As you’ll see in several stories in this issue, Big Tech is going all-in on travel. Despite their dominance, plenty of opportunities remain for startups to innovate, carve their niches, and become the Travel Big Techs of tomorrow.
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Why does travel lag in creating seamless booking experiences? In our latest Future of Travel article, we uncover the intricacies behind the current state of flight bookings and explore how the booking journey holds untapped potential for improvement. Our full analysis provides three strategic ways to improve the flight booking experience for customers.
0. The most clicked link in the previous newsletter
The most clicked link in Travel Tech Essentialist #143 was Morgan Stanley’s recent report Generating your AI Itinerary.
1. How AI will reinvent Marketing
In How AI will Reinvent Marketing, Andrew Chen, General Partner at Andreessen Horowitz, discusses the future of marketing as AI integrates into every aspect of technology.
First-order effects of inventions are easy to predict, but secondary, tertiary, and n+1 effects are very hard. When the iPhone launched, it was seen primarily as a revolutionary phone, camera, and internet browser. Few could have predicted it would enable the gig economy, social media influencers, or revolutionize entire industries like transportation. Similarly, AI’s long-term impacts on marketing will likely be far more profound and unpredictable than we can currently imagine. Chen discusses what he calls “boring examples” (i.e., first-order effects) of AI in marketing, such as creating numerous ad variations, cheaper content production, and embedding ads in LLM-generated answers. He then moves on to consider what the secondary or tertiary-order effects could be in Marketing as a result of AI giving us infinite labor, infinite content, and mass personalization. A few of the possible consequences that Chen goes into some detail:
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White glove everything: AI will make onboarding and customer service feel like a luxury experience, similar to service at a 5-star hotel.
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Explosion in the depth of content: Creating digital assets like video games will become so cheap that companies might use them to promote other products. For example, an entire video game or TV show could market a new toy, allowing consumers to interact deeply with the product’s world.
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Channel transformation: As AI generates endless content, traditional marketing channels like SEO/SEM may become obsolete. New channels will emerge where marketing messages are embedded in conversations with AI, making it hard to predict future dominant marketing platforms.
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Companions as a dominant new channel: AI companions will become personalized sales agents. This could replace traditional ads with interactive AI-driven experiences that feel more like friendships, promoting products in engaging ways.
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Authenticity and dilution of design/beauty/perfection: In an AI world where everything is perfect and beautiful, we will see “Proof of Human” and a desire for authenticity become a major component of marketing.
2. Travel AI Paradoxes
Rod Cuthbert (founder of Viator) did not mince words as he addressed Google’s growing dominance in travel and the looming threat of a ‘super app’ fueled by AI, which could fundamentally disrupt the OTA’s business model. Read +
Rod also spoke about the paradox of AI-powered local recommendations, which I thought was particularly interesting:
“It’s self-defeating if I say I want to find a great local restaurant near the Westin Hotel in Tokyo, and AI tells me, it’s not going to just tell me, it’s going to tell everybody. And so instantly, that place is not a locals’ place anymore. It’s overrun by tourists.” — Rod Cuthbert
Here are other paradoxes that AI could bring to the travel sector:
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Overexposure vs Authenticity: AI recommendations popularize hidden gems, risking their uniqueness.
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Predictability vs Serendipity: AI minimizes surprises by suggesting known options.
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Globalization vs. Localization: By favoring widely popular options, AI could overshadow unique local aspects.
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Efficiency vs. Customization: Streamlined fast processes may overlook individual preferences that require understanding individual tastes and preferences.
Future advancements in AI could potentially invalidate these paradoxes as the technology evolves and adapts to new challenges and opportunities.
Feel free to share more paradoxes if you have them!
3. Mastercard’s travel data report
According to the Mastercard Economics Institute’s latest travel report, the travel sector is on course for a record-breaking year in 2024 in terms of spending and the number of people traveling. The report takes a deep dive into evolving travel trends globally and provides detailed country-specific insights. Some highlights include:
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Nine of the last ten all-time record spending days in cruises and airlines have happened in 2024.
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Travelers are extending their trips by about a day on average compared to 2019.
