AFR: Travel start-up that cut costs to survive COVID now x7 bigger

Travello

Travel experiences marketplace Travello has closed its largest funding round to date, just two years after its founders were forced to take a pay cut to survive the COVID-19 pandemic.

A bounce back in leisure travel has led Travello to increase revenue seven times above pre-COVID-19 levels, enabling them to raise $10 million in fresh funding, in a round led by the Queensland Investment Corporation and with participation from Paspalis Innovation Investment Fund.

Paspalis CEO Harley Paroulakis said the investment in Travello was part of the company’s entry into the global online “experiences vertical” which he believes Travello can dominate in the coming years.

“They’re a great team with a fast-growing track record,” Mr Paroulakis said.

The capital raised will support its land grab to become the biggest online travel experiences platform in Australia and New Zealand.

Founded in 2016 by Ryan Hanly and Mark Cantoni, Travello enables users to browse and book more than 20,000 tours, attractions and activities. It has been used by more than 2 million people in 180 countries.

Before the pandemic, its focus was on overseas tourists coming to Australia, who were used to online experience booking platforms in their home markets such as Viator and GetYourGuide. But, in the past year, the bulk of its growth has come from domestic travellers.

This provides an opportunity for the business, the founders say, with Travello able to further build its domestic market, while also boosting revenue from overseas travellers as the post-COVID travel recovery continues.

“International travellers will fly into Sydney or Melbourne, travel to multiple locations up the east coast and do multiple experiences,” Mr Hanly said.

“Domestic travellers fly to Noosa, spend a week there and do one or two things before flying home. So, international travellers stay longer and spend more.

“That’s the most exciting thing for us and the investors coming into Travello.”

Travello’s rapid growth comes only two years after the co-founders were forced to rein in corporate costs, cut marketing to nil, reduce their own salaries and reduce staff to working four days a week at 80 per cent pay, when its revenue plummeted to zero thanks to COVID-19.

The new funding round follows a $6.5 million raise by the business in mid last year, in which travel industry executives including Flight Centre co-founder Jim Goldburg, former Velocity CEO Phil Gunter and ex-Tourism Australia head Andrew McEvoy invested.

Popular experiences on Travello currently include a helicopter pub crawl in the Northern Territory and the Ningaloo whale shark swimming experience in Western Australia.

Tourism was the worst-affected industry by the COVID-19 pandemic, with international visitors nosediving 99.1 per cent compared with the previous year in Australia by November 2020.

Overseas arrivals to Australia are still down more than 54 per cent on their recent peak in January 2020, Australian Bureau of Statistics data shows. Many youth travel brands did not survive the pandemic, including STA Travel and Student Flights.

Mr Hanly said the youth travel market was now wide open in Australia and the fresh funding would let it make acquisitions to grow its scale. It also intends expand into new categories including outbound multi-day tours.

“We are currently growing at 25 per cent monthly and have recorded over 1000 per cent growth in bookings,” he said.

“The tours and activities vertical … is really young and immature in travel … and in Australia, we’re a long way behind what’s happening overseas. We still have 200-plus bricks and mortar stores selling tours and activities here, and you don’t see that anywhere else in the world.”

While the tech market has had a substantial valuation correction in 2020, Mr Cantoni said Travello was fortunate to be in a growing industry that has only just emerged from its darkest days.

But, he said investors were more interested in pathways to profitability than six months ago, and he cautioned that any start-up capable of raising capital now, should do so.

“We’re not profitable at the moment, but we plan on breaking even in 2023… and we believe we have the sound unit economics to back it up,” Mr Cantoni said.

Source: Yolanda Redrup (AFR) and TravelWeekly

About Paspalis Innovation Investment Fund

Paspalis is one of Australia’s leading private investment firms. Their business aligns its interests with those of their investors and partners for lasting impact in Australia’s North.

Paspalis invests in both Australian and Offshore high growth companies looking to grow their businesses in the Northern Territory. When Paspalis invest, they are able to leverage their reputation, knowledge, programs and network, providing meaningful positive value to their investees.

Australian companies will be considered for investment where those companies are engaged in high growth ventures that create an economic advantage to the Northern Territory. Offshore companies will be considered for investment where those companies are prepared to relocate to the Northern Territory and/or are involved in high growth ventures that provide an economic advantage to the Northern Territory.

Learn more about PIIF and their criteria here