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It may be a quiet time for the travel industry but fast-growing tourism experience community app Travello is consolidating its position with the acquisition of Backpacker Deals, the largest youth online travel agency (OTA) in Australasia.
The company has been gathering steam recently through a tie-up with Flight Centre (ASX: FLT) and has also welcomed Jeff Lewis, former global VP of technology and strategic initiatives at Trip Advisor, to its board.
Travello CEO and co-founder Ryan Hanly describes Backpacker Deals as a market leader in the youth vertical, having built "some great technology we haven't seen in other companies".
"We have an aligned vision and demographic focus, so this just made perfect sense," says Hanly.
Hanly says Backpacker Deals' growth in normal times is a clear indicator of a fast rebound.
"Their market share and revenues have been growing aggressively over the last few years and while they obviously suffered from the impacts of COVID, they are already seeing a strong recovery," he says.
"We can't see that stopping as people turn to online channels to book more and more of their travel journey."
The entrepreneur explains tours and activities businesses have digitised like many industries during the pandemic, even though they have traditionally lagged other sectors in terms of digital adoption.
"The majority of experiences pre-COVID were booked offline, at retail stores and hotel desks. This will change as the majority of those stores won't re-open and travellers will be booking their experiences online for the first time," says Hanly.
Backpacker Deals founder Dinesh Kaku will join Travello as its head of growth and is excited about the scale both companies can achieve.
"The combination of Travello's community and Backpacker Deals' e-commerce focus is pretty irresistible," he says.
"It will be exciting to scale this company and become the global leaders in youth travel."
Kaku says the fact Millennials and Gen Zs represented a large share of the travel market pre-COVID presents a huge opportunity for destinations looking to rebound, as they will likely be the first demographic to travel widely upon reopening.
"Youth travellers are generally more open to risk, so they will be the first demographic to travel widely as soon as they can," says Kaku.
"Gen X, older travellers and those with children won't be willing to take those risks and we are seeing that in our bookings already."
A recent study conducted by Travello found that 83 per cent of youth travellers (aged 18-35) would travel overseas in the next three months if they could. The value of the youth market is also backed by Tourism Australia's research showing this cohort tend to stay longer and spend more, accounting for 25 per cent of the inbound market but more than 40 per cent of total spend.
And while the current climate for travel looks bleak, Hanly is excited about the future.
"We've really spent this time looking at the future of travel, what it will look like and who it will be. How people discover and book travel is changing and our combination of social and commerce positions us perfectly to take advantage of this huge opportunity and the shift in consumer booking behaviours," he says.
"Out of every global event like the GFC, innovative companies have emerged as huge winners. Our attitude has always been about being on the offense and that hasn't changed. We're looking forward with some serious optimism in regards to how we emerge from this pandemic. We want to be the winners."
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