Food for thought: Tours and Activities, a fad? State of AI in travel and more stories
By Martin Soler, Partner at Soler & Associates
Food for thought.
Tours and Activities, a fad?
The recent attention on Tours and Activities has made this one of the hottest trends in travel tech recently. Even Google is beta testing their own platform. Is this because growth in the hotel space is evening out or is it really the next big thing because guests want to spend more on experiences than great hotels. And should hotels turn to building better experiences and activities within?
Hotel's data sharing problem
While this may or may not be limited to the hospitality industry the problem (think costs, politics and archaic system) of data and sharing amongst technology providers is one of the biggest road blocks to building a better industry. As hotels consolidate into bigger and more efficient establishments they also lose a bit of soul. Much of that soul could be regained with better technology. If PMS see themselves as operating systems for hotels (huge maybe) then they also have a responsibility to ensure other developers can build on top of that.
AI is good for travel, and hotels
We focus a lot of our AI discussions on replacing humans and robot driven hotels. But that's mainly a pessimistic look. Reality is that humans hate repetitive tasks and machines love them. Humans are brilliant at creativity and machines aren't. If AI and machines could remove all the repetitive tasks from humans in hotels we'd have people to turn most hotels into a level of service rarely experienced. And with the ever growing competition in the space our industry should be focusing on making exceptional experiences. That will require more people, who aren't busy doing repetitive tasks they don't like doing.
A look into hotel P&L changes
The upside of duopolies (Expedia/Booking or Google/Facebook) is that it becomes much easier to distribute. The downside is that they control costs and investors make pretty sure those costs always go up. A look into hotel P&Ls shows that agency fees are growing at 6% rate when room revenue is growing at 2%. The open question is when will this reach breaking point. The OTA/Direct battles aren't always rational, but they might become the best way for hotels to keep their profits.
OTAs really have a PR problem
In reading a quite interesting analysis into the recent acquisition by Booking of Fareharbor one thing struck me, the writer doesn't seems to look at it as a great thing for the Tours and Activities industry. The OTAs haven't (and don't seem to be trying very hard) fixed their perception problem. Big product brands tend to build a passionate community around them (Nike, Apple, Disney etc) and people are proud to associate themselves with those brands. True, it is harder in the platform/marketplace space. But Amazon is succeeding at it. If customers don't care, then they're probably not really loyal anyhow. If suppliers don't care they just consider it a necessary evil. Maybe it's time OTAs work on building great relations with suppliers.
Moving away from tech?
Whilst AccorHotels has been busy acquiring companies over the last years it seemed the tech route was becoming more and more of a focus. Except, is it really? Is AccorHotels moving away from tech back to more hotel brands? Companies have a DNA, they're hardwired in a certain way. Changing the DNA isn't easy, the switch from a hotel company to a tech company is tremendous. Yet on a recent Skift interview Sebastien Bazin aspires to be alongside Google, Facebook in terms of consumer engagement. There is no doubt about the future potential and growth in doing that. The question is how to it.