Piles of seaweed lie strewn along the water’s edge along Hollywood Beach in Fort Lauderdale. I am told it’s the remnants of Hurricane Irma which crashed through the state of Florida last month.
From the other side of the world, I’ve been receiving updates of the floods that have devastated Penang, causing seven deaths and affecting 80% of the Malaysian island. Like Irma, which devastated Florida, Puerto Rico and parts of the Caribbean, the weather front that slammed Penang was the worst in living memory.
“It’s definitely global warming,” said my driver, who moved to Miami from Moldovia 15 years ago, when we exchanged weather stories and he recalled the fear of living through Irma.
It may have taken me more than a day of travel to get to Fort Lauderdale but these days, global forces, be it weather, political or tech, bind us more closely than ever.
Travel In The Age of Trump
At Phocuswright, a panel on “Travel in the age of Trump” noted that inbound travel to the US was down particularly from markets in the Middle East, such as Turkey, Saudi Arabia and Kuwait, due to the current policies on travel from that part of the world.
But because those are small markets by comparison, these losses were shrugged off. Strong domestic travel has more than made up for the losses.
“If I were Trump, I’d tell Americans to go see America,” said one of the panelists. “I’d push very hard on leisure and behind the scenes, do the right thing to bring in international visitors.”
There were concerns that Inbound appetites, especially on the meetings and exhibitions side, may be dampened by violent acts such as the shooting in Mandalay Bay, Las Vegas, and on the day I landed, the shooting at a church in San Antonio, Texas, but again those were shrugged off as inconsequential to the longterm health of tourism.
“Only in America can you give someone a tip to deliver bombs and guns to your room”, said one panelist, with others saying increased security measures in hotels were now probably inevitable but that they hoped there wouldn’t be an over-reaction to the other extreme.
The message I got from the panel was that random acts of violence are no more prevalent in the US than anywhere in the world and no more frequent now than in the past and that the US must take steps to separate perception from reality. There are pockets where Trump’s policies may have had an impact, it was agreed, but once you get here, you can see how great America is as a destination.
I am always amazed by how optimistic destination marketers always are but then, what’s the alternative, as Winston Churchill once said.
Here’s a summary of the other key messages I picked up from Phocuswright 2017.
Glenn Fogel on stage with Phocuswright’s Douglas Quinby: “We need to take the friction out of travel.”
- For US travel brands, the growth is out there
While the US administration may be looking inwards, it is clear that for future growth, American online travel brands will have to look abroad.
Share prices of Priceline, Expedia and TripAdvisor all tumbled the week before the event with analysts asking whether this was structural or company-specific. Pressed on the question, Glenn Fogel, group CEO of Priceline, said he does not look at stock prices every minute. His job is to “help direct all our efforts to produce long term value” and “provide something people are willing to pay for”.
One area of value it is working on is how to make the hotel check-in process easier where we don’t have to wait half an hour to check into a room. “It should be as easy as Uber,” he said. “That’s what we need travel to become – we need to take the friction out of it.”
And while the question of where the next $100b will come from – the company is currently valued at about $80b – Fogel reminded the audience that, as big as it is, the group only has a single digit percentage share of the travel business. “There’s a lot of opportunity to grow.”
Its goal remains “to use technology or leverage technology to make it easier for people to experience the world.”
Expedia’s new CEO Mark Okerstrom said he would focus on “operational rigour to realise the best value” out of the tech platform it’s invested in the last six years.
“We’ve built it, now it’s time to drive it, he said, adding that the current stock market dip was but a blip. In the first half of 2017, room nights went up by 17% and “the lodging industry isn’t growing at 17%”.
“We have 500,000 instantly bookable properties on Expedia Inc, there’s tons of runway ahead of us.”
He also said Expedia was now in a position to work on “being the number one OTA in Malaysia or South Korea” with the investments it’s made in the region. Expedia has openly declared its goal is to have two-thirds of its business coming from outside the US.
The Investors View: From left, Sophie Forest, Brightspark Ventures; Ben Johnson, Vitruvian Capital; Woody Marshall, Technollogy Crossover Ventures; Jenny Wu, Baidu Capital Partners with WIT’s Yeoh Siew Hoon as moderator
- For Chinese giants and their capital, the future is also out there
The latest acquisition of Trip.com by Ctrip was the talk of the week with everyone wondering what the Chinese travel giant will buy next as it sets sights on globalisation. The other question was what would be the first travel investment by Baidu Capital Partners, led by former Ctrip’s strategic investment lead, Jenny Wu.
Barely a year old, BCP’s fund stands at $3b, towering over $2.5b at Technology Crossover Ventures and the 2.4b Euros at Vitruvian Capital (the company which sold Skyscanner to Ctrip). On a panel on “The Investors View”, Woody Marshall of TCV said that to invest in Asia, “one cannot be just a tourist”.
