Israel’s Growing Travel and Tourism Startup Ecosystem Drives Industry Resilience
Israel may become widely known as the ‘Startup Nation’ thanks to countless innovations in the fields of cybersecurity, communications, and technology, but the nation’s vibrant travel and tourism industry is rapidly growing into its most valuable sectors.
According to GuruWalk’s Summer 2024 Tourism Report, Israel will rank in the top 10 for visits to the United States this year, placing higher than the likes of France, Australia, and Brazil in the process.
In fact, Israel’s 2024 outbound tourism figures have shown remarkable resilience, with as many as 3 million trips overseas recorded in the first half of 2024. In June alone, 750,000 outbound trips among Israeli travellers amounted to around 80% of the total that took place over the same period in 2023.
Maintaining Israel’s strong tourism infrastructure is one of the world’s leading startups helping to create a frictionless ecosystem in which residents can book trips and travel the world.
Although many often look to innovations in the fields of cybersecurity and communications as the jewel in the crown of the Startup Nation, a recent CTech list of the top 50 most promising Israeli startups for 2024 placed travel insuretech firm Faye in the coveted #1 spot.
July saw Faye announce that it had raised $31 million in Series B funding in a move that brought the startup’s total funding to $49 million.
The round was led by Portage and featured participation from the likes of Lumir Ventures, F2 Venture Capital, Viola Ventures, and Munich Re Ventures.
Following its expansion into American markets, Faye has grown alongside the rising appetites for American residents to buy travel insurance. With just 40% of American travellers purchasing travel insurance but as much as 68% expressing an interest in insurance in the wake of the disruption caused by the pandemic, we may see Faye take advantage of a high-potential market.
Catalysts for Growth
Israel’s travel and tourism startup ecosystem has plenty of cause for optimism moving forward. Crucially, July saw the government launch an Electronic Travel Authorization system to approve the entrance of tourists from visa-exempt countries.
The move sees the Startup Nation join the likes of the United States, Canada, and Australia where similar systems are already in place.
In adopting an electronic authorization system, the technology has removed some of the typical obstacles that travellers face when boarding a flight to Israel. If the system doesn’t grant approval, applicants will be directed to a service center for further assistance.
This system will be a catalyst for growth for Israel’s tourism industry and will strengthen the country’s bonds with the United States, which is the most popular destination for Israelis to travel to each year.
In 2023, more than 301,000 Israeli travellers visited the US for both business and leisure, and the nation’s recent acceptance into the visa waiver program will pave the way for higher volumes of tourists to enjoy frictionless travel.
Perfect Timing
The timing of the nation’s visa waiver acceptance may be crucial for Israel’s travel and tourism startups. 2024 has seen venture funding rapidly accelerate among Israeli startups, and a more streamlined tourism infrastructure may see more VC money allocated towards the industry’s brightest innovators.
Venture funding in Israel grew by an astonishing 31% in the first half of 2024 in comparison to the same period last year.
This impressive figure is almost double that of the global average rate of 16%. At a time when Israel’s startup ecosystem is receiving more VC attention, travel and tourism startups could be in line for some transformative growth.
Learning from Waze
With an impressive 140 million monthly average users, Waze is one of Israel’s most successful travel and tourism startups.
The community-powered navigation and carpooling app shares real-time road information and allows users to report accidents and disruptions to help other drivers get from A to B more efficiently.
Having received $67 million in funding, Waze is undoubtedly a success story. However, the app’s growth also serves as a reminder to other industry innovators that patience in scaling up is a virtue.
Founded in 2008, the rapid growth of Waze saw Google acquire the company for $1.15 billion just five years later in June 2013 when the startup had just 10% of today’s user base and 1% of the revenues it has today.
Today, Israel’s growing influx of capital is providing its brightest startups with more space to breathe and scale at their own pace, rather than finding themselves acquired by larger international firms.
We can see evidence of this greater growing room for travel and tourism innovators in the case of Jerusalem startup Joyned.
January 2024 saw Joyned secure $8 million in Series A funding, helping to provide a platform for sustainable growth for the travel booking startup.
Joyned uses AI to identify data such as price perception and sentiment analysis to help travel sites deliver a more bespoke booking journey for customers.