The Future of Travel: And Why It is Big, Bright… and Personal
So where is the Travel and Hospitality space headed? Though it’s impossible to predict the future, the industry’s growth is being driven by an increasing number of travelers making more frequent trips and adapting to an increasingly globalized economy.
According to a 2017 study published by Google and Phocuswright, 57% of travelers feel that brands should tailor their information based on personal preferences or past behaviors. Not only that: consumers may also be more willing to pay premium for that personalization. In that same survey, 36% of travelers said they would be likely to pay more for travel services if a brand tailored its information and overall trip experience based on personal preferences or past behavior.
The competitive landscape of the travel and hospitality industry is in a constant state of flux. The size of the market and the highly segmented nature of the sub-sectors complicate things even further. Traditionally, large multinational suppliers like hotel chains and airlines held a strong position in the marketplace. In recent years, online travel agencies (OTAs) began to dominate the marketplace for travelers looking to get the best deals on airlines and hotels and packages. Now, as technology becomes more advanced, accessible and affordable, suppliers and travel startups are again gaining traction in the travel space.
Whether through alternative accommodation platforms like Airbnb designed to provide a different user experience to customers, or through the adoption of machine learning and big data analytics to streamline back-end processes to improve functionality and profitability for suppliers, travel companies are becoming increasingly more creative in finding new opportunities for growth and differentiation.
Funding the Future of Travel Through Greater Knowledge
Support for the travel and hospitality sector comes from all sides, but the smart money comes from those “in the know”. Venture capitalists, arguably some of the most “in the know” people out there, continue to pour money into the sector with little sign of slowing down. Should corporates and investors be scared by the prospect of a bubble, or should they be looking to paddle like hell just in time to catch the next big wave?
“Suppliers are embracing innovation and experimentation like never before and are becoming increasingly fixated on the entire guest journey" - Chris Hemmeter, Thayer
While we at Plug and Play feel bullish about the future of the travel and hospitality sector, we’re careful to make sure we aren’t blinded by Shiny Object Syndrome. To make sure we don’t miss out on any warning signs present in the market, we keep an ear to the ground for what other investors are saying about the sector. One of these is the VC firm Thayer Ventures, an early-stage firm that focuses exclusively on travel and hospitality technology.
“We are seeing a convergence of forces coming together in the broader industry,” said Chris Hemmeter, Managing Director of Thayer Ventures. “Suppliers are embracing innovation and experimentation like never before and are becoming increasingly fixated on the entire guest journey. The old silos of planning, booking, experiencing and sharing are converging into a seamless continuum of activities. This shift in supplier perspective and traveler demands is stressing the old tech stack and creating a broad range of entrepreneurial opportunity.”
"Travel executives are demanding greater flexibility from their tech platforms"
Funding for startups in this space continues to be strong, particularly for technology providers that offer a solution to provide experience to travelers while offering more flexibility in an industry that has traditionally been resistant to change. “Travel executives are demanding greater flexibility from their tech platforms and are finding, much to their frustration, that legacy investments are stubbornly rigid. As they address this problem, they are also looking to startups for the next generation of solutions that attack a wide range of opportunity along the traveler journey” said Hemmeter. “Our thesis is that this trend is just beginning, and that great value will be created by emerging companies as they address these issues using new capabilities like AI.” Ultimately, the businesses that will be most successful in this sector will be those that continue to build applications that solve true business problems.
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