Barcelona-based TravelPerk has acquired US competitor NexTravel as the COVID-19 pandemic encourages consolidation within the heavily impacted travel industry.

The financial details of the acquisition are not being disclosed, but TravelPerk states this is its largest acquisition to date. NexTravel serves approximately 700 customers worldwide and has facilitated around 300,000 trips since its establishment in 2013. The deal is strategically aimed at strengthening TravelPerk’s presence in the US market. (The company is also announcing a new partnership with Southwest Airlines today, which addresses a significant gap in its US service offerings.)

According to CEO and co-founder Avi Meir, the US has consistently been a top five market for TravelPerk; however, the NexTravel acquisition elevates it to the company’s largest market.

“US customers, US expertise, [a US-based] team,” he explained, outlining the key reasons behind the acquisition. “They have developed a remarkable product. As a Y Combinator company, they launched two to three years before we did and concentrated primarily on the US market, giving them specialized knowledge that complements our own efforts.”

Meir confirmed that the founders and team members of NexTravel will be joining TravelPerk as part of this transaction. Their existing clientele includes well-known companies such as Yelp, Stripe, and Harry’s.

“They are a strong organization. I believe we have excellent operational capabilities and entered the crisis with a robust cash reserve. COVID-19 is generating opportunities that were previously unavailable,” he stated. “We enjoyed a positive competitive relationship, and our stronger financial position enabled us to acquire them rather than the other way around.”

The plan involves gradually migrating NexTravel’s US users to the TravelPerk platform. However, Meir indicated that the NexTravel team will continue to support their product for the immediate future while they identify and address any functional differences to ensure a seamless transition for NexTravel customers.

This acquisition represents only TravelPerk’s second, following the purchase of risk management startup Albatross last summer—highlighting how the coronavirus crisis is prompting businesses in the travel sector to reassess their priorities.

This is particularly true for companies with sufficient funding to navigate the current revenue challenges. Meir also confirmed that TravelPerk is actively exploring additional acquisition possibilities.

“We are currently in discussions with several other [potential acquisition targets],” he said, adding, “Consolidation is typical during times of crisis, so it’s reasonable to anticipate further developments of this kind.”

While NexTravel began operations a couple of years before TravelPerk, it has secured considerably less funding throughout its history—approximately $4.5M, as reported by Crunchbase.

The younger, Spain-based startup, in contrast, has experienced faster growth and has raised significantly more capital (~$134M to date), including a $60M addition to its Series C funding in 2019, at which time it reported serving 2,000 customers globally.

“We happen to be based in Europe,” Meir explained to TechCrunch, discussing how his European startup is in a position to acquire a US competitor (a scenario that is often reversed in the tech industry)—and emphasizing the importance of localization expertise. “We never focused solely on the Spanish market or even the European market.

“To succeed in business travel, it’s essential to develop a highly localized product… Therefore, we never considered ourselves a European business; we simply recognized the need for deep localization to achieve success anywhere. This acquisition is another step towards localization for the US market.”

“[The acquisition] will undoubtedly drive significant product development, commercial investments, and partnerships,” he added. “We are proceeding with the understanding that it will require us to expand our efforts in the US—it’s almost a self-fulfilling prophecy—but given the $300 billion business travel market, we must take action.”

Given the ongoing global impact of the pandemic—including in both the US and Europe—the amount of available revenue in the business travel sector is likely to remain considerably reduced for a substantial portion of 2021. Meir confirmed that TravelPerk does not anticipate a market recovery before the second half of the year.

Despite this, he remains optimistic that the rollout of vaccinations to vulnerable populations will soon enable business travelers to resume their activities—predicting that “Zoom fatigue” and the rise of remote work will reignite demand for in-person interactions.

“My current expectation is that everything will converge around the second half of this year—perhaps around May-June—when seasonality should hopefully take effect. This means we’ll likely see a similar decline in hospitalizations and deaths as we experienced last year. That is my hope,” he predicted. “Furthermore, we have the vaccines… Within the next four to five months, there is reason to believe that vaccine distribution will accelerate, and everything will come together. We simply need to ensure the safety of at-risk populations for the world to reopen.”

“This doesn’t mean we’ll be completely free of the coronavirus, but it won’t be as deadly as it is now, allowing us to ease restrictions and see travel resume,” he added.

Responding to questions about whether businesses may have adapted to a “more digital” norm after 1.5 years of living with COVID-19—relying on videoconferencing and virtual meeting tools—Meir dismisses the notion of a permanently smaller business travel market, instead forecasting a “roaring ’20s” revival for business travel, fueled by “Zoom fatigue” and the fear of missing out on networking opportunities once social distancing measures are lifted.

“If you still hold any Zoom stock, you should sell it!” he joked during a Zoom call (ironically). “Its value is going down from now on. Everyone is tired of this. The Zoom fatigue is real, leading to mental health concerns and social isolation… Maslow’s Hierarchy of Needs still applies, and I believe it’s even stronger now, as we realize how detrimental it is when we can’t meet people in person. The virus doesn’t alter human nature; we still need face-to-face interaction.”

“The first salesperson who loses a deal because a competitor took the client to dinner while they conducted the meeting via Zoom will be on a plane the next day. Competition will resolve this—even if we set aside human nature,” he added. “We all recognize now more than ever how much we need human connection.”

Even if some “transactional meetings” do shift permanently to Zoom, as Meir conceded might happen, he said they aren’t the primary driver of the majority of business travel.

Moreover, the pandemic will generate new demand for business travel due to the increase in remote work, creating an ongoing need for geographically dispersed colleagues to meet in person, with Meir arguing that more flexible working arrangements are likely to endure.

“My team, like many others, used to be entirely based in Barcelona in the same building—and now we allow them to work from anywhere in the world. Why not? Many companies will likely maintain this approach,” he said. “We’ve found that people enjoy it, employees are happier, and it’s more cost-effective because you don’t need as much office space—and people are more productive and achieve a better work-life balance.

“This necessitates a new type of travel because… you need to bring [your team] together for a week of collaborative work. Therefore, I believe any potential decline in business travel due to the one-hour transactional calls that can be moved to Zoom will be more than offset—even increased—by this new way of working that requires a new type of business travel.”

While TravelPerk was fortunate to enter the pandemic with a strong financial position, having secured additional funding in its Series C round in 2019, investor interest in travel startups undoubtedly waned for a considerable period last year. However, Meir suggests that this is beginning to change.

“We don’t need to raise capital anytime soon—we have sufficient funds. We anticipate the business returning to year-on-year growth sometime in the third or fourth quarter of this year,” he told us. “However, what’s interesting—and I don’t know if I’m alone in this—is that we went from [being a rapidly growing company] and receiving a lot of inbound inquiries from investors, and then COVID-19 hit, and my inbox became empty for a while.

“It was disheartening, frankly. And then, in the last few weeks—since the start of the school year—September/October, my inbox is no longer empty. There is renewed activity in the market. There’s a lot of capital seeking investment opportunities—and I believe that even in a struggling industry, strong companies can secure funding on favorable terms right now. So, I’m not actively looking to raise funds, but I’m always open to the possibility.”