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The coronavirus pandemic is impacting the entire travel industry, but the effect on individual travel startups will vary.

“It’s like a giant meteor hit our industry,” said Adam Harris, the CEO of hotel software services provider Cloudbeds, which closed an $82 million Series C round last week. “We’re still all figuring out what’s going on, hour by hour.”

Some companies may have business models facing a surprise stress test, such as ones that have offered price-guarantees to suppliers. Others have may have relied too much on endless rounds of top-up funding as a source of cash flow.

“The impact of this public health scare on travel tech startups won’t be indiscriminate,” said Sundeep Chanana, founder of Horatio Partners, an investment bank focusing on late-stage tech startups.

Skift spoke to several industry leaders about where the weaknesses and strengths may lie in travel startups. The areas of short-term rental, corporate travel, and tours-and-activities popped up as high on investor lists for potential turmoil. History shows, though, that savvy founders can defy skeptics and thrive through smart execution despite long odds.

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Here are segments and pockets of the travel startup universe to watch in the weeks ahead.

Short-Term Rental Property Management Companies

Watch for Price Guarantees

Investors are watching short-term rental property management companies, among them Sonder, that have sometimes promised property developers “guaranteed” income for apartment units regardless of whether they could put “heads in beds.”

Such contracts need to be viewed in a dynamic context of other factors, such as how real estate owners expect to fare this year, experts said. As long as a short-term rental brand is the least-bad option for a property owner, it could thrive.

Some property management companies, such as Vacasa, have offered promises to owners of vacation homes. If an owner switches to it from another vacation rental firm, for instance, Vacasa has guaranteed that the owner will earn at least $5,000 more during their first year with Vacasa. But what will happen if most vacation homes go empty through the U.S. spring?

In a different type of income guarantee, Rented in 2017 began offering a financing arm where it gives qualified owners of vacation homes a “guaranteed” income if they signed up to pay the property manager’s commissions.

Rented saw good returns at first. But in 2018 many companies mimicked the guarantees, and that pushed up prices to secure the guarantees and saturated the supply.

Early last year, Rented shifted to providing a revenue management service that makes up more than 80 percent of its revenue.

“As Napoleon said, I would rather have lucky generals than good generals,” Rented CEO Andrew McConnell said. “Given what is happening right now, the help we provide is more needed than ever on the revenue management front, and we are not stuck with a portfolio of guarantees that would no doubt be under water.”

Some short-term property management companies will weather the crisis thanks to diversified streams of income. They have enough cash flow to weather a dry spell in fundraising and less exposure to downturns than hotel companies, which often have more fixed costs.

Yet the February collapse of UK-based hospitality management company Hostmaker, which had raised more than $29 million in funding, reminded everyone of the perils ahead.

Tours and Activities

Watch for Collapses of Smaller Operators and of Some Startups

The biggest names in the sightseeing and experiences sector may turn out okay, but feel bad for the little guys. That seemed to be the consensus of experts.

One of the largest online travel agencies for sightseeing and experiences is GetYourGuide, and CEO Johannes Reck has been on a media blitz in the past week assuring people that the company had used its recent investment from SoftBank wisely and had enough capital to withstand a “nuclear winter” this year. But Reck expected other players “to go bust.”

Some experts speculated that Klook, another online travel agency focusing on experiences that Softbank has backed, may eventually merge with Berlin-based GetYourGuide if it has been severely wounded by the past several months, given the Hong Kong-based brand’s exposure to the Asian market.

Other reservation systems are attempting to build relationships with suppliers during the turmoil. For example, Bookingkit waived two months of its basic fee for eligible operators in need.

Stride Travel, an aggregator of multi-day tours and expert-planned vacations, backed by JetBlue Tech Ventures, said it has been enhancing its product based on emerging consumer preferences like making travel insurance and cancellation policies searchable, filterable, and comparable. It said it has enough cash to weather the demand drop for a substantial period, and has diverted all its ad spend to hiring additional team and passing on fee reductions to its tour operator partners.

Others are cutting costs. Last week, Peek, a company that provides reservation software and some reselling services for tour operators, had “a significant layoff.”

It’s the suppliers of tours themselves who are the most vulnerable, many said.

“Which local tour operators can survive 4-6 months with no bookings followed by light recovery?” asked Alex Bainbridge in a blog post Monday for his consultancy Destination CTO.

