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Travel Tech Essentialist #105: Running
Every morning in Africa, a gazelle wakes up, it knows it must outrun the fastest lion or it will be killed. Every morning in Africa, a lion wakes up. It knows it must run faster than the slowest gazelle, or it will starve. It doesn't matter whether you're the lion or a gazelle-when the sun comes up, you'd better be running. — Proverb shared by John Hope Bryan
This newsletter is sponsored by Pattern
Global Insurtech MGA Pattern has been accepted as a member of the prestigious United States Tour Operators Association (USTOA). The professional trade association’s members include many of the leading lights in travel and tourism in North America. “We’re thrilled to welcome Pattern into the USTOA family. The travel market is always evolving, and it’s exciting to see the demand for instant compensation set to take center stage within the next decade. Travel insurance offers very relevant benefits before and during travel, so it’s an ideal match to bring both insurance and the tour operator industry together,” said Luis Maravi, Director of Membership & Programming, USTOA.
1. Team-first and common goals
Bill Gurley had some interesting thoughts on the new level of performance needed to simply survive, let alone thrive. He says that with the new environment, cash is hard to come by for startups, and investors are expecting solid unit economics & earlier profitability. Everything is immediately 5-10X harder now compared to the past 5 years. As such, survival now depends on hard-core, disciplined, top-decile business execution. Bill Gurley takes a cue from Coach K, the most successful basketball coach in history:
Coach K believes (1) the team is more important than the individual, (2) he expects each individual to perform at their very best, & (3) the team needs a single, shared objective function. You can see why this approach would optimize team success. Reflecting, it occured to me that many in Silicon Valley would take exception to such a framework. During the bubble, they expected the corporation to cater to the individual (the opposite of Coach K, JFK), and in many cases, individual needs were held above the company needs.
Bill also refers to the proverb in the intro to this newsletter: “Startups/private companies are not for everyone. If you plan to stay, be ready to run. Your team needs you. Run as fast as you can to help save your company's life.” Bill Gurley Twitter thread (unrolled for easier read)
2. The Hospitality Economy
Making good products is no longer enough. Being efficient is no longer enough. It's how we make people feel that matters most of all. In his TED talk (2 minute version, 13 minute version), American restaurateur Will Guidara suggests that all industries are now in the hospitality business. Finding ways to deliver “unreasonable hospitality,” to give people more than they would expect, can transform any business. In his talk, he shares three steps to crafting truly memorable moments centered on human connection.
3. Startups to the rescue
Recent problems at the US Federal Aviation Administration and Southwest are advancing arguments for modernizing the airline industry with cloud-based systems that allow crucial operations data to flow more freely. This WSJ article (free link) looks at how startups can help airline systems be less dependent on older technologies that require manual updates and are increasingly expensive to maintain. Some of the tech companies highlighted are:
Santa Clara-based software company Couchbase helped United Airlines modernize its operations by providing a cloud-based database for its crew-scheduling software.
Houston-based Gurobi Optimization provides optimization technology for Air France-KLM to power its decision-support tool, which recommends optimal flight and aircraft assignments.
Barcelona-based startup Big Blue Analytics is creating a platform that finds solutions for flights, aircraft, maintenance, crews, and passenger itineraries simultaneously, rather than sequentially, as current systems do. The startup’s customers include Spanish low-cost carrier Volotea.
4. Airline industry’s exploding topics
Exploding Topics is a startup that finds growing trends before they take off by analyzing millions of searches, conversations, and mentions across the internet. Their Top 5 Airline Industry and Aviation Trends of 2023 highlights five changes taking place and who’s leading the innovation in each:
Supersonic passenger jets could cut flight times in half
Sustainable fuel sources are taking precedence
Autonomous aircraft may revolutionize cargo delivery
The automotive industry looks to the skies for growth (flying cars, yes)
Predictive maintenance can save costs for both airlines and customers
5. Running an airline is like performing open-heart surgery
Airline Tech entrepreneur Jose Luis Vilar wrote a good summary of aviation trends that will impact the industry this year. The quote in the title of this section is from Swiss Airlines Chief Commercial Officer and Board Member.
6. A guide to Artificial Intelligence for hospitality leaders
A McKinsey Global Institute report from 2018 ranked travel as the #1 industry to create the most incremental value from AI. Josiah Mackenzie wrote a detailed and practical guide on the impact and opportunities of AI for hotels and the hospitality industry.
7. Global OTAs market share
A Bernstein research report found that Expedia Group has lost global hotel market share since the onset of the pandemic, all of it coming from its non-core brands, such as Hotwire, eBookers, Orbitz and Travelocity. The report noted that Expedia's core brands, Expedia.com and Vrbo, are increasing market share. Google, Airbnb, Hopper eDreams, Trip.com and hotel direct bookings were the beneficiaries, according to the report. The report grandly states that "For the first time in history — Booking and Expedia have lost aggregate share through Covid.” I don't have access to the report and don’t know what the methodology was, but by looking at the chart, things look much more static than the catchy headline implies. Booking has exactly the same market share in Q1-Q3 2022 as in Q1-Q3 2019. And Expedia is down from 5%-6% in 2019 to around 4% in 2022. And both have gained in 2022 vs 2020 and 2021. If someone has access to the report and wants to jump in to provide some more context and details, please do so in the comments section. Read + Yahoo Finance
8. Fintech will play an integral role in the future of travel
Damian Alonso, Head of Platform and Partnerships at Outpayce, wrote an article on the challenges and opportunities for fintech in the travel industry. He covers topics such as chargebacks, Buy Now Pay Later, currencies, foreign exchange, insurance, disruption protection, and invisible payment experiences. Read + Global Banking & Finance Review
9. What is the metaverse and how will it change the future of travel
According to Amadeus, the metaverse will boost traveler engagement. For instance, travelers could enjoy deeper cultural experiences, get pre-trip assistance, and have the opportunity to “try before you buy.” This might become increasingly popular to upsell higher-priced items such as getting the traveler to experience a business class flatbed seat (or a middle seat in economy). Diego Heredia, Head of Corporate Strategic Projects at Amadeus explores the matter further and looks at the role the metaverse could play in travel moving forward, as well as what some travel companies are doing today in the metaverse. Read + Amedeus.
New York-based Cruisebound, a new online travel agency for cruise travel, launched with $10 million in Series A funding led by former Booking Holdings chairman and Priceline CEO Jeff Boyd and PAR Capital Ventures
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