‘Omicron showed up at the wrong time’ for business travel, VC partner says

Forerunner Ventures Partner Brian O'Malley joins Yahoo Finance Live to explain how detrimental the recent Omicron variant has been to the business travel industry's 2022 outlook, specifically the airlines and hotel chains.

Video transcript

- Well, travel optimism is in flux for 2022 with Omicron concerns growing in countries weighing new lockdown measures. Let's talk about what's happening on the private side for some of these travel names.

So we've got Forerunner Ventures partner Brian O'Malley joining us today. And Brian, I want to get to what's happening in the startup space. But just glad to get your thoughts on what we're seeing play out. In many ways, you know, we're looking at the Dow selling off today.

Significantly, we've seen this volatility come in waves along with the pandemic. That hasn't necessarily kept a lot of these startups from tapping into the public markets to raise capital. What have you seen on the private side?

BRIAN O'MALLEY: Sure, Kiko. First off, thanks for having me. So the private side is still dominated by a large amount of capital coming into the market, which is impacted things more broadly, as well as more specifically within the travel sector. I think what you have the Omicron impacting things today. You'll look and see that the public travel stocks are not down any more than any other stocks in the market, and that optimism for where things are headed down in the future is certainly seen on the private side as well.

- Yeah. I mean, they may not be down as much. But I mean, overall, we're seeing the market down significantly. We've seen the challenges come with airlines, for example. Some of these other travel names.

It's interesting to see how consumer behavior has really shifted during the pandemic. You look at a name like an Airbnb, where they have seen a significant uptick in longer term stay. So some of their services being used in a different way than maybe what we saw pre-pandemic. What about some of the startups that you've backed? What are you seeing in terms of the pivot that's happened in their business?

BRIAN O'MALLEY: Sure. I think consumers are first off blurring the lines between this idea of working and vacation. And so we're seeing people working from distance and working from home at the same time. And so Airbnb, which is really giving access to people to live and work and be in different places. That is an underlying trend that we're seeing.

But along the way, consumers are also looking for greater confidence. And so we're seeing solutions in that area where you're not rolling the dice, maybe not having a great stay. They are giving consumers confidence that where they're staying is going to be great. And so that level of curation is becoming increasingly important as people think about not just where they're going, but also making sure that they get there in one piece. And that's a great experience, whether they're.

- And so you know, we're showing some of the names that you have invested in. You obviously led the seed funding around for a way which, by the way, is a suitcase. I use all the time. What's the outlook for some of these companies.

Is it that, in fact, we're going to learn to live with this virus and maybe some of those travel plans that people had next year aren't necessarily going to be put on hold. What are you hearing?

BRIAN O'MALLEY: Sure. I think uncertainty is the name of the game. And so we've seen not a lot of cancelations so far in the travel space. But also remember a lot of airlines a lot of travel companies have much more flexible policies than they used to. So it's still TBD what's going to happen this holiday season, as well as what everyone's really focused on, which is next summer.

And so as people ramp up bookings over the next couple of months, we're paying close attention to whether folks have confidence to make those bookings, and we're seeing a new wave of startups around reinventing the travel agent becoming prevalent as people look not just for a certain level of access, but a certain level of curation and confidence that their plans are going to play out the way they want them to.

- And you've got a number of startups in your portfolio that are also helping a lot of these entrepreneurs. These smaller businesses trying to navigate this wave. What are you hearing about business travel returning? How significant is that outlook likely to improve, especially given what we're experiencing right now?

BRIAN O'MALLEY: Sure. We believe that business travel is going to return a little bit more slowly as people gain confidence. And remember the magic of being in person in the moment when you're trying to cut a new business deal. And so we think business travel is re-emerging. But Omicron showed up at just the wrong time for that to happen. And so we think that's going to still take a little bit of time to play out.

- OK. We'll be watching that one closely Forerunner Ventures partner Brian O'Malley joining us today. Appreciate the time.