Some industry leaders set up a Tourmageddon site to offer resources to small-and-medium-sized operators.

Corporate Travel

Watch for Hidden Strengths

Several startups have recently set about offering travel management services for small-and-medium sized businesses. The best-funded of these is TripActions, which last June closed an additional $250 million in Series D funding, bringing its total amount raised to $481.5 million since the Palo Alto, California, company was founded in 2015.

Another well-funded player is Barcelona-based TravelPerk, but there are several others, such as Singapore-based Travelstop that received backing from venture firm Accel last year.

At first glance, the typical business model in this category looks vulnerable. These companies typically rely on commission-based fees for revenue, but that is falling off as business travel vanishes. Some of these companies have also used venture capital money to fuel marketing efforts to acquire customers rapidly.

But corporate travel startups that have nimble management and staff may be able to navigate the downturn adroitly. TravelPerk, for example, has had to switch some salespeople to handling customer service calls to cope with higher-than-usual customer service queries. The company has been responding to the crisis by pushing a product called FlexiPerk that lets business travelers enjoy more flexible cancellation, change, and refund rules than generally available.

Experts expect private equity may make some additional investments, acquisitions, and mergers in the short-term rental sector. At least in theory, private equity firms can more easily access low-interest-rate debt than many startups can access venture capital right now.

Play the Long Game on Fundraising

Courting venture capital for future funding shouldn’t completely stop during the crisis, some experts said.

“During times of economic uncertainty, a subset of investors across all sectors and strategies, from pre seed/VC to buyout/PE, and strategics won’t necessary self sideline,” Chanana of Horatio said. “But they will apply stricter filters when searching for high quality assets and use two primary tools – diligence and pricing – more wisely.”

Startups that have received several rounds of funding may be in a better place than newbies.

“If you’re pre-seed to early-stage selling non-mission-critical software, buckle in,” Chanana said. “If on the other hand you’re mid stage and older, meeting or beating benchmark KPIs [measures of performance], and winning blue chip clients who renew and attest to the mission criticality of the app, remain calm and optimistic. We can confirm firsthand deals that make this cut are only experiencing isolated impact on gestation periods pre or post LOI [letter of intent].”

Keeping relationships “warm” is key, experts said.

“My advice to startups is to stay the course and use this time to share your vision with investors,” Hemmeter of Thayer said.

“Many of us are multi-hundred-thousand-mile business travelers, and the sudden suspension of that time-consuming activity gives us more time to look at deals,” Hemmeter said. “Term sheets and funding may not happen in the next month or two. But fundraising is a process, and now is the time to focus on building relationships and sharing your progress with investors.”

Staying the Course

More broadly speaking, founders face urgent worries.

“Focus on cash preservation” was the number-one tip from Chris Hemmeter, who leads investments at major travel tech investor Thayer Ventures.

As for overall advice, Suzanna Chiu, head of travel tech giant Amadeus‘ startup investing unit of Amadeus Ventures, recommended founders read a message Sequoia Capital published earlier this month titled “Coronavirus: The Black Swan of 2020.” Sequoia’s advice on quickly making tough decisions was “very smart,” Chiu said.

Other experts counseled entrepreneurs to take the long view.

“The critical thing not to lose sight of in a time of chaos is that every company has areas where they generate real value but that still need improvement and you need to keep focused on improving those things,” said Harris of Cloudbeds. “If there’s value for customers, continue to find ways to show more value. If you can make processes more efficient, take an internal look at how to do find more gains.”

During a market meltdown, startups can seem out-gunned by legacy players. But looks can deceive. Airbnb stole market share in the hospitality market in the depths of the last great recession.

“Ironically, it may be easier for disruptors to make progress during profoundly challenging times than it was during the easy days when industry executives took a ‘if it ain’t broke, don’t fix it’ attitude.”

Many established incumbents are weighed down by excess debt and could become more easily disrupted within a year.

“We are long-term investors and disruptions,” Hemmeter of Thayer said. “Even shocks like this one can cause an uncoupling of legacy business practices and, in the long run, lead to more experimentation and opportunity for startups.”

Photo Credit: Plug and Play is a startup accelerator program in Sunnyvale, California, that provides startup founders with chances to pitch in front of audiences with corporate partners and venture capitalists. Plug and Play