Big corporations in the travel and hospitality space have long been thought of as lagging behind in technology adoption and openness to change. But those once slow to react are now developing corporate venture capital arms and innovation groups to leverage technological advancements at lightning speed.
Plug and Play’s Travel and Hospitality practice bridges the gap between leading corporations and promising startups by providing the following services:
Two 90-day accelerator programs designed and managed by 25+ travel corporations including but not limited to Accor Hotels, Jetblue Technology Ventures, AirAsia, Swissport, Carlson Wagonlit Travel, Manchester Airport Group, TUI Group, Ctrip, Trivago, Star Alliance, etc.
Plug and Play sources ~500 stage-agnostic startups every six months based on the collective interests of corporate partners. The list is narrowed to a top 100 list by conducting due diligence on the underlying technology of the startup, the team, funding and the competitive landscape.
Ultimately the corporate partners select ~20 of the startups to go through a 90-day accelerator program during which the corporate partners look into pilot, proof of concept, licensing, investing or acquisition opportunities.
This interaction between the corporate partners and startups helps Plug and Play ventures identify investment opportunities across the most promising startups.
Deal Flow Sessions
Plug and Play provides up to 6 private deal review sessions for its corporate partners per year. Whereas the accelerator programs bring high-level innovations that can positively impact the entire travel industry, the deal is focused on specific problem statement(s) dictated by a single corporation. During these sessions, corporate partners have the opportunity to get a bit more granular and focus more on IP-related innovation initiatives.
Plug and Play hosts quarterly industry best practice round tables for its corporate partners.
During these sessions, success and failure innovation/digitalization stories are shared among corporate partners.
Some high-level topics include:
- how to get various business units motivated to collaborate with startups alongside of regular daily operations
- or what are the true metrics of success for a corporate innovation program, since most programs are viewed as a cost center rather than revenue generating initiatives.
Some of our corporate partners
Carlson Wagonlit Travel (CWT) is a multi-billion-dollar company that manages business travel, meetings and events for companies, governments and non-governmental organizations. The company has over 18,000 employees and is headquartered in Minneapolis, MN.
"One of the major trends is the growing use of technology like AI and machine learning to facilitate more personalized customer interactions" - Brandom Balcom, CWT.
Business travel, while not as large a segment of the travel industry as tourism, represents a strong and growing sub-sector of the market. To maintain market share and drive growth in the business travel sector, CWT is continuously looking to drive open innovation throughout the organization.
“I think that one of the major trends is the growing use of technology like AI and machine learning to facilitate more personalized customer interactions,” said Brandon Balcom, Director of Open Innovation at CWT. “I’m not sure anyone has really cracked the code on it. There are use cases here and there and pockets of success, but it hasn’t really taken off.
Investing in cost savings strategies for clients is also of key importance to Carlson Wagonlit, especially as their clients are businesses which are trying to save money across a large company. Often, these opportunities for cost-cutting come in the form of niche solutions which solve specific problems.
Through their partnership with Plug and Play, they developed a relationship with FLYR Labs. Through this collaboration, the CWT has been testing how best to predict airline pricing to save clients money. For example, by delaying ticketing until it’s the best time to buy, they can provide substantial cost savings to clients. Even if a price is quoted as something on day one, they might wait 10 hours if they can predict that it’s going to go lower.
By taking advantage of all of these little opportunities without the heavy lifting that goes along with voiding a ticket and processing an exchange, CWT can drive cost savings for clients and ultimately deliver greater value. “Our opportunity for growth is to play a role outside of just air, car and hotel, and we’re starting to do that today with the way we’re providing new analytics to customers who are taking in expense and credit card data fees,” said Balcom. “We’re taking that and stitching it all together, which is quite complex, to figure out how a certain meal correlates to this trip. So we help clients sift through all of that information, to understand what might be going out of a channel, or what might be a new category of expense that you’re not managing.”
JetBlue Technology Ventures
JetBlue is the sixth largest airline in the US. The low-cost airline has a fleet of over 250 aircraft and over 20,000 employees. Given its position and branding in the market, they are perfectly situated to drive the large-scale change that is currently unfolding in the global travel and hospitality sector.
