Travel Tech Essentialist #31: Acceleration



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Travel Tech Essentialist

June 25 · Issue #31 · View online

Every two weeks, ten insights that explore travel’s new frontiers.

The current crisis is accelerating the development and adoption of many technology trends that existed pre-COVID: personalization, digital, mobile, customer-centric experience, well-being, end-to-end customer journey, contactless, flexibility, etc… This acceleration will be a problem for those with legacy business models that are difficult to adapt to the new environment. But others will capture this opportunity to reinvent travel and build resilient and strong businesses. 

1. Make it better, not just safer: The opportunity to reinvent travel
Many travel companies have announced a series of health and hygiene measures, often promoted with well-known cleaning brands or health experts. McKinsey argues that a focus on health and hygiene only scratches the surface of the changes that are necessary in the aftermath of the current crisis. Companies need to move beyond reassuring customers to exciting them by looking for opportunities to create exceptional travel experiences. Read more - McKinsey.
2. JetBlue Technology Venture is looking for contactless mobility startups
JetBlue Technology Ventures (JTV) is looking at contactless solutions that reduce person-to-person touchpoints and for technologies that can simplify or streamline the customer travel journey. JTV has begun to identify a number of startups that can better enable contactless mobility, including automation, robotics and digital identity. If you’re a startup that is shaping this new future of contactless mobility and travel, JTV wants you to get in touch with them. More info.
3. Sonder announces a $200M fundraising at an increased valuation of $1.3 billion
Since the pandemic hit, Sonder was quick to execute two of the the strategies that they outlined back in March: securing rent reductions at many locations (among other expense reductions), and pivoting to longer-term stays. The quick pivot towards longer stays for guests in need of housing during the pandemic was essential to their higher-than-average occupancy rate of 40% at the height of the pandemic. Before CV19, Sonder was an early pioneer in the kind of stay that guests are now looking for: “contactless” guest experiences, including digital check-in, keyless entry, professional cleaning, and no lines or crowded lobbies. Its global occupancy rate is now at 75%. More info.
4. A much needed pricing & revenue management revolution in travel
As travel products become more sophisticated, pricing should no longer be about just the competitive cost of a ticket, level of service, or type of hotel room. Pricing & revenue management must be adaptable to individual customers’ circumstances and look beyond simple pricing by testing individualized product design, ancillaries, and bundles as well as post-booking activities. The goal should be to shift from a paradigm of pricing individual purchases to maximizing customer lifetime value.  This BCG report calls for travel companies to effectively combine human analytical skills and machine data capabilities to improve activities in three categories: 1. pursuing outcomes that go beyond ticket pricing; 2. enabling technology to add value to human efforts; 3. enabling humans to extract value from technology.
5. Seven predictions on how tech will shape travel and mobility
The 2020s will become the most pivotal decade for the travel and mobility sector, according to Gleb Tritus, Managing Director of the Lufthansa Innovation Hub. In summary, his seven predictions:
  • The push towards digitization won’t stop even after the pandemic no longer dominates the public narrative. 
  • Digital will help sharpen the consumer mindset not only on safety attributes but also on sustainable travel. 
  • Connecting the dots from micro- to long-haul will be travel and mobility’s main challenge of the new decade. 
  • Decreasing the degree of uncertainty is now more important than increasing the degree of variety.  Not content, but context, curation, and consolidation will be king in the 2020s.
  • Business travel is a trillion-dollar-opportunity with the usability of 2010. Expect a substantial founding and funding dynamic around B2B travel startups in the new decade.
  • The superappization of the west will start with mobility. 
  • At least in the Western Hemisphere, we won’t see air taxis regularly transporting people in the 2020s. 
6. Demand for air travel in Europe is coming back
Norwegian announced plans to reintroduce short-haul flying outside of Norway as of July 1 — at least eight months earlier than originally planned. Ryanair too will be making a comeback as of July 1, as will British Airways, which is planning to fly a total of 29 long-haul routes in July; EasyJet has already recommenced some scheduled domestic flights within the U.K. as of June 15; Virgin Atlantic is expecting to make a substantial return to service later this summer, resuming at least 19 long-haul routes.
7. Travelers prefer staying in a hotel they’ve stayed before
10,477 travelers in 10 countries were surveyed by Revinate to uncover their expectations on future travel plans. One of the questions was about the type of accommodation they would feel more comfortable staying in. Among the options provided, travelers showed a clear preference for staying in a hotel that they have stayed before (see chart). In order have a true comparison about hotels vs short-term, it would’ve been better if the survey had also included the option of “Staying in a short-term rental I’ve stayed before” and also know how their preferences compared to pre-COVID.
8. eDreams reaches 500.000 paying travel subscribers
The Barcelona-based OTA launched its Prime subscription program in 2017, initially covering only flights, and since November it has added 2.1 million hotels and 50.000 new Prime members. Subscribers receive discounts in return for paying annual fees in the range of €50 per year (varies by country). Prime members are renewing at high rates too. In Italy, for example, 2/3 of Prime members are renewing, and Prime bookings account for 26% share of eDreams Italy total bookings. Read more.
9. The Art of Innovation: a Conversation with Steve Blank, Silicon Valley entrepreneur and originator of the lean startup movement
In this discussion with Martin Reeves, Steve Blank discusses the lean startup method, innovation, differences between large corporations and startups, strategic ambidexterity, and the disruption and re-imagination of companies in the context of the COVID crisis. “In a large company, more than 99% of your people come into work to execute repeatable tasks…In large companies, if you get it wrong, you might still keep your corner office and secure another project. In a startup, if you aren’t moving fast enough and finding product-market fit, you are out of business”.
10. Farelogix acquisition, take two
 in April, Sabre abandoned its planned acquisition of Farelogix after the UK Competition and Markets Authority blocked the proposed $360 million acquisition on the grounds that the deal would stifle innovation and competition. Two months later, Accelya, a leading provider of technology solutions to the global airline and travel industry, announced that it has entered into a definitive agreement to acquire Farelogix. The acquisition follows Vista Equity Partners´ investment in Accelya. Subject to regulatory approvals, the acquisition is expected to close this summer. Read more.
P.S. Upcoming webinars
  • June 24th. Boom and Bust: Airline Strategies To Get Flying Again. Organized by OAG. It already took place, but here is the recorded video.
  • June 26th. Aviation During COVID-19. Organized by The Points Guy. Info.
  • July 1st. “Future of Travel’ with JetBlue’s President and COO. Organized by The Points Guy. Info.
  • July 1st. OTAs plan for the future. Organized by OAG. Info.
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