Berlin travel startup GetYourGuide announced earlier this month an 80 million euro line of credit financing to help the company stay afloat until the pandemic subsides. The coronavirus situation has put on hold travelers, which has, in turn, put the brakes on all the tech associated with tourism.
According to TechCrunch, the Berlin startup that curates, organizes, and lets travelers and others book tours and other experiences got the financing via UniCredit, with CitiGroup, Silicon Valley Bank, Deutsche Bank, and KfW participating. But there is another side to this seemingly positive news.
Anticipating Is Not Reality
The TC story cites an interview with CFO Nils Chrestin, saying the funding will let GetYourGuide come “sprinting out of the gates” when consumers are in a better position to enjoy travel experiences again. At the other end of the story, there’s still no real indication that tourists will “sprint” to travel destinations anytime soon. At least not in the same numbers as we saw in 2019. This is not good news for any of the travel-related businesses, and especially not companies like GetYourGuide.
Since 2009, GetYourGuide has raised more than $600 million in equity capital. Just before the pandemic hit, the startup got a Series E round of $484 million. Then, back in October, the company was forced to close a convertible note of $133 million, to service debt and operations. PhocusWright reported that GetYourGuide snagged the most recent line of credit to “explore strategic investments”, but given the climate of uncertainty in the industry, the safety net is another emergency stopgap measure. Skift and a score of other travel news outlets reported similarly, but this is largely PR and media outreach from GetYourGuide. I should know, it used to be my job to get media to say what companies wanted.
Like everybody else in the sphere, GetYourGuide is laying all its hopes on “pent up demand” for travel once vaccines and nature take its course. While it’s true people around the world are itching to travel again, the economics just might not be there. Here in Greece, even the most positive of political preaching has turned to guarded optimism. Just the other day Prime Minister Mitsotakis retreated on Greece’s expectations saying he hoped 2021 would see “half as many” tourists hit Greek beaches, as visited in 2019. 2020, of course, was a disaster for Greece, where tourism is responsible for one-fifth of the economy.
Doe Eyed Daydreaming All Done
This false optimism is doing more harm than good if you ask me. Take this Forbes piece from Christopher Elliott last summer. The author cites James Ferrara, president of InteleTravel saying: “We see a full recovery in the first quarter of 2021.” In the same piece, GetYourGuide is there with a “study revealing” that U.S. travelers plan to take more leisure trips in 2021 than they did in 2019 or 2020. Here’s the press release, but please understand, hardly anyone in journalism simply goes out searching for press releases from companies anymore. I won’t delve further into the implications.
Let’s just say I know what was up on this “study” at an opportune time. (I used to create studies too) Consider that Airbnb just posted it’s first profits as a public company of a loss of almost $4 billion. And just yesterday the tech-heavy Nasdaq slid 478.54 points to 13,119.43, causing Asia markets to slide as well. I hate to be the harbinger of bad news, really I do, but this dreamy-eyed look at tourism 2021 is looking more dangerous by the second. Somebody needs to be planning for the worst contingency here.
The only positive I can find for 2021 tourism lies in sustainable travel, where hiking, biking or camping vacations will become a megatrend if things line up right. People are going to shy away from crowded experiences like all-inclusive hotels and cruises, and opt for real and perceptively safer vacations with some distance in between. This Deutsche Welle report talks about this a bit, as well as the trend for people to vacation in their home countries more. It looks like Germans will be visiting undiscovered German destinations instead of flying to Greece or Mallorca this year. On the point, Olivier Ponti, VP Insights at ForwardKeys, a global travel analytics company, was quoted concerning the Middle East region recently saying:
“As of February 9 (the latest available data), flight tickets issued for travel to the region in the coming six months are just 19% of what they were at the same moment a year ago,” Ponti revealed. “The best performing major destinations are currently doing only marginally better. Bookings to the [United Arab Emirates] are just 22%, to Qatar are just 20% and to Egypt are just 23%.”
China’s and all of Asia’s early season and early bookings are in freefall. Spring break has been canceled in America. Even the usually upbeat UNWTO is down on 2021 as an expert panel voted the outlook for 2021 as 45% expecting a better year, anticipating 25% no change from this past year, and 30% fearing an even worse season. Gerasimos Bakogiannis, owner of the Portes Palace hotel in Potidaia in the northern Halkidiki region of Greece laid it out straight via the ABC story:
“If this year is like last year, tourism will be destroyed.”
I’ll just leave the GetYourGuide news there.