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7 months ago
 

Travel needs more startups to succeed (and it must try innovating more as well)

Travel is one of the biggest – as well as the most interesting and diverse – businesses around.

In the US alone, travel accounts for over 10% of the country’s GDP, according to the World Travel & Tourism Council.

But it is a hard business for tech companies and, (in)famously, a very unfriendly market for startups.

NB: This is an analysis by David Turnbull, co-founder and chief commercial officer at Snapshot.

As we all know, innovation comes from entrepreneurs who are crazy enough to challenge the status quo and build something new and exciting.

Few have succeeded in changing things.

Airbnb bypassed the entire hospitality industry and created a major ecosystem of alternative short-term rentals.

And while Uber isn’t the first thing one would consider when one looks at the travel industry, they too have gone out to create a whole new ecosystem essentially by bypassing the existing companies.

One could argue that the reason these startups came and stole so much market share is because existing industry leaders focused more on what they had, and lost the opportunity to innovate.

An example that is close to home

TripAdvisor did exactly what hotels didn’t feel comfortable doing, making reviews open to everyone.

It now exerts so much power that even the best hotels need to remain sharp to ensure they keep delivering great service.

What TripAdvisor has done for the hotel industry is just a little less than a conduct a revolution – it has managed to change how hotels operate to the point where, once again, the guest is king.

However, it started as a small team with a polarizing idea and the odds weren’t really in its favor.

When the online travel agencies came along, in the mid-1990s, way before anybody believed it could be done, they essentially did what many hotels didn’t want to do – invested in new technology and attitudes towards the storage and management of valuable data (inventory, pricing, digital assets and consumer behavior).

The result is that they’ve redirected hotel distribution from a game owned and controlled mostly by hotel chains and travel agents.

The point is, hotel and travel technology needs operators and technologists who are ready to promote change –people who will dream big, challenge the status quo and do what existing companies won’t do, because most hotel and travel technology companies are so busy doing what they do (operate), that they haven’t the time or focus inventing the future.

And yet rather than embrace the vision of the few hospitality entrepreneurs around, as an industry we tend to be overly cautious, even suspicious of new entrants and new categories within hotel tech, leaving a tiny percentage of “early adopters” to assume this risk and quick to judge when solutions fail or take longer than planned to realize.

In some respects, it’s understandable.

The lifeblood of any new hotel technology company is acquiring the hotel’s data and this requires integrations, typically with a hotel’s property management system (PMS).

For hotels, this is a costly and time-consuming process, even if the product they are buying has the necessary integration and they the hotel are sat in the correct version of the PMS.

For the PMS companies, this also becomes a significant bottleneck, as supplier after supplier requests their own unique data and integration request.

The result is we are an especially hard industry to innovate in, due to the fragmentation and on-premise nature of most systems and lack of investment in up-to-date data formats and delivery methodologies.

Systems that are hosted in the basement of the hotel might be perceived as safe, but they provide no value in an industry that is rolling (slowly) towards entry into the data economy.

Exactly the point

The next big thing in hotel and travel technology could be artificial intelligence. It could be connected devices or sensors and beacons that make hotel services and experiences more intuitive.

It could also be none of those.

Some have put forward the idea of hotels being a sort of local service hub in addition to renting rooms. Others are talking about embedding other travel services into guest stays.

There are simply hundreds of ways that the hotel and travel industry can evolve.

I can’t predict that future, but what I know for sure is that it will take innovative entrepreneurs and hotel operators establishing in-house R&D teams, who are ready to take risks in order to evolve an age old and beloved industry into for the next generations.

What all these visionaries will need is access to data.

The less friction there is to exchange data, the faster and easier it will be to integrate systems and increase the potential for innovation.

As hoteliers and hotel tech companies, it is our duty to help the industry move forward.

Hotel and travel technology companies understandably want to protect their revenue. Building closed systems with a high barrier to (data) entry might be a wise short-term business solution, but it is also the safest way to becoming irrelevant.

The investment to shift from the basement to the cloud might be daunting for smaller companies who make a stable living on these solutions.

But, simply put, the time is running out for operators who fail to invest.

Just do it

The answer obviously isn’t to go and build something yourself – however, as a hotel operator, you must start to challenge your vendors and decide is my data sufficiently accessible to permit future innovation.

However, hotels can’t sit back and wait for the entrepreneurs.

The same mindset, as intrapreneur, has to sit within the hotel operation, where either formal or pseudo R&D teams need to experiment with different technologies (once the data freedom has been achieved).

With access to the data, could a data scientist at a nearby university build for your hotel, a customized predictive pricing tool. Or could A/B test two or three different mobile check-in apps before deciding which vendor gets your business.

