Venture capital investment in the travel industry reached its lowest levels in a decade in 2023, with only $2.9 billion invested compared to nearly $9 billion in 2019. The number of deals also dropped more than 20%, the second steepest decline since the start of the pandemic. However, despite fewer deals, the average size of the deals is increasing, indicating a potential overall increase in travel VC funding in 2024. The growth areas of investment include tours and experiences, AI and automation, and hospitality employment.
Starting July 1, Airbnb will display the total price before taxes of a stay in California in compliance with the state’s new law banning junk fees. This includes fees such as host cleaning fees and Airbnb’s service fee. Guests booking an Airbnb in California from outside the state will not automatically see the total price, but can choose to view it. This move follows Airbnb rolling out a total price toggle button across the U.S. in May 2023, aiming for greater transparency in pricing.
Corporate travel decision-makers are increasingly turning to artificial intelligence to solve problems in business travel. A Mastercard survey found that 90% of travel decision-makers plan to invest in AI and machine learning to improve operations and personalize employee travel. The CEO of the Global Business Travel Association, Suzanne Neufang, believes that AI can help overcome the complexities of corporate travel. FCM Travel, in particular, sees AI reshaping how it operates, offering the opportunity to provide clients with more personalized offerings.
The podcast also highlights the fact that the travel industry is continuously evolving, with companies adapting to new laws, technologies, and consumer demands. The state of venture capital investments in travel reflects the changing landscape, with a focus on areas such as tours and experiences, AI, and hospitality employment. Airbnb’s pricing display changes in California demonstrate a response to regulatory changes aimed at increasing transparency for consumers. Corporate travel decision-makers are looking towards AI to improve operations and tailor travel experiences for employees.
Overall, the business of travel is seeing shifts in investment trends, pricing practices, and the integration of AI technology. Despite lower levels of venture capital investment in 2023, the average size of deals is increasing, indicating potential growth in the coming year. Companies like Airbnb are adapting to new regulations to provide greater transparency in pricing, while corporate travel decision-makers are leveraging AI to enhance operations and personalize travel experiences. The transportation industry remains dynamic and responsive to changing consumer needs and regulatory environments.
