With the world still reeling from the effects of the pandemic and a slower-than-expected global vaccination roll-out, the travel and hospitality industry continues to flounder. While there have been many attempts to fix the problem, we focused in on how Velocity Ventures, a hospitality & travel-focused venture capital firm based in Singapore, is aiming to build a venture capital fund dedicated to hospitality and travel startups.
The venture fund is Southeast Asia-focused and has a COVID-19 themed investment mandate to support distressed and disrupting seed and early growth stage hospitality and travel startups in the region.
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To get a better understand of what this means, we spoke to Nicholas Cocks, Founder and Managing Partner of Velocity Ventures. He was kind enough to share the vision of the fund and paint us a picture of the region and what it will take to get things back on track.
Could you share what you hope to achieve with the Hospitality and Travel Fund?
The fund aims to grow early stage, tech-enabled start-ups within Southeast Asia that will transform and rapidly digitalise the sector post-COVID.
The current structural change in consumer behaviour is a game changer as it will not only create new opportunities within the Travel & Hospitality sector but will also drive the sector to develop transformative tech-driven solutions – which is a process that has just begun in the industry. This is supported by our Corporate Partnership programme, allowing us to pinpoint the industry’s needs and source for the right technology to suit these needs.
What will be the long-term impact of the pandemic on the travel and hospitality industry in Southeast Asia?
We have a positive outlook about the recovery of the industry. Different sub-sectors will recover at different paces – i.e F&B (restaurants, delivery services) has recovered strongly to pre-pandemic levels but the accommodation sub-sector (hotels) and travel retail have some way to go.
Could you paint a picture on what would be required for the hotel and accommodation sector to bounce back?
Domestic travel in heavily populated countries like China and Indonesia has rebounded strongly and the accommodation sector in those countries is doing well. For those countries that are dependent on international tourism – Singapore, Thailand and to a lesser extent Malaysia and Philippines – these countries will need to see the vaccination programme covering more than 50% of the population and proper cross border recognition of vaccinations before a full recovery takes place.
When do you think the industry will be able to resume some sense of normalcy in Southeast Asia?
We’re expecting for the industry overall to be back to pre-pandemic levels by 2023. It will depend on 2 factors: the pace of vaccination roll out, and how quickly governments can establish cross-border vaccine recognition regimes.
With cross-border vaccination programmes, do you believe that is likely given the vast different in vaccination timetables by different markets in Southeast Asia?
We don’t see much in the way of cross border vaccination programmes – most countries are taking care of their own needs. What is needed though is a verifiable recognition system – like a health passport. Nations need to establish protocols for recognition of each other’s vaccination certifications and to also set up clear rules on who they will allow to enter and in what circumstances. Hong Kong has done a good job of this with their rating system – there is visibility on what will happen when the situation changes – rather than waiting for random, unpredictable adjustments that can leave travellers stranded.
How are you working with influencers such as the Singapore Tourism Board, Malaysia Digital Economy Corporation, Startup Indonesia?
We work closely with the Singapore Tourism Board Accelerator to help promising start ups and founders develop critical market entry skills and fundraising strategies via workshops and mentoring. Due to the nature of the Accelerator program that sits right within our investment mandate, we are able to bring value to the program with our industry insights.
As for MDEC and Startup Indonesia, organisations who are well plugged into Malaysia and Indonesia’s start up community respectively, we participate in pitching and investor matching events. By being a sector-specific fund, we are well positioned to support start ups and founders within the travel and hospitality industry.
What’s next for the fund?
For the remainder of the year, we would be looking to complete our fundraising to hit our target of USD20 million. Over the next 2 years, we will also be looking for promising startups to invest in.