We’re on the verge of a significant revolution in how hotels value what is their brand on what technology will be needed to create unique guest facing products and experiences.

As search changes, mobile computing takes over and cloud-based, data accessible systems are a standard rather than the outlier.

With every major shift in technology comes a major shift in industry.

This time, however, the technology empowers the consumer, not the business.

NB: This is an analysis by David Turnbull, co-founder and chief commercial officer at Snapshot.

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Viewpoints

About the Writer :: Viewpoints

A founding principle of tnooz was a diversity of viewpoints from across the spectrum. Viewpoints are articles by guest contributors from around the travel and hospitality industries.

 

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  1. S. Norton

    Great article Mr Turnbull. Hotels need to innovate and be flexible to recapture market share and take advantage of the new technologies coming to market in order to continue to thrive. Airbnb have indeed made a large dent in the industry and challenged the thinking. Microstays (www.microstays.com) is a platform that challenges the status quo of overnight bookings and give hoteliers more options to make use of vacant rooms and increase their revenue. By the same token it empowers the consumer to pay for what they need. It’s a win win at the end of the day.

     
  2. Seetharaman N

    Agreed.
    In a competitive environment every innovation will be tested and adopted quickly if it solves a problem.At 6hourly we strive to do that exactly empowering the consumers. Great article Mr Turnbull.
    Cheers

     
  3. John van Vroenhoven

    This article looks at one side of the industry. Travel consists out of more then just hotel business. It’s the full circle from inspiration to experience. Innovation and tech is key but do not forget the human factor. Our experience at Touracti is that a personal approach is creating value for the customer in our online market (Tours and Activities).

     
    • David Turnbull

      Fully agreed Jon and the strive for greater guest experience lies at the heart of this. So much manual interaction is spent problem solving issues that could be resolved by increased automation and data management leaving increased opportunities to share knowledge and provide genuine travel experiences …citizenM is a great example of a brand who on a small scale are achieving this by taking increased ownership of their data and an R&D mindset to in house developed and externally sourced technology

       
  4. vic

    Exactly. innovation.
    Our product is also got challenge. What’s the pain point? We try to shove people who hate current itinerary – word, excel, paper writing. However, is an interactive itinerary really innovation? We don’t know.
    Just try to get things done, and easy.

     
  5. yannis moati

    I second everything that is written and would add that this is exactly what we experience at HotelsByDay and FlexBook. Thank you Mr. Turnbull for clearly stating the hospitality status quo.

     
  6. Bill Lennan

    Totally agree.
    And often the greatest value is in the hardest to reach places.
    Automation is great – until it frustrates customers.
    Data is interesting – until you forget the people behind it.

    Tech can be an enabler or if relied on too heavily it becomes a business blocker ( did I say that out loud? ).
    Tech gets in the way of building relationships – and relationships are where higher profits are.

    How about we focus on building relationships with the customers?
    I know, it’s a crazy idea.

    But it is working for our clients.

     
  7. Steve Sherlock

    Over the years I’ve seen many startups give up too easily i.e. when the initial versions of their ideas didn’t quite work. Sure sometimes you gotta just call it quits – but oftentimes I find success is more reliant on one’s ability to persist over a several year period, so long as they believe in their idea. Granted many startups run out of cash and runway – but I reckon the really gritty ones will find one way or the other to persist until they reach the promised land!

     
  8. Joyce - Hotelchamp

    At Hotelchamp we couldn’t agree more! We believe that new innovative startups and technology can make a big change in the hospitality industry. We help hotels to be less dependend on third parties by optimizing their own website with a variety of tools. We are curious to see what other innovating technologies are disrupting the industry.

     
  9. Ian R Clayton

    check out this new innovation – an uphill battle for sure, but there is a lot of interest. I look forward to collaborating where we can. http://technology.fascinatingtravelers.com

     
  10. Alex Hogan

    The travel industry could evolve tremendously if they would just focus on the roughly 80% of the travelers experience that they’re not addressing. AI and chatbots can take it so far, but not addressing user needs is still holding the entire industry back.

     
    • Carter Lyles

      `Alex — Interested in talking about what this 80% entails. What in your opinion are we not doing enough of or what the industry as a whole could improve upon?

       
  11. Timothy O'Neil-Dunne

    The strength or weakness of any idea depends on many factors. Reading through TNooz will be a guide to both what to do and what not to do. In the end there is no short cut to a great idea, a great team, hard work, a sound business plan – good funding… oh yes and a large amount of luck.
    Cheers

    Timothy

     
  12. Byron Copeland

    I personally think the shift in the travel space is moving back towards a more personalized experience. When it comes to planning….having someone else cster and build out your experience is better than spending hours doing it yourself.

     
 
 

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