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During the second quarter of 2020, the hospitality industry took a £30B hit as sales fell by 87%. While hospitality providers from restaurants to hotels to sports venues have hard work ahead of them, they’ve also come a long way.
Despite the obvious challenges of the last year, many players in this space made huge strides in the way of adaptability and resilience. They pivoted their business models, digitised their processes and created safe experiences for guests, even if it meant delivering them to their homes. Now, as restrictions ease on the path to recovery, the hospitality industry in the UK is rebounding faster than in Europe, China and the US.
Keep reading to find out how the hospitality sector is reinventing itself after one of the toughest years in history.
💡 Hospitality, digitised
Hospitality accounts for 10% of GDP and jobs worldwide, and is beginning to make its comeback after the crisis. According to Lloyds Bank, 78% of UK sectors reported faster month-on-month output growth in May 2021, up from 64% in April. The biggest contributors to this growth were the tourism and recreation sectors, which saw a sharp rise as hotels, pubs and restaurants opened back up and consumers rushed to take advantage of new freedoms. Much of this growth was facilitated by digitisation. In the 12 months leading up to March 2021, restaurants’ digital orders shot up 124% percent, with the majority of orders taking place on websites and apps. Not only is digitisation convenient, easy and safe for guests, it’s allowed bricks and mortar venues to serve more customers faster, without increasing their headcount.
According to McKinsey research, the pandemic has accelerated the digitisation of customer and supply-chain interactions by up to 4 years, and much of that technology is here to stay. With 85% of hospitality workers accessing workplace tech through their smartphones, venues from hotels and restaurants and live sport are adopting new, leaner business models that streamline communications, cut costs and improve the standard of service. In the next 5 years, it’s anticipated that 80% of hospitality operators will use cloud-based computing and communications tools. Moreover, with the 2020 Tokyo Olympics piloting athlete tracking and virtual arenas to make experiences accessible remotely through 5G and VR technologies, the opportunities for digitisation in every realm of the hospitality and entertainment space are endless.
💡People are going out, and investment’s going up
Like always, where there’s digitisation, there’s investment. With global vaccination programmes moving full steam ahead, and green passes for travel in the works, institutional interest in the hospitality space is quickly recovering.
Helsinki-based Airbnb rival Bob W, just announced its seed round of €10M led by Founders VC and private equity firm Finnish Industry Investment (Tesi). Similarly, Berlin-based short-stay rental company Cosi Group, just closed a €20M round, backed by leading real estate group Soravia. In the US, Mint House, a startup that’s leveraging technology to create modern amenities for business travelers, and Kasa Living, which uses tech-powered innovation to provide flexible accommodation across the US, both secured investment from VC Allegion’s $60M corporate fund. In the words of the fund’s CEO Rob Martens, the logic behind these bets is based on two themes: “seamless access, with smarter, stronger, faster, less intrusive processes, and modularity”. These short-stay apartment services and pop-up hotel propositions are bringing hotel quality and consistency to individual rentals, powered by digital check-in and check-out, virtual concierges, ghost kitchens and even fitness mirrors to rival hotel gyms. The end result? A cost-efficient, scalable, flexible model that can be replicated anywhere in the world and run by a remote workforce.
Travel and hospitality exits are also picking up. Barcelona-based travel platform TravelPerk just finalised its purchase of UK startup Click Travel, marking its third and largest acquisition since the start of the pandemic. TravelPerk has been on a growth spree despite the difficulties of the last year, successfully raising a $160M Series D round led by London-based equity firm Greyhound Capital. TravelPerk CEO and co-founder Avi Meir told TechCrunch that “travel is definitely coming back” and “the global market may take a little longer but [we] are optimistic we will see close to pre-pandemic levels in 2022.”
💡A new chapter for hospitality
The pandemic has created opportunities, not just for hospitality businesses, but for the tech solutions that allow them to operate safely and sustainably. Hotel management systems, guest identification software, contracted cleaning services and remote ordering and payments will be vital in rebuilding consumer confidence. For the first time in a long time, hospitality providers and the tech startups that underpin their processes have a unique chance to challenge industry incumbents and provide better service at lower costs.
We’ve seen a number of hospitality startups come across our desks, whose propositions have been strengthened by the pandemic. Take property management company GuestReady for example, which has raised €2.4M from over 800 investors on Seedrs. Well before the crisis, the startup was handling booking, cleaning and operations for short to mid-term rental properties in over 20 cities worldwide. Now, with consumers laser-focused on clean and contactless experiences, the proposition has never looked stronger.
From the restaurant perspective, booking and payment system FETCH (which has raised £900,000 from over 500 investors) is helping hospitality venues including festivals and stadiums process orders and pinpoint customer location down to the centimetre to deliver food and drink. Along the same vein, we’re seeing a rise in popularity of dark kitchens, like Cook & Thief (£1.3M from 459 investors) which is reinventing sustainable delivery for restaurants without compromising the dishes’ condition and presentation. Importantly, these technologies are not replacing brick and mortar hospitality – they’re unlocking new revenue streams and crisis-proof business models.
We’re excited to see venues across Europe including Seedrs alumni Mercato Metropolitano and Stem + Glory open their doors to the public again. Armed with the right tech, and with the hospitality ready to rebound, they’ll be more resilient than ever.
To browse live investment opportunities on Seedrs, visit here.