Via Kristy Dorsey
Since its founder described a sea shift in the travel industry, vacation rental company TravelNest has received £ 1.8 million in government funding to expand its customer base.
In the weeks immediately following the first national freeze in the spring, like the industry as a whole, the Edinburgh-based startup encountered a decline in bookings. Founder Doug Stephenson said the company is seeing strong patterns that will boost demand for its service, which automates the selling of vacation rentals on sites such as Airbnb, Expedia and TripAdvisor, as restrictions loosened over the summer.
Stephenson said, “What we’re starting to see is a redistribution in travel,” There is a very strong preference for people to move to a location that is just a few hours away from where they live, if you look at things now.
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The demand for hotel accommodation is much smaller, where everybody has to share the same common spaces, such as elevators. There are also more common rural areas than the urban destinations where much of the demand used to be. There are still people who want to fly, but they want to be safe.
The funding includes a £ 1.5 million business interruption loan from Silicon Valley Bank’s U.K. arm and £ 300,000 from Scottish Enterprise’s Early Stage Growth Challenge Fund. Both funds were designed to help firms whose companies were affected by Covid-19.
Launched in 2018, TravelNest has a primarily rural property portfolio that uses its listing automation service to raise awareness and reduce the administrative burden on owners. Roughly half are in the United Kingdom, with the rest distributed across some 60 countries worldwide.
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In March, bookings dropped “off a cliff” and bottomed out in April, before Mr. Stephenson described a “incredible V-shaped upturn” as eased by the lockdown measures. By cutting costs and taking advantage of the furlough program of the government, the company responded to the worst of the downturn, but did not have to make any layoffs among its 50 employees.
TravelNest is funded by Pentech, Mangrove Capital Partners and Frontline Ventures, which in 2017 invested an initial £ 3 million in the company’s seed financing. A further £ 5.1 million investment round followed late last year.
Members of the board include former Skyscanner chief operating officer Mark Logan, author of the Scottish government’s recent Scottish Technology Ecosystem Review, who is a non-executive director. Last year, another Skyscanner veteran, Rebecca Moore, joined TravelNest and is now the chief operating officer of the company.
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We got tremendous support from Silicon Valley Bank, first as a client of a bank and now as a recipient of a CBILS loan,” Ms. Moore said. “The team of the bank has a deep understanding of the high-growth startup industry and also recognized the complexities of the business we faced earlier this year.
“We are also incredibly grateful for the ongoing support we have received from Scottish Enterprise.”
Mr. Stephenson said about 38 percent of personal travel was to rural areas before the pandemic. At present, the number is more than 50 percent.
Similarly, in January, about 60% of personal travel included at least one flight, but that proportion is now in the mid-20s. The travel market’s domestic share has risen by 45 percent.
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“It’s been a very difficult year, but it’s also very exciting,” said Mr. Stephenson. “When you look at these macro trends and the way the market is evolving, the opportunity for our industry is huge.”
Vacation rentals accounted for 14% of the worldwide travel accommodation market in 2019 and are expected to hit more than £ 150 billion by 2021. There are approximately 8.3 million homes hosted worldwide, with about 65 percent owned by independent hosts with fewer than 5 properties and 82 percent owned by independent hosts with fewer than 5 properties.