GetYourGuide CEO on deploying machine learning and intelligent recs to make travel better

GetYourGuide has been around for quite some time, and continues to grow with global ambitions. The company recently raised a Series D, which was geared towards fueling not only its continued worldwide expansion but also to building the technologies that are foundational to its future.

As part of our tnoozLIVE@ITB show, I sat down with GetYourGuide CEO Johannes Reck. In this wide-ranging interview, we discussed just how the company plans to move ahead in defining the future of travel today.

Machine learning and AI

True success in the future of travel comes down to personalization, Reck said.

The company aims to build the AI underpinnings that drive intelligent recommendations to its users. By reducing search time, and connecting travelers more quickly to the right content for them, the company believes it will have a leg up in both stronger customer loyalty and lower marketing-related costs.

If you look at the travel landscape today online, the cost of people is negligent. We — the Pricelines, Expedias, Ctrips, GetYourGuides — the staff that we employ is such a small part of our P&L versus the marketing. Costs just continue to explode for the benefit of Google and Facebook and everyone else. So making that more efficient is really the name of the game.

Using technology to personalize more effectively as a cost-efficiency effort will become critical for long-term success of mainstream travel companies, Reck says:

So in the next five-to-ten years, you’ll be seeing travel companies doing that and doing that very well and those will win and the others who don’t do that will lose.

On China and mobile bookings

Like many others in travel, GetYourGuide has seen growth in mobile bookings. Especially when it comes to in-destination activities, travelers are showing more willingness to purchase via mobile.

This trend is, in some ways boosted by China, where travelers are venturing further abroad and want to have the same seamless mobile payments experience that now exists across that country.

What we’re continuously seeing is a strong shift towards mobile. So it’s been there for many years, but I think the velocity at which it’s happening now is really unprecedented.

I think we’re at a point where in five to ten years, very, very, few people will book travel on desktop.

The full interview and transcript are below.

Nick: What message are you going to send to people and what are you going to tell people here at ITB?

Johannes: Sure, Nick. Thank you so much for inviting me. It’s a pleasure to be here. The key piece that I’ll be talking about today is actually about how big data’s trending travel so we really a divide between the players that you actually harvest big data and machine learning and automate more intelligent recommendations to travelers and attract travelers in a much more efficient way.

Those players who frankly don’t do it, you see tremendous difference and growth and capturing market share between these two groups. That’s what I’ll be talking about and how you can basically move from being a small or slow moving player, into a champion that can actually take advantage of the scope of technology that’s available today.

Ctrip showed on stage how they’re using data too. So this is a big thing right? Because you can actually personalize products and understand your customers more. What do you guys do with that data? What are some of the things that you guys are seeing and using?

Well we have, I’d say two to three main areas where were working with data.

One is actually in the predictive algorithms, where we try to figure out what a customer’s actually going to be worth for us, depending on which part of the travel funnel that person enters. Whether there’s stuff like very high intent from Google, when you know someone is searching for an Eiffel tower ticket.

They already know exactly what they want to do and that’s sort of like customer’s obviously worth a lot to us because they are very likely to convert over that there’s still sort of more on a planning mode and stuff much further up the funnel.

I mean it’s maybe clicking on something like an inspirational ad Instagram or so. When I’m faraway from the travel purchase decision, but I still want to get to know the brand and flip through the inventory. That entire pieces is quite difficult to work up because you need to have very smart machines that kind of of cluster the different customer intents and traffic sources and price them and make sure that we price that accurately. So that’s one area.

Then the other area we’re really focusing on is in the recommendation algorithms to customers.

Depending on who you are and what you’re looking for in a destination, a very different set of inventory is relevant. If you’ve already been to Paris five, ten times right? So it’s very unlikely that you’ll be interested in the Eiffel tower.

That said, if you’re a family that’s coming in to Paris for the first time, it’s very likely that Disneyland is relevant for you right? So the resource page that we need to show you and the inventory that we need to surface to you is widely different, depending on the customer so that entire area of the personalization is very important.

And then the last piece is really about the long-term relationship with the customer.

That is about how we can reach out to them again at a relevant time point. So you know when for instance, you’re just landing again on your next trip in Paris or you know when the right window is for you to get inspired the next time — and teaching the machines to make intelligent decisions on when you can be relevant and with what time of content. That’s also a very big part of big data and machine learning for us.

That’s a lot of stuff.

That’s exactly what I’m saying. So in the next five-to-ten years, you’ll be seeing travel companies doing that and doing that very well and those will win and the others who don’t do that will lose.

Because one of the critical pieces is that you’ll be able to be more efficient with your marketing spend right? Because you know it costs you a certain amount to get a customer.

If you look at the travel landscape today and online, you will see that you know the cost of people is negligent at this point in time. We — the Pricelines, Expedias, Ctrips, GetYourGuides — the staff that we employ by now is such a small part of our PNL versus the marketing. Costs just continue to explode for the benefit of Google and Facebook and everyone else. So making that more efficient is really the name of the game.