Wu said Baidu Capital Partners has so far made six investments totaling RMB3b but none so far in travel. She said she’s waiting for the right mid- to late-stage travel company to invest in but it’s not been easy picking the next big play in travel. Whatever that is, it has to be the number one vertical in its field, she said.
Google’s Heckmann on the future of digital assistance
- It’s going to be a big-get-bigger world and tech and data will be the steamroller
It is clear that in this next stage of travel, scale, tech and data will converge to create dominance. Google’s vice president of travel and shopping, Oliver Heckmann spoke of the future of digital assistance and painted a world where the Google assistant would be multi-modal and live in multi-devices – from your watch to phone to home assistant. (You can see it at work in the new version of Google Photos).
Already, the Google Assistant is in more than 100 million devices. The Assistant lives and dies by data, the more it collects, the more it learns, the more it can help you in whatever circumstances.
Said Heckmann, “If you are working with us on flight and hotels search, you will be included in the future. If you want the booking function, then you can work with us on booking functionality.”
I had visions of us travelling and staying within the Google Circle after his talk. And guess what, when I am travelling in a country where I don’t speak the language, I will have Google Pixel Buds, the biggest leap in quality in machine translation in 20 years, to help me converse with locals. Heckmann showed how the Pixel Buds helped him communicate with his five-year-old son in Mandarin – a language all kids in Silicon Valley are clearly learning.
Heckmann didn’t even mention the power of Google Maps in his talk. When I was on the private island of Cempedak Island off Bintan, Indonesia, last month, I asked three couples how they found the obscure island and all of them said Google Maps. They keyed in surrounding islands, found Cempedak and booked direct with the island.
Discussing The Next Big Thing, from left, Paul English, Lola; Brad Gerstner, Altimeter Capital; Steve Hafner, KAYAK
- The next battleground is in Asia
Brad Gerstner of Altimeter Capital, in a panel on “The Next Big Thing”, observed that as tech companies chase the next billion users, the growth markets are in a part of the world where the two American giants are not dominant, the first time this is happening in travel.
Priceline’s $450m investment in Meituan, the competitor of Ctrip in which it also has a stake, has definitely raised eyebrows and Fogel, in bis interview, said it was hard to say no when it was approached by Tencent and other blue chip investors in the latest fund-raise of $4 billion.
Quoting McKinsey data, he said the number of middle class households in China will rise from 100m to 300m. “That’s 200m more households and it is incredibly important that we have a strategy for China.” The company now has 1,000 employees in China and runs three call centres.
Similarly, Chinese brands will face challenges in expanding beyond their shores because not all markets are like China and the playbook that works in China may not work as well elsewhere.
When commenting on Alibaba’s new $15b fund to spend on research and development, Gerstner said it had the advantage of a “longterm play with a government’s longterm imperial view”. Whether that gives China an unfair advantage in overseas markets remains to be seen.
Steve Hafner, co-founder and CEO of KAYAK, believes Chinese brands will face similar challenges expanding beyond their borders as their American counterparts and KAYAK was working hard on getting its product right for the region.
- Deep, personal and often
Gerstner observed two types of companies would do well in future – those that can develop deep one-on-one relationships with their customers with high frequency and those that do demand aggregation well.
What companies come to mind? Amazon certainly does both things well, and companies like Uber or Grab are trying to extend frequency, Grab with GrabPay whereby you use it for everyday spending and Uber with UberEats for food delivery services. Watch travel companies try and extend their influence up and down the funnel.
John Kim, HomeAway: Prepare yourself for a faster ride.
- Fasten your seatbelts, it’s going to get faster and faster
In his talk on “humanity in the age of AI”, John Kim, president of HomeAway, said that the rate of change, going forward, would be exponential. The iPhone X is not just a phone upgrade, “they’re calling it a life upgrade”.
Sharing statistics, he said, 81% of American adults own a smartphone, they touch it 2.617 times a day or 2.5 times every minute and they spend 70% of their waking hours consuming media. And 39% of millennials are more engaged with their smartphones than with their significant other, parents, friends and co-workers.
Illustrating the exponential rate of change, he used YouTube as an example. Born 12 years ago. Superbowl in 2007 reached 93.2m viewers, the Despacito video by Puerto Rican singer Luis Fonsi featuring Puerto Rican rapper Daddy Yankee reached 4.6b viewers. It took Gangnam Style, the viral hit from South Korea, two years to reach 2.9b views, Despacito did it in six months.
With such accelerated rate of change, humanity would have to keep up with the changing nature of jobs. AI, he said, would change jobs. AI software can do in seconds what takes lawyers thousands of hours to do, and it would eliminate some jobs.
However if machines did what they did and left humans to do what we do best, it would make for a better world and travel, he said, is a job engine for the future. “Travel is the cure,” he said.
Go forth and heal.