Overtourism as an opportunity in travel VC

Some time ago, in the context of a fellow investor's annual LP day, I attended an excellent talk by Madeline List of Phocuswright, presenting some original research on overtourism and sustainability. 

Madeline's argument goes like this: a lot of travellers say they care about sustainability, but their actions don't really reflect this. Interestingly, though, while only 6-12% of travellers avoid a destination because of unsustainable practices, 24-40% avoid it due to overcrowding. And overtourism is very much a part of the sustainability calculation. 

We know this from research in other consumer studies, of course. People say they want what's sustainable, but end up doing what's readily available, convenient, and cheap. Change the balance of selection, convenience, and price, and you can change behaviour. 

Some places just feel well over capacity. We attended a wedding in Venice two years ago - despite it being May, it was crowded. Rome, last year, was clearly over-run. Barcelona, where we combined our 10-year anniversary with a TravelPerk board, has had aggressive anti-tourism protests. And prices everywhere, most notably in Portugal where we were in June, have seen dramatic inflation from the influx of US tourists (and prior to that the Chinese, and prior to that the Russians). 

I took a brief look at the numbers. In the early 2000s, Venice had 6-7 million inbound visitors per annum. Just before the pandemic, those numbers had risen to approx. 20 million (thanks, cruise lines). Rome is even more extreme: from approx. 8 million twenty years ago to over 35 million arrivals (!) today. It has almost doubled just in the last five years. 

In some ways, this is not surprising. The total travel market is on an ever-steady growth curve, at around 6-7% per annum. Covid was obviously a major hit, but "revenge travel", which only really ended this year, reverted us right back to the mean. And 7% compounded over 20 years just is a cool 4x (that Einstein quote keeps being right). 

In part you can blame low-cost airlines and short-term rentals really: over the past three decades it has gotten much cheaper to get there and much easier to stay there. But in a sort of Jevons paradox, that increased demand is now producing even more demand through a cycle of social media-induced FOMO.

67% of 18-34 year-olds (versus a negligible amount of olds) say social media heavily influences their travel plans. And a good 40% pick their next spot based on how it will look in their feed. Folks are there for the experience, but the image matters. And hence the masses queued at the Bali Swing, in Santorini, Machu Picchu, Trolltunga, the Maldives, Blue Lagoon, in Positano, the Trevi foundation, and other major snapshot destinations. 

Short of major geopolitical dislocations, which will probably come, this is the new normal.

So just about how we developed a thesis to back an outdoor travel company about five years ago (Roadsurfer), or how we thought in-destination experiences were the strategic white space in travel over a decade ago (GetYourGuide), we started the work around how to benefit from the fact that the world's favourite places are less interesting now than when some of us were kids.

In that context, we met Cat Jones, who had approached this problem from the perspective of sustainability and introduced us to the concept of "slow travel": "Slow travel is like slow food. The ingredients (hotels, transport, activities) are good for locals and for the planet. The recipe (route) is optimised for quality rather than speed. The result is often a much richer travel experience with depth of flavour and story."

Her company, flight-free travel specialist Byway, offers bespoke journeys across the UK, Europe and beyond, by rail, boat and bus. These trips across multiple countries and travel modalities can be prohibitively complex to organise, but Byway makes it easy. To create trips, it uses proprietary travel technology, called JourneyAI, which pulls together transport, places, experiences and accommodation to create multi-stop trips designed for enjoyment rather than speed, while avoiding tourist hotspots.

Alongside Founders Factory and Eka Ventures, we became investors in Byway earlier this year.

A Byway holiday isn’t about rushing to a destination as quickly as possible. Instead, the journey is a highlight of the experience, including super-scenic routes and detours to lesser-known places. In getting fewer folks on a plane, not only does Byway reduce carbon emissions dramatically, it increases the dispersal of tourism overall. 

Of course, there's a reason hotspot destinations have risen to such popularity. Byway recognises the draw of Venice for drifting along canals, or of Rome for ancient ruins, and for travellers very keen to visit, will include these places for shorter stops especially out of season. But where similar experiences can be found in lesser-known places (with fewer crowds to boot), Byway suggests carefully curated alternatives. There’s magic to be found in swapping the crowded canals of Venice for Bruges, or Italy’s over-touristed capital for the ‘French Rome’ of Nîmes, or Barcelona’s city-beach combo for coastal Cadiz - so well-loved by Spanish holiday-makers. 

People will keep travelling, and they should. As the economy continues to pivot away from things (which are cheap) to experiences (which are invaluable), we believe more and more people will choose the actual adventure, not the photo opportunity. And by meeting locals who may actually want to chat instead of protesting outside your Airbnb, we believe we can recover the connection that tourists used to build with their destination: a discovery of the other, a connection to a new culture, a rediscovery of self in the beauty of elsewhere. 

Madeline's talk (in the context of another conference) is here.