The Future of Travel is SaaS-y

One of the reasons I was drawn to the travel industry was that, for me, it seemed it was a natural area for entrepreneurs. Not long ago there were no university programs for tourism and many of the companies that made comprised the industry entered it of their own accord. New entrants are still common, but this might not be the case in the short-term.

Tourism was one of the first industries to embrace tech infrastructure when you look at Sabre/GDS, and then Expedia with Online Travel Bookings.

I would call these companies part of 1st wave travel-tech. We are currently in the 2nd wave, but it’s stumbling, especially SaaS-based companies.

When doing research for this post I looked for specific examples of success and failure in the travel tech ecosystem (Handy instantly came to mind, as did Hotel Tonight). I came across “skiftseedlings” from Skift.

It’s no longer active, so it felt a bit like looking at a time-capsule of travel tech.

My immediate impression was that even 4–5 years ago (as many of the articles are dated), startups were still focusing and not succeeding at the same problems, over and over.

Is SaaS travel-tech suffering from Insanity (as defined by Albert Einstein)?

Or are those companies shouting in a vacuum — no one listening or caring.

I think coronavirus has created an inflection point for SaaS travel-tech during a time when the industry is hurting. I have no doubt that travel will rebound, first locally, and then internationally; but I also strongly believe that it will need to look different.

The more radical the change, the quicker the industry will be able to rebound, in my opinion. The old system was built upon a “stack people high and tight” approach (especially aeroplanes). The industry really emphasised the “mass” in mass tourism.

That’s not going to work anymore, especially in the short term. I expand on this point in my other article, “The New Post-Corona Economy”.

Companies are going to need to change — often due to enforcement around new coronavirus regulations. For hotels, restaurants, and other providers this means focusing on being “COVID secure” with social distancing and other methods.

Operators have an opportunity to take it one step further, however. Although a lot of ideas about travel tech have been around for many years (without adequate solutions in a lot of cases), due to “Kurzweil’s ‘Law of accelerated returns’” the tech has already improved dramatically — and will continue to.

Therefore, the tourism industry needs to keep an open mind, because innovation is happening faster than you think, and technology that organisations may have written off has become increasingly more viable.

When thinking about the tourism industry (and I include hospitality in that) I outlined the below segments:

1. Hotels/Accommodation
2. Transport — airlines
3. Tours, Activities, Attractions
4. OTAs
5. DMOs
6. DMCs

If I look at how digital or analogue these segments are, using my own observations, I find the following:

1. OTAs
2. Airlines
3. DMOs
4. Hotels
5. DMCs
6. Tours, Activities, Attractions

If I had access to all of the SaaS travel-tech startups ever created and then divided them into their various client-focused segments so that I could see the frequency I suspect we would find the below:

1. Hotels
2. Tours, Activities, Attractions
3. OTAs
4. Airlines
5. DMOs
6. DMCs

Why is so much SaaS Travel Tech aimed at Hotels, and why does it seem like the adoption rates are so low?

What I see as the key challenge to break into the hotel industry with travel tech is that hotels are not organised in a way that really allows them to onboard new tech and take advantage of this “new wave” of SaaS travel tech entrepreneurs.

Hotels often don’t have a department in charge of evaluating new technology, while also being the shot-caller.

Authority is defused between multiple departments, therefore creating a situation where you end up herding cats to get a pilot going.

Then you have to look at existing technical systems, which are often outdated due to an “if it ain’t broke, don’t fix it” mentality and lacklustre budgets for tech.

I once visited a hotel back office a few years ago as they couldn’t get the web-conferencing tool to work. I asked to see the computer when I arrived for the meeting, only to realise they were still running on Windows 95!

For me, this was the exception that proves the rule — hoteliers don’t like tech, and often won’t allocate a budget towards it. There are many other reasons I suspect hoteliers don’t like SaaS Travel Tech ranging from not understanding tech to fearing being replaced by tech (think Luddite).

When talking about chatbots, hoteliers have told me that they don’t want to decrease the level of service they currently give their guests — which is ironic because if you don’t have a chatbot on your website (let alone a custom one) then you are giving your guests zero service online (except for “self-service”).

This Luddite-ian fear of technology is nothing new, however. People are often resistant to change, and especially if they think there is an existential threat associated with it. For instance, in another organisation I worked for I have the following experience. I overheard a colleague comment, upon the spread of channel managers, “if we hook up all our contracts to the channel managers, they won’t need us anymore!”.

Many don’t realise that tech doesn’t eliminate jobs, it creates more jobs.

If your hotel puts in new concierge tech, guess who they will need to manage it (assuming they want to keep the same quality).

The above observations are basically only for unbranded properties — “independents”. If you want to try to work with a branded property, be prepared for a whole different ball game of bureaucracy and redirecting.

Now, I spoke about an inflection point in the industry due to the coronavirus, so let’s look at the timing element here.

In hotels and experiences guests/customers are already expecting an adjusted service, so why not embrace that opportunity and try to adopt some new technology so you can do more with less?

Payrolls will stay constrained in the near future as volumes remain low, so when hiring back my recommendation to hoteliers that are looking at how to rebuild on the other side of this crisis. Look to tech.

Tech allows you to be more efficient, more relevant, and accessible. Hire someone who can help facilitate the IT change-management needed.