Published: Thursday, 19 August 2021 09:12
The pandemic catapulted a few niche innovations into widespread use, benefiting a few fast-moving travel businesses. Lists come and go, but pay attention to the underlying trends that will last after the crisis passes. — Sean O'Neill
Though the pandemic has hammered much of the travel sector, a handful of fast-growth companies powered through somewhat undiminished. Apart from the worst lockdowns, 16 U.S. private companies in travel emerged in good enough financial health to be counted as among the 5,000 fastest-growing private companies in America.
The track record of these travel businesses reflects broader trends that undergird the entire sector’s phased recovery. The pandemic in many ways re-prioritized what people want from travel suppliers. Some interests and behaviors that used to be specialized transformed into more widely popular options. Vacation rentals, outdoor travel, and experiences are some of the categories to benefit.
The list from Inc. assessed companies by their revenue growth between 2017 and 2020. Like every list, it isn’t perfect. This one suspiciously neglects startups, such as recreational vehicle marketplace Outdoorsy and outdoor adventure booking service Hipcamp, which seem to be growing rapidly.
“Many venture backed companies refuse to disclose precise revenue numbers and that means they don’t appear on the Inc list,” said Nadav Gur, a principal at Vanguard Enterprises, a consultancy for startups, and executive chairman of ridehail aggregator Obi.
But directionally speaking, the companies on the list reveal broader patterns worth tracking.
Alternative Accommodations Is the Big Winner
The top-performer in the travel and hospitality sector is Frontdesk, named the 136th fastest-growing private company on the list. The Milwaukee, Wisconsin-based startup runs short-term rentals with hotel-like amenities. It also sells operational software, called Flex, to property managers.
“It’s an honor to be on the list, but it’s even more of an honor just to survive Covid,” said Kyle Weatherly, co-founder and CEO at Frontdesk, which operates more than 700 fully managed suites in 160 buildings across 35 U.S. cities.
“From a revenue perspective and consumer behavior perspective, we’re back to pre-Covid levels,” Weatherly said. “We’re on track to be profitable next year.”
Another fast-growing company in the alternative accommodations space also is a startup taking a branded approach. Yet AvantStay, a Los Angeles-based business, has a twist in that it specializes in short-term rentals for groups.
Frontdesk and AvantStay belong to the largest cohort of the fast-growing companies in travel, namely ones that professionally manage alternative accommodations. This lodging category has drawn consumers in large numbers during the pandemic.
The list of fast-growth property managers includes Del Mar Vacations, which rents 200 Cape Cod properties, RealJoy, which rents 800 vacation homes in Florida, Vacation Rentals of Breckenridge, which rents Colorado homes, Teeming, a full-service property manager in Florida, Sandbridge Blue, which rents beach houses in Virginia, and Nomadess, which rents luxury properties in California and Colorado.
More Working From Home Means More Travel
One key pandemic trend has been an interest in the outdoors. Gaining from that was Under Canvas, an outdoor destination hospitality experience company providing “safari-style accommodations.”
Ready to pounce on the trend in companies reuniting workers and managing distributed workforces is Team Housing Solutions. It’s a fast-growth company based in Texas that provides corporate lodging solutions, including full-service corporate housing and discounted hotel options for teams of all sizes.
Both businesses are riding the tailwinds of a bigger displacement that may turn out to be an enduring feature.
“The biggest outcome from the pandemic might be a lastingly higher number of people who keep an option to work remotely part or all of the time,” said Gur of Vanguard Enterprises. “Unless you have to send kids to school or are tied to a dialysis machine, you can have more mobility more often.”
“This trend will have momentum even after the pandemic fades and will benefit the travel industry broadly, but especially players in the recreational vehicle, camping, and vacation rental spaces,” Gur said.
Surprises and Experiences
One of the surprise names on the fast-growth company list is World Amenities, which makes guest room amenities that are vegan, cruelty-free, environmentally friendly, recyclable, and biodegradable. The underlying trend from this challenger to Sysco there speaks for itself.
A demand for experiences by travelers also played into the hands of AOA, a creator of immersive design and production of themed rides and attractions, live shows, and interactive exhibits. If you want something creative for your museum or attraction park, you might turn to this Florida-based consultancy and vendor.
The fastest growing company in the tours, activities, and experiences sector has been City Brew Tours, a nationwide franchise that provides local brewery tours.
A Bet on Travel Tech Investment
Some parts of the travel industry are going through a similar digital transformation as other sectors, such as e-commerce and retail, went through after the financial crisis a decade ago.
Vendors and consultants aim to help travel companies adapt to the new realities.
A case in point is Jacaruso Enterprises, which is a Texas-based company that provides remote hotel sales support and training for owners and management companies of small to medium size hotels.
Playing to that tech-outsourcing trend, too, is StayMarquis, which provides marketing, booking, concierge and management services for vacation rentals.
The subscription model is a trend much discussed in the past year, and one example of a fast-growth company making use of it is Vacation VIP, an Orlando-based digital marketing agency focusing on providing qualified prospects to timeshare resort developers.
For this review, we picked 16 companies as fitting a classical definition of “travel,” and we left out adjacent services, such as private jet aviation.
Yet we see that some companies that made the Inc 5,000 list impact the travel sector without being formally part of it. The most notable company like that is DataArt, a software engineering firm, because of the broader trend in outsourced tech spending that it represents.
“We expect the travel sector to approach 15 percent of our company’s revenue by the end of 2021,” said Greg Abbott, DataArt’s head of travel, transportation, and hospitality. “Travel companies are leveraging automation and custom technology solutions to solve for many of the operational challenges born from the pandemic.”
When sectors face a revenue crunch or a new cycle for technological investment, companies typically turn to outsourced vendors for help. Many analysts expect the travel sector to turn to tech experts in the coming year.
DataArt, which has 5,000 workers, had a growth rate of 80 percent in the three years through 2020. Its travel practice has served more than 100 travel brands, including Priceline, Apple Leisure Group, IDeaS, Inspirato, Best Day Travel, Skyscanner, Trainline, and Travelport.
Beyond Silicon Valley
One subtle trend that the list of fast-growing companies reveals is that the 16 travel companies aren’t based in the traditional startup headquarters of either Silicon Valley or New York. Not only are more people working remotely, but more and more entrepreneurs are founding companies outside of the best-known entrepreneurial hubs. While Inc’s list seems to overlook some venture-backed companies, it nevertheless reveals a geographically diverse landscape.
Small business is having a moment. In 2020, the U.S. Census received a record number of new business applications, with nearly 4.5 million enterprises forming, which was 51 percent higher than the 2010-19 annual average. Many of the companies are sole proprietorships that may fade with time. But several of these businesses will eventually need to travel to grow their companies, boosting the broader industry.
These companies may be more resilient even after the foam blows out of equity markets.
“As a Midwest-based company, we didn’t have access to as much investor capital,” Weatherly of Frontdesk said. “That reality forced us to be very capital efficient, growing almost entirely out of revenues.”
Founded in 2017, his startup reported 3,012 percent growth in the past three years. Yet earlier this month it only raised a $7 million venture round.
“Whatever the opposite of fake it until you make it is, that’s what we’ve had to do,” Weatherly said. “We didn’t have piles of investor cash.”
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