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Cruise passenger transactions are roughly 16% above 2019 levels in Q1.
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Munich, Germany, is the top trending destination worldwide due to the Euro Championship.
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Spending on experiences and nightlife totals 12% of tourism sales, the highest in at least five years.
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Luxury apparel shopping in Japan and the UAE is up 152% and 61%, respectively, compared to last year.
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Top 10 trending destinations for June through August 2024, ranked by country of origin.
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Top 10 trending markets over the past 12 months ending March 2024
4. Meta Quest Travel Mode: On
Earlier this week, Meta launched a Travel Mode feature for Quest 2 and 3, converting the headsets into in-flight entertainment devices. This feature allows users to watch movies, play games, and work in a virtual environment that feels like they’re in front of a large screen. It stabilizes viewing on flights and is planned for other transport modes too. In collaboration with Lufthansa, Meta is testing this technology on select flights for customers of the new Lufthansa Allegris Business Class Suite, providing pre-loaded Quest 3 headsets. Here is Zuckerberg demoing Travel Mode in an IG post.
5. $105 Billion bill for US Air Travel improvements
The US Senate passed a civil aviation bill to improve US air travel, and the House of Representatives is now set to consider the legislation. The bill allocates $105 billion over five years to improve airport infrastructure and the Federal Aviation Administration, impacting over 40,000 employees. The legislation ensures consumer protections, such as mandatory ticket reimbursements for travel disruptions, and introduces provisions to make air travel easier for passengers with disabilities. It also includes enhanced runway safety measures like ground-based warning systems at major airports and advanced cockpit alert systems to prevent collisions. Read + WSJ.
This substantial investment and new regulatory obligations will create opportunities for new and established startups in sectors such as airline and airport technology, insurtech, customer service, and back-office operations.
If you read this, please participate in this week’s poll at the end of this newsletter 🙏
6. The world is flat and getting flatter
Apple faced serious backlash from their recent ad, which showed musical instruments and paint bottles being destroyed and replaced by their super thin iPad Pro. Apple’s VP of Marketing was quick to issue an apology. Ben Thomson wrote an insightful article in which he mentions that the ad couldn’t have hit the mark more squarely. He argues that, according to Aggregation Theory, digital transformation has shifted the power from distributing scarce goods to facilitating the discovery of desired content. This shift has led to a level of accessibility where everything is readily available, resulting in a flattened hierarchy of content and services:
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Expedia and Booking transformed travel planning from agent-dependent to user-driven, prioritizing price and features.
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Google fragmented traditional publications into individual articles accessible directly through search results.
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Facebook elevated user-generated content to the same status as professional journalism within its feeds.
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Amazon made almost any product available for home delivery in a few clicks.
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Netflix changed viewing habits from scheduled programming to on-demand streaming.
Technology has only continued to accelerate this flattening:
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LLMs synthesize vast amounts of text and voice to deliver concise answers directly.
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TikTok has shown that algorithm-driven content curation based on individual interests can supersede content linked to personal relationships.
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Amazon is evolving into a logistics giant, increasingly powered by third-party sellers.
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Uber and Airbnb have decentralized transportation and lodging, empowering individual providers.
This is what I mean when I say that Apple’s iPad ad hit the mark: the reason why I think the ad resonated so deeply is that it captured something deep in the gestalt that actually has very little to do with trumpets or guitars or bottles of paint; rather, thanks to the Internet — particularly the smartphone-denominated Internet — everything is an app. — Ben Thomson
The only way that the Apple ad could have driven the flattening point more squarely would have been to play the ad in reverse, as Reza Sixo Safai pointed out on X:
The new ultra-slim iPad Pro ad reminded me of a couple of funny takes on the trend of shrinking tech products. One is the movie Zoolander (2001), where the protagonist uses an absurdly tiny flip phone. The other is a Saturday Night Live skit (2008) featuring “Steve Jobs” unveiling the iPod Micro, iPod Pequeño, and the invisible iPod Invisa, each more comically smaller than the last.