And it’s actually for the end user, for Facebook and Google, they want that and they just theoretically help with that too. Because users want to see relevant ads.

Absolutely and that’s why ultimately, we’ve seen over the last ten years that in every category, you know whether that’s hotels, alternative accommodation, and destination activities, you will see two, three, maybe four if at all winners that can harness all that data and can be good partners to the Facebook and Google. So the consumer, facing advertisement companies and the others just don’t have as good of a shot.

It takes a lot of money to do these consumer businesses. 75 million is a big amount of money. So what are you gonna do with it?

So it might sound like a lot to you, but GetYourGuide is not a very young company anymore. We have very significant revenues and for us basically, that cash was not to be burned on some crazy Mars-like project.

But it was really just to fuel the build up of the technology in all core areas and make sure that we still remain independent and can keep a long term vision right? Our space gets increasingly competitive. You see all the big whole sort of names, trying to take a stab at it and we want to make sure that we remain in a position where we can invest and grow to become the leading globally leading player on that space.

The capital markets have changed tremendously, right? So If you would’ve thought of Get Your Guide fifteen years ago, I’m like- we would need to prepare for public offering right now. In fact, we’d be perfectly legit public company at this point in time.

Now, you have all these players in the late stage markets thatwant to help companies to stay private for long as so they can just grow and grab more market share and I think that’s really beneficial for entrepreneurs.

And for those startups who may be watching, how did you get to this point? You have been around for a while. But how did you get to this point? And would you make a recommendation to take larger financing or really only take what you need? Walk us through how you decided to get your financing at the certain points in your business.

It really always depends on what type of business you have. Generally, if you’re on technology, you wanna target a very large market first. If you have a very large market on site, so a very big price to win as to globally leading platform and that market that you– and travel tends to be one of these mega-markets like even every sub-market of travel is still a hundred billion dollar market.

If that’s the case, you wanna raise as much cash as you can. Because at the end of the day, it’s not about optimizing for the illusion at a give and run, but it’s actually optimizing for market chain in the end game that will come up.

If you’re really serious about what you’re doing, particularly in travel, then for sure the top five travel companies in the world will compete with you at some point and you need to be geared up for that battle. So I think that’s why we definitely chose to go very aggressive in terms of funding. Any other company that is in a similar dynamic, I’d recommend to do the same thing.

So you’re wrapping up data operations, I’m assuming it’s already existing. But some of that funding is probably going to that. Is that a correct assumption?

Correct, yeah. I would say product, engineering, design, all of that. It’s a key element of what we investing in. It’s a key element frankly that every digital travel company invest in heavily right now and we definitely see an accelerating race right now in sort of building up this tech functionalities in house and even some of the big players I would say are not as advanced as you might think. But this will change dramatically over the next two years.

What skillsets are being the most competitively sought right now? What are you seeing as the harder to find occupations or skillsets?

Well I can speak from the lands of Europe and I’d say that for us, it’s definitely all of the data positions. Like handling and dealing with large scaled data and sort of like building algorithms that make smart decisions. That’s definitely something where we don’t have as many people yet, because we also just haven’t bought the gigantic internet companies.

So lack that part of expertise. We also see lacking, frankly, experienced product managers who can lead engineering teams and know enough software engineering projects.

I think in general, Silicon Valley just has the bigger advantage than you know, they’ve had a lot of very big large scaled consumer internet companies over the last ten, twenty years and so the talent pool is just a lot deeper than what we can deal with here.

China, on the flipside, are ramping up these resources very, very quickly. That’s the big focus of the government on that to do that and give that education to people and they also have increasing larger amount of big companies. So it’s really something that we need more of in Europe.

I was reading in BusinessWeek that a lot of Chinese folks are returning from Silicon Valley back to China for these big problems. So you have all these PhDs returning to China and there’s only so many PhDs with data science backgrounds. So if you’re in college, study data! That seems to be the lesson right? It’s data science. Should everybody have some knowledge of how to use data? Even the product managers, the designers?

Yeah, that study will be a requirement for most jobs. I’d still recommend that people study what they are passionate about first and foremost, because if you’re not passionate about doing something, there’s no use in it. I mean you can be a great reporter and so 21st century as well and that’s also a great scale right? Not that many around these days.

At the end of the day, I think you should do what you’re passionate about. But most jobs in the next ten, twenty years will require a very deep understanding of how to deal with large sets of data.

So let’s get a little bit into travel trends, traveler trends with customers. Are you noticing anything in particular about certain type of bookings that are happening? Or lead times. Has there been anything interesting that has piqued your curiosity with certain customers?

Sure. What we’re continuously seeing is a strong shift towards mobile. So it’s been there for many years, but I think the velocity at which it’s happening now is really unprecedented. I think we’re at a point where, in five to ten years, very, very, few people will book travel on desktop.

How far do you think it will go? Like 90% mobile? I mean, how deep?

If you look at — it depends on what type of travel product. If you look at trains, it’s already 80, 90% mobile today. Activities I think will be in the same realm. Maybe complex travel will still remain lower for a longer period of time. But even then, that will shift to voice interfaces and that will ultimately be mobile.

