BEACH (Booking, Entertainment & Live Events, Airlines, Cruise Lines & Hotels & Resorts) stocks have taken a hammering with the Covid-19 crisis and more than $332 billion in value have evaporated over the past month.
Booking Holdings has seen a 37% drop, Expedia Group an even bigger one at 53%; worldwide, airline revenue is estimated to fall by as much as $113b in 2020.
If the giants are at risk of falling, what does it look like for startups? At WiT Virtual, two venture capitalists shared their perspectives on how the travel and startup landscape will evolve as a result of Covid-19.
Looking at the travel industry broadly, Hian Goh, co-founder and partner, Openspace Ventures described travel as “a bad product-market fit situation right now.”
Kuo-Yi Lim, managing partner, Monk’s Hill Ventures remarked, “travel gets slammed the hardest and most immediately… not just regional and long-distance, but within countries themselves.”
In such a period of uncertainty, it is difficult to determine who the winners and losers will be. However, the general outlook is that once the dust settles, the strong will get stronger and the weak will get culled in almost all sectors – travel or otherwise. “It’s not unlike the virus’ effect on the population,” said Lim, “vulnerabilities will show up very clearly.”
“I generally think no one is going to get stronger because it’s a systemic situation… the only situation where someone gets stronger is because of mortality… because competition decreases,” argued Goh.
Using the example of rival super apps, Gojek and Grab, Goh said, “they’re not fighting anymore” suggesting that they are more focused on ensuring their own survival than battling over market share. Competition will come back after the crisis, he predicted. “The [players] who survive the crisis will be weakened but if they have a field where it is less competitive, that’s where dominance grows.”
Meanwhile, some sectors are simply too big to let fail, the airline sector being a particularly salient example. CAPA warned that most of the world’s airlines could be “bankrupt by the end of May” without government and industry intervention.
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