7. A different kind of Trip Advisor
Psychedelic therapy is going to be a multi-billion dollar business, and we’ll start to see that in late 2024. — Arlene Battishill
The interest in using psychedelics for mental health has grown in recent years:
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The psychedelic market is projected to reach $10.7 billion by 2027, up from $3.8 billion in 2023.
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1 in 3 Americans and over 50% of Millennials are interested in using it for mental health
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The US ketamine clinics market reached $3.1B in 2022, and will more than double by 2030
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In 2023, 17% of employers said they were investing in psychedelic-assisted clinical therapy solutions to support their employees’ mental health. It might soon become a workplace perk paid by employers.
Most psychedelic therapies are not legal in the West. But there is a rising popularity of psychedelic retreats in countries such as Mexico, Jamaica, Costa Rica, the Netherlands, and Australia, where it is either legal or in legal limbo. Many expect that psychedelics will go mainstream in the near future.
There is a lack of integration and aftercare for psychedelic-assisted therapy experiences, and this could present a great opportunity for the emergence of psychedelic concierges, according to Trends.
Psychedelic concierge, you can act as a liaison between patients and qualified therapists, consult people on their options, and facilitate aftercare sessions so they can process their trip. — Trends
8. The impact of Google’s Helpful Content Update on travel publishers
James Brockbank from Digitaloft analyzed the impact of Google’s Helpful Content Update (HCU) on the travel publishing sector. HCU was rolled out in August 2022 and by May 2024, 78% of the 671 travel sites reviewed experienced a drop in organic traffic. Sites like Timeout.com (+56%), LonelyPlanet.com (+133%), and Fodors.com (+309%) saw major traffic increases, while others like PlanetWare.com (-89%), TheCultureTrip.com (-69%), and Thrillist.com (-68%) experienced sharp declines. This update aims to prioritize human-generated content over AI-produced content, enhancing the quality by focusing on user needs rather than just search engine optimization. However, the significant traffic losses raise concerns about the update’s fairness and real-world effectiveness. Read +
It’s almost like Google is punishing sites that, let’s face it, exploited loopholes that existed in Google’s algorithms. We must remember that Google allowed sites to rank content that stepped away from their core topics. And when something works, it’s only natural to double down on it. — James Brockbank
9. Big week in Gen AI and Travel
This week saw major breakthroughs in generative AI in travel. Christian Watts, Magpie founder & CEO, wrote about the three major announcements:
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OpenAI (GPT-4o): With lifelike voice agents and memory capabilities, it revolutionizes travel planning by providing personalized recommendations and natural conversational experiences.
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Expedia (Romie): Romie, the travel assistant, integrates seamlessly into chats (Messenger, Whatsapp, Text), sits quietly, “monitors” the conversation, and jumps in to help at the right time.
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Google (Gemini): Leads the pack in trip planning, capitalizing on its strengths in Google Maps and efficiency.
10. Premium seats
My two favorite comments to this question and the beautiful video:
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“The blood pressure of structural engineers around the world just doubled.
I like these types of videos. They’re entertaining for non-aviation people and provide a good laugh for those in the industry. Like the cabin that parachutes down or the circular runway.” — Courtney Miller
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“I would rather install 4k cameras on the same spot and give the Vision Pro as as new ancillary for 50$/flight to all passengers as a choice ✈️” — Dimitris Bountolos
PS. Community Poll
The poll in the previous newsletter -Who do you think will lead in travel transaction volume in 10 years?- had Booking.com as the leading answer (29%), followed by Google (23%), an AI-native search engine (19%), an AI-native OTA (18%), and Airbnb coming last at 10%.
This week’s poll refers to the $105 Billion bill for US Air Travel improvements (see #5 above). Who do you think will be the main winners if this bill passes?
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Travel Tech Essentialist Job Board
Explore the 1362 open positions on Travel Tech Essentialist’s curated Job Board and stay ahead of the curve by subscribing to job alerts. Here’s a tasted of the jobs on the board:
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Virtuoso | Vice President, Data & Analytics | Fort Worth Texas | $190,000 – 230,000
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eDreams Odigeo | Senior Paid Social Media Specialist | Barcelona
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Airbnb | Senior Market Manager, Luxe | Mexico City
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Mauricio Prieto
