TravelPerk CEO and co-founder Avi Meir.
TravelPerk
TravelPerk primarily uses AI technologies such as machine learning and neural networks in the backend to help automate many of the manual tasks involved in corporate travel—for example, connecting users with the best prices for flights and accommodations.
“Traditionally, if you look at legacy players, like American Express or Expedia, or vacation travel sites, most of the work is done manually by travel agents,” Avi Meir, CEO and co-founder of TravelPerk, told CNBC.
“That’s one of the reasons why you don’t really see huge success at scale with travel is because the technology hasn’t been used, and the technology is how you scale today.”
SoftBank invested $70 million in TravelPerk’s latest round, which the company says is a follow-up to its “D-1” funding round. The fundraising round shows SoftBank making a major bet on a company that is disrupting corporate travel through new technologies like AI — which has generated significant buzz since OpenAI’s November 2022 launch of ChatGPT.
The latest fundraising round raises TravelPerk’s valuation to $1.4 billion, slightly above the $1.3 billion TravelPerk was valued at in its previous fundraising a year ago.
A “raise,” in which a private startup company raises funds at a higher share price, has become a rare event in the past year or two amid extremely high interest rates.
Meir poured cold water on some of the hype around AI, saying that many of the experiments he’s seen with generative AI tools like ChatGPT seem more like a “show” than a practical adoption of AI to improve the travel business’ thorny problems .
He said TravelPerk operates on a far more cost-effective operating model than established companies in the legacy travel agency market. While many travel agencies operate at low single-digit gross margins, Meir says TravelPerk’s profit margin was 60% last year.
“What we’ve done in 2023 is, with the help of AI, we’ve basically automated a lot of these kinds of manual processes in the back office,” Meir told CNBC. “It’s less sexy than having a chatbot, but it’s worth it,” Meir said.
TravelPerk also intends to use the fresh cash to fuel the acceleration of its gross profit, which grew 90% in all of 2023 through automation and AI. TravelPerk is targeting $100 million in annual revenue in 2023, according to its co-founder and CEO Avi Meir.
TravelPerk had a tough time during the Covid-19 pandemic when all types of travel, not just corporate, stopped to stop the spread of the virus.
Since then, the company has benefited from a resurgence in international travel as the release of vaccines has allowed public health authorities to lift travel restrictions around the world.
“Not only did we emerge from the pandemic, but we returned to hyper growth. 2023 was our best year yet. We’ve grown our revenue more than 70% year over year, on a pretty big base,” Meir told CNBC.
TravelPerk competes with American Express, BCD Travel, SAP Concur and Navan in the corporate travel management space.
Post-Covid-19, Meir says, TravelPerk’s growth has been sharp. It projects the company to reach profitability on a monthly basis by the end of 2024 and quarterly profitability by the end of 2025.
TravelPerk has continued to hire rather than cut staff, as several other travel tech firms have done. The company has hired 50% of its staff over the past two years, according to the CEO.
Meir said TravelPerk has no immediate plans to go public because its intent is to build a company that will be around 100 years from now. However, an initial public offering is something the company would be “ready” to do if and when that event approaches, he added.
TravelPerk hired a new chief financial officer, Roy Heffer, last year, who has experience taking companies public and was part of two US tech IPOs
