The unprecedented travel demand that marked the first half of 2022 is expected to increase over the fall and winter months. More leisure travelers than ever are back to booking trips and globetrotting.
In addition, there has been a substantial rise in domestic and international travel and the formation of a new “blended” or “bleisure” (business and leisure) travel category, replacing business travel. Now, people travel on vacation or visit family and simultaneously set business meetings, attend professional events and continue remote work, or vice versa. Others make spontaneous decisions to extend a business trip for a weekend stay or invite a partner for a romantic getaway.
“Blended” or “bleisure” travelers are looking for more security and ways to minimize the impact of travel disruptions. They need plenty of flexibility with cancellations and changes, for example, by extending or upgrading hotel stays or adding new destinations and travel partners, which creates the perfect environment for convergence between fintech and the travel industry. This opens up considerable opportunities for investors to get excited about.
Travel and Fintech Go Hand-in-Hand
Because travel customers are now extremely interested in the high quality and convenience aspects of travel, there are even more ways that banks, travel agencies and airlines can coordinate to create a better travel experience.
If the finance and travel industries could strike an advance agreement about pricing deals, booking flexibility and bonus perks for customers, this could not only streamline existing services but boost the overall quality of travel, especially since specialized travel companies have an in-depth knowledge of the market.
The partnership of travel and fintech companies could add a bit to the agreed-upon prices to hedge risks for things like canceled flights or other unforeseen circumstances. However, most customers are willing to pay a bit extra for this service, so both the banking and travel industries profit. Sometimes, it might not even cost the traveler extra, especially if they were a longtime client.
There Are Already Startups Taking Advantage of the Travel-Banking Synergy
This new landscape has already seen several startups enter the scene. Some are brand new, and others have been around for a while and hope to secure more funding as the travel boom swells.
Valencia-based Flywire solves payment challenges for travel businesses by offering a one-stop-shop to easily receive and manage payments, deliver invoices and statements, and collect commissions from various suppliers. Recently, a startup called WeTravel, which provides payments and other tools for the specific needs of group travel, has raised $27 million. Besides travel planning, the startup handles different payment processes, such as payments in installments, working with various currencies and payment methods, and paying out to different suppliers.
The Market is Full of Investment Opportunities
Fintech trends like open banking, "buy now, pay later," and tokenization work in investors' favor, too.
The ability to embed banking tech into the travel industry means airlines, hotels and travel agencies are poised to invest in fintech products that offer high margins and easy LTV-boosting add-ons.
The "buy now, pay later" trend is also highly encouraging for the travel market. Flexible, easily accessed credit frees travelers to make higher-value purchases or say "yes" to upsells.
Many companies have already sprung at the opportunity presented by the BNPL trend. Some of the most popular providers of this option for certain travel partners are Afterpay, Affirm, Klarna and Uplift. Affirm has partnerships with Delta Vacations, Priceline, StubHub and Alternative Airlines, a flight booking website. Uplift is exclusively focused on providing point-of-sale loans for travel, with around 200 travel partners, including United Airlines, Kayak, Southwest Airlines and Royal Caribbean.
Qantas launched a "fly now, pay later" partnership with BNPL provider Zip, enabling customers to book domestic and international flights with payment installments that can also earn them loyalty points for Qantas through Zip’s own loyalty program, Zip Rewards.
The BNPL trend presents a great opportunity for companies’ further development. Investors who can get in with travel firms that prioritize responsible lending strategies are likely to see success.
Finally, the post-pandemic world now expects frictionless payment for everything. Fintech companies that can offer simple payment solutions like tokenization, last-mile digitization and merchant-initiated transactions have enormous growth potential for the foreseeable future.
The Confluence of Fintech and Travel Means Optimal Investment Conditions
With the post-pandemic travel boom continuing to grow, the travel sector and all of its ancillary industries are working overtime to manage demands and offer the level of travel experience that customers now demand.
Soaring demands plus an intensifying convergence of fintech and travel means that an unprecedented number of innovations are on the horizon, so this is the perfect time for investors to start looking at the emerging businesses coming to fill the needs of returning travelers.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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