Travel Tech: Can Scotland produce another Skyscanner?

Ever since Edinburgh-based flight search business Skyscanner was snapped up by Chinese travel group Ctrip almost a decade ago for £1.4 billion, the dream of producing another local “unicorn” has been kept alive by numerous entrepreneurs in Scotland.

Nikki Gibson is one of them. Three years ago the former corporate events executive founded Edinburgh-based Swurf, an app that links peripatetic workers with hotels, gyms and other places across the UK where they can park their laptops and work for a day.

This week she and Alison Grieve, a board member and editor of Young Company Finance, welcomed users to a monthly “coworking” session at the Kimpton Hotel on Edinburgh’s Charlotte Square.

"Travel tech", pioneered by firms such as Skyscanner, help travellers plan city breaks to destinations such as Prague | Getty Images

Gibson founded the business to tap into what she calls a growing “digital workforce” seeking temporary workspaces, while providing foot traffic for hospitality businesses recovering from the pandemic. The roughly 55 venues signed up to Swurf in Scotland pay an annual fee to be listed on the app, while users enjoy perks like discounted food and coffee.

Swurf and other startups in Scotland such as Obvlo and Holibob are part of a global phenomenon known as “travel tech” – businesses involved in the digitalisation of travel, tourism and hospitality. Its growth has coincided with the post-pandemic rebound in travel and a proliferation of digital nomads and includes established names like Booking.com and ticketing system Amadeus. Recent startups include TravelPerk, a travel and expense management platform and Barcelona-based Exoticca, involved in the digitalisation of long-haul travel.

AI creating travel itineraries

Investors have loved the story, in particular how AI is enabling the personalisation of travel itineraries in a way that humans could never manage on a large scale, while increasing the efficiency of booking technology and revenue management.

Edinburgh-based Obvlo, founded four years ago by Aberdeen University graduate Callum McPherson, is a “digital concierge” using AI to help hotels build personalised food and sightseeing recommendations for guests before they check in. Investors include US-based Blue Run Ventures and Edinburgh family office Murray Capital.

Edinburgh is a natural hub for this given a steady increase in tourism, which is driving a spurt in hotel development. It also has a thriving ecosystem of travel tech entrepreneurs and promoters associated with the university’s Edinburgh Futures Institute (EFI), one of six innovation hubs under the Edinburgh City and Region Deal’s Data Driven Innovation programme driving collaboration between academia and business.

Josh Ryan-Saha, an authority on AI and data-driven innovation in tourism, operates out of the EFI, where he runs Traveltech for Scotland, a cluster involving over 200 tourism and technology companies that he founded in 2020.

He cites TravelPerk as an example of Scotland’s tech travel credentials. The Barcelona-based company opened a hub in Edinburgh in 2022 staffed largely by software engineers, some of them former Skyscanner employees. “They could see the talent was coming out of Edinburgh because of the informatics and data capability at the university,” Ryan-Saha says.

Scotland also has a mature funding ecosystem of private equity, VC and angel investors, among them Gareth Williams, co-founder and former chief executive of Skyscanner who has backed Swurf. Angel Capital Scotland, which represents around 2,000 private investors, says the value of deals to fund startups of all types in 2023-24 was up slightly to £106m, involving 94 transactions of between £20,000 and just over £4m.

Skyscanner co-founder Gareth Williams | TSPL

Scottish government support is also helping through the role of Scottish Enterprise as an early-stage co-investor. McPherson says a £10,000 grant from Scottish Development International allowing Obvlo to attend a tourism conference in Miami resulted in the company being named by organisers as a “hot travel startup” for 2025.

Scarcity of funding

Yet all of this masks a tough reality for Scotland’s travel techs: funding is becoming scarcer.

While Scotland’s investment share of equity fund raisings for all types of businesses in the UK grew last year slightly to 4.8 per cent involving 199 deals worth £59m according to consultancy Beauhurst, such funding across the UK in the final quarters of last year was the lowest in deal volume since 2014 due to geopolitical instability and tough macro-economic conditions.

Travel tech funding has fared no better, dropping globally to nearly a decade low in 2023 to $5.2 billion, according to Phocuswright, a research firm whose parent company is hosting a travel tech conference in London next month. It predicts that the number of funding rounds likely to have been completed in 2024 will fall to the lowest level on record.

Moreover, investors are becoming stricter about what they’ll commit to. Scottish Enterprise acknowledged this in its latest report on Scotland’s risk capital market published last week, saying “changes in investor risk-appetite have perpetuated the drift towards later stage opportunities, with early-stage below £10 million and new to equity investment being the most challenging areas”.

Cara Whitehill, a vice-president at Thayer Investment Partners, a US venture capital firm specialising in travel tech, explains that investors are now looking “for more traction earlier in the lifecycle compared to a few years ago, so it will be tough to capture funding without having something relatively concrete you can point to.”

Given Edinburgh’s reputation as a leading centre for AI in Europe, Scotland can at least point to AI as an advantage in the quest for the next Skyscanner. “I want Scotland to be the UK hub for travel tech,” says Ryan-Saha. “We are still at a fairly nascent stage but I think we can get there.”