2012, or 61% of total fundraising in
that period
• Majority of deals between 2012-2016 were seed/angel
• Seed/angel accounted for 50% of deals and
Series A accounted for 18% in 2016
Target Acquiror Type EV Date
VC-
Backed?
Strategic $550mm 2017 Yes
Strategic $1.7bn
2016
Yes
Financial
Sponsor
$1.3bn 2016 No
Strategic $168mm 2016 Yes
Strategic $3.3bn 2015 Yes
Strategic $830mm 2015 No
Financial
Sponsor
$930mm 2014 Yes
• Similar transactions with undisclosed valuations include:
Trip4real/Airbnb, HouseTrip/TripAdvisor

9. Please send any inquiries to briehan@catalyst.com