To support its strategic vision and prepare for the future of travel, JetBlue launched JetBlue Technology Ventures (JTV) in 2015 in Silicon Valley. JTV is the venture capital subsidiary of JetBlue Airways, and has the mission to incubate, invest in and partner with early-stage startups launching businesses at the intersection between technology and travel.
"AI and machine learning have the potential to transform entire business models." - Bonny Simi, JetBlue.
“AI and machine learning have the potential to transform entire business models. The technologies can help operations run more efficiently and allow for more personalized bookings and transactions,” said Bonny Simi, President of JTV. “But the necessary data needs to move from legacy hosted systems into the cloud, so we’re seeing many different airlines and hotel groups move to these types of cloud-based systems and data lakes.”
One of the startups that JTV has invested in and currently works with is the omnichannel communication platform Gladly. The platform gathers all travel information about an individual no matter if it comes from (email, text, etc.).This allows the agent serving a customer to know exactly what the customer is calling about, whether it’s because they’ve had a flight cancellation or an email or a text they’ve received.
“At JetBlue Technology Ventures, we believe the travel industry is heading towards greater levels of personalization," said Simi. "Because of this, we’re very focused on AI and machine learning elements that, once the data is unlocked, will allow us to utilize that data to provide new customized offerings.”
One of the big pain points that travelers experience in air travel currently is the lack of a seamless way to manage customer complaints and issues through multiple channels as they arise. As part of their strategy to develop more customer-centric solutions for travelers, JTV is constantly on the lookout for businesses that will allow them to create better experiences for passengers at all stages of the journey. “Gladly makes you a person rather than a number, so it’s really exciting,” said Bonny Simi, President of JTV. “We started with a proof of concept and we did an investment and now we’re doing a full-scale implementation with them.”
Traveling the Road to Disruptive Growth
According to Amir Amidi, Founder of the Travel and Hospitality Center of Innovation at Plug and Play, the industry has seen disruption by players seeking to increase revenue, lower costs and increase loyalty throughout the traveler’s journey.
“The big opportunity is how, through the entire travel journey, corporates and startups work together to develop a personalized experience.” Amidi also says that “the future of travel involves seamless traveler experiences enabled by various legacy and new technology platforms. I believe the most cost and capital efficient path to true innovation is strategic collaboration between the leading travel industry suppliers/service providers and startups that are solving real-world problems.
Within the context of travel and hospitality, opportunities for innovation and investment are vast. The greatest growth and competitive advantage – for startups and corporate innovators alike – will come from a focus on:
- Increasing revenue through technology: OTAs, hotels, and airlines see opportunities to increase revenues by automating and optimizing pricing and ticketing systems, and by upselling ancillary products and services. These efforts will be supported by predictive analytics and Artificial Intelligence.
- Reducing the cost of delivery to customers: When the cost of products and services goes down, businesses are better able to serve their customers while maintaining profitability. A major opportunity for travel and hospitality companies in the coming months will be to improve customer satisfaction through the use of Artificial Intelligence, while cutting down on customer service wait times, and generally streamlining processes.
- Developing a deeper sense of loyalty and stickiness: Loyalty programs have always been a big part of the travel and hospitality sector, but there is a growing opportunity for disruption in loyalty, as hotels and airlines look to leverage technology to snatch customers away from the big OTAs.
- Producing operational efficiencies for companies: Similar to reducing the costs of delivering products and services to customers, developing operational efficiencies within travel and hospitality companies can help drive profitability by improving the overall bottom line. Businesses that are looking for ways to drive cost savings by reducing delays and forecasting when issues may arise, will be well positioned to take advantage of this opportunity.
- Using technology to create a seamless customer experience: When all is said and done, creating a seamless traveler experience may be the biggest opportunity of all. Companies that look at how to leverage technology so that it can support the travel journey from initial search and pre-booking through the end of the trip, will be best positioned to create lasting differentiation.
Innovation in travel is happening. Don’t be left behind.
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