The desktop has a shelf life and the clock is ticking at the end of the day. So I’d give it another ten years maybe, at most.

Are you seeing any increase in mobile about when looking at regions or even specific countries? Maybe a country is accelerating faster, like more Chinese folks are actually booking on mobile at a faster rate than other areas, or is it all growing at the same rate?

China is definitely the leader of the pack one communicate when it comes to mobile. They basically just jumped the entire desktop age and they’ve been — those guys already on mobile 70, 80% of people. The US is also very strong on mobile.

I’d say at Central Europe, Italy and Germany are a little bit the laggards, so it’s taking us longer time to get comfortable to just be spontaneous and book something on a mobile device.

The UK and Europe are very interestingly just the opposite. So the UK is actually the most mobile country in Europe. Even more so than the Unites States so we see a very strong mobile trend there. So if you realize stuff like it depends a little bit by country and their mobile ecosystem.

So GetYourGuide, when you founded it, what was the premise? What was the original problem that you wanted to solve way back in the day?

Now you’re taking me way back.

Cause things have changed a little bit, yeah?

Yeah, it changed a lot. So originally, we were at peer to peer marketplace.

Our idea was for students to get online and basically host activities in a city and the idea was that they could show other people a good time and a little incremental dollar for their living. But what we found out very quickly is that students did not have the time to do that and they were not interested to upload tours.

I think it’s about the same thing that Airbnb realizes now as well with their offering, which is very similar to our original offering. People are either professionals or they do it very rarely and for a very high price point.

That was what prompted us to this market because we realized, a lot of the real suppliers of site seeing and attractions and activities, they wanted to be listed on platform, they had good price points, they have good availability and a very good product. But it was just not promoted properly. And that’s when we flipped to and opened the company and launched it in the way we’re operating today.

Do you think that having Airbnb Experiences is better distribution for tourism activities, and is going to really help maybe smaller players get in? Or is tours and activities always just going be fragmented?

We certainly see professionalization of our space so they’re more bigger and better operators. There used to be a lot of big operators but poor operators twenty, thirty years ago when distribution was a means to an end for tour operators. The tour operators today have died and the old suppliers that they had have died alongside with them.

Those were the guys who would drive you into souvenir shops and would have overprice tours for a terrible quality.

They didn’t survive the shift towards digital because on Get Your Guide they’d just get very terrible reviews and people wouldn’t book them. So we’ve really grown a complete new breed of suppliers, but those are all professional suppliers who get increasingly big on our platform alongside with us. I think there will be a place for smaller and fragmented suppliers as well, and that we will be endorsing and also growing as we get better at personalization for people.

So if we get better at recommending stuff for the people that have already been to Paris for five times and now are interested in wine and food, then he smaller suppliers also will be relevant.

I don’t anticipate that there will be a revolution where suddenly everyone will become a host and start to offer things to tourists. It’s too complicated of domain for that and frankly, if you have a day job, what we found out time and again is people don’t have the time and they don’t do it. So I wouldn’t see that, but in general, I would say Airbnb experience is a great product and I think they definitely put on big spot light in our industries and we can only be thankful for that.

Yeah, consistency matters. If a guide is inconsistent, it gets poor reviews or could get the digital world to push them aside.

If you look at the profitability of the product behind it, if you don’t have an operation that is consistent and that is scalable in a way, no it’s not very profitable and hence it cannot grow.

So in that sense, the experience as product as Airbnb stands today is not anything that is destined for scale and I don’t think it will work at ten ex or a hundred ex. But I think it’s a good step in the right direction, I definitely expect those guys also moving more and more towards the mainstream market as they go along

Or Brian Chesky says, “We’re just gonna be an OTA!” It’s a big shift.

Sure. They’ll all be an OTA, I think Expedia and and the idea with all the stuff that comes along with it that.

The marketing spend increases, like Expedia had last quarter. It’s wild to see the jumps?

If you want to be a mainstream company in travel, which ultimately you want to if you wanna capture meaningful market share. Then that comes alongside with it.

So let’s wrap this interview up with a looking ahead question. So as you want to become a meaningful company, already meaningful but even bigger and more scale, where do you see yourself the next two years? Where are you headed and how are you going to get there?

I think for GetYourGuide, it’s very simple. We’re clearly the leading product in the in destination travel activities vertical. So anything that site seeing tours, day tours, excursions, attractions. We will just continue to sell at an ever increasing scale.

And internationalization really is the name of the game. We have clearly locked on Europe at this point, now we’ll get into other geographies over the next two, three years.

And we’ll do that with an increasingly aggressive approach on the marketing side and an increasingly better product for the customers. In order to improve our long term viability. That will be really the key focus of the company. I don’t anticipate anything other than that over the next two to three years. I think that will keep us plenty busy.

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Nick Vivion

About the Writer :: Nick Vivion

Nick helps brands blog better at Ghost Works, a boutique blog management service. Nick was previously the Director of Content for tnooz, where he oversaw the editorial and commercial content as well as producing/hosting tnoozLIVE.



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