On this newsletter, we highlight the most important news and topics discussed on travel tech during 2018. Trends, technologies, and behaviors will change, but there will always be room for new ideas. In the last decade, a huge ecosystem of travel-focused incubators, accelerators, investors, pitch competitions and conferences have blossomed to support innovation in the travel industry.

The emerging technologies have the potential to disrupt the travel industry. However, startups working in areas like AI, the blockchain, VR and other technologies often face challenges in commercializing their tech and ensuring their real value.

The Importance of Understanding Travelers' Motivation takes as its starting point the fact that online channels can give consumers a broad range of choices to consider, so sales channel design that inspires purchase is critical.

There is a need for people who can articulate business needs in a way to be met with new technology that didn't exist in previous years. Despite all the tech hype, there is still a lot of room for improve the journey from the customer's point of view and minimize their pain points.

Participants in the travel industry traditionally had well-defined roles around providing a service until the word experience started to replace service. With digital transformation, the number of touchpoints has increased and travel experiences become largely affected by digital experiences. But in the end, what meets the needs of travelers?

In addition to the needs, how travel companies can guarantee safety of their services and customer data? Fraud costs the travel industry more than $20 billion a year, with the biggest hit allocated to the indirect cost line, according to Jason Hancock from eNett. Only $6 billion were associated with direct costs.

Gathering the most relevant news and topics on travel tech during 2018, we present this newsletter divided by the following sections:

• Tours & Activities + OTAы: 2018 witnessed the rise of tours & activities, and giants moving to this still fragmented segment.
• Consolidation of mobile: Mobile is also shifting the way we travel.
• Hospitality industry: Hotels are also competing with tech companies such as Facebook, Google and Amazon.
• Airlines: Major airlines are gradually looking for startups to solve their last shifts in the travel industry.
• Startups: Highlights of travel tech startups in 2018.
• Airbnb: Airbnb consolidated in 2018 new partnership strategies and moved into tours & activities.
• Blockchain, VR and AI: Will these three technologies survive the hype along the next years?
• Asia: Boosted by China, Asia has become an epicenter of the global travel industry and on travel tech

Tours & Activities + OTAs

2018 has witnessed the rise of tours & activities as the new big thing in the travel industry, with the OTAs investing on new solutions and acquisitions for this segment still fragmented and purchased in-destination.

TripAdvisor acquired Bokun, which used to be one of its third party integrators that connect tours suppliers to its platform. As a full-service software, Bokun is a booking engine, inventory manager, and multi-currency price management tool.

Booking for tours and activities still largely happen in destination and in person, very close to the intended time of departure - a major challenge for any company looking for a significant degree of a scale.

Arival pointed through surveying 4.000 travelers from the U.S., U.K., France, and Germany, trends showing shopping, historical and cultural sites as the top activities booked. More insights follow on the report What Your Customers Want: In-Destination Traveler Trends.

With the recent disruptions on tours and activities, every OTA and booking platform is positioning and preparing itself. But who will dominate the market? Chris Torres takes a look at how Airbnb, TripAdvisor, