The tourist industry is bouncing back after a rough couple of pandemic-stressed years, and in the case of some tourism and travel startups, its momentum is coming in at a pace that’s defying the even the current market climate.
Today, GetYourGuide — a Berlin-based startup that has built a marketplace for finding and booking tourist, travel and other experiences, with some 75,000 experiences from 16,000 providers listed at any given time — is announcing that it has raised $194 million.
It will be using the funds in three basic areas: first, to continue expanding into new markets. Second, to add in more hikes, tours and other experiential events like meeting Gianni, the key holder for the whole of the Vatican, at 6am and turning on all the lights as you walk through the halls with him. And third, to bring in more AI and other technology to improve discovery and personalization on the platform.
The money is coming in the form of an $85 million Series F and a revolving credit facility of $109 million. Blue Pool Capital led the equity round with KKR and Temasek also participating, while UniCredit led the credit facility with participation from BNP Paribas, Citibank and KfW.
The round values GetYourGuide at $2 billion — double the startup’s valuation compared to its previous round, a monster $484 million Series E in 2019.
The funding, and valuation boost, stand out in the current market because consumer-oriented startups have been finding it extremely challenging to raise money; and all startups, not just consumer, are seeing a lot of pressure on their valuations — two trends that GYG has just bucked. (And it’s not the only travel startup making those waves: just yesterday Hostaway announced a $175 million raise.)
But the news also represents a pretty major turnaround for GetYourGuide itself.
Pre-Covid, Berlin’s GetYourGuide was one of the hottest startups in Europe, built on a very simple idea: it took one of the most old-fashioned and outdated aspects of tourism — guided tours — and reinvented them as “experiences” to meet the needs, interests, and Instagrammable requirements of a new wave of younger consumers, all discoverable and bookable using everyone’s favorite device, the smartphone.
The idea took off like a rocket — a successfully launched one. Bookings went up, investors flocked to the startup, it moved into a very impressive digs in the east of Berlin, and people started to think that maybe it wasn’t just Airbnb that could within a decade upend how we think about travel.
Then Covid-19 happened.
“We went from high-flying to zero revenues — zero revenues for multiple quarters,” CEO and co-founder Johannes Reck recalled. “A lot of startups struggled at that time, but we were one of the worst hit. Of course, no one wanted to go on tours with other people” — which was effectively the only product that GYG offered. “It was really bad.”
Reck took a bold bet at that time: he decided that consumer behavior, the interest in experiences that had been driving business for the startup, wouldn’t change; it would likely just pause under pandemic circumstances.
“I was always convinced that we would go back and that our market would come out better than it was even pre-pandemic. First it’s because people crave experiences. Covid was a big setback but not a fork in the road where consumer behavior would be different,” he said. “Second, I was very sure travel would return, and travelers would not want to sit in hotel rooms for the next century.”
The company’s $484 million round led by SoftBank closed just months before Covid-19 hit, so GYG had plenty of cash. But on top of that it secured a $133 million convertible note, in case things got really hairy. It also laid off 20% of its staff, all told, but then it held tight. “We didn’t cut deep,” Reck said. “We stopped and waited for 8-10 months to pass.”
It took a bit longer — around two years in fact — but eventually things started to pick back up. GYG never did exercise the convertible note, Reck said.
The end of 2022, with the Omicron wave of Covid-19 subsiding, was the turning point, he recalled, with everything “just starting to fall back in place.” By Q1 of 2023, the startup was seeing booking volumes that were 4 times bigger than its volumes in Q1 in 2019 (the last comparable year of non-Covid normalcy). It’s not speaking specific numbers on volumes but it had about 25-30 million tickets sold on its app between 2019 and 2020; four times that would be 100-120 million.
Reck added that now it’s looking like the company is “on the route to profitability” in many of its major markets.
Of course, that route, unlike a GYG tour, doesn’t have a well-defined starting or end point, nor estimated time of arrival. But it seems to be one that investors are happy to book and follow regardless.
“There is immense opportunity in the digitization of the experiences industry, and we believe GetYourGuide’s global leadership and market-leading customer-centricity in the category stems from its deep expertise in this complex space,” said Oliver Weisberg, CEO of Blue Pool Capital, in a statement. “We believe GetYourGuide is uniquely positioned to be the global leader in the category; we are pleased to lead the equity financing given the strength of the business.”
Meanwhile, the future for GYG has a couple of interesting technology and business variables at play.
Reck said that GYG remains very committed to the idea of selling human-led group tours. That means: no self-guided tours, no virtual tours, and no generative-AI created tours are on its roadmap today.
Reck calls the group tour, devised and led by an actual person, “the core product” of GYG. “Our mission just doesn’t happen if you are glued to your smartphone,” he said. He speaks not just from opinion but experience: “We’ve tested so many alternative formats, including virtual experiences,” Reck said. “They all flopped.”
But that’s not to say that there aren’t some big opportunities for using AI in the business. Reck said.
About a week ago, the company launched a ChatGPT integration that lets users initiate a search of GYG’s catalogue by way of natural-language queries. That solves a big pain point for the company, which has been that basic keyword searches are not good enough to produce useful search results.
Over time, there could also be further extensions of this where GYG can start to get more accurate ideas of what people like to do and look at to give them even more accurate search results; and GYG aggregates the data to get a better picture of what its customer base wants more or less of — analytics and data that it could in turn feed back to its suppliers to build better future tours.
“I don’t see AI as an end in itself but a tool to help suppliers and users,” he said. “There are so many different types of experiences, and AI will help figure out what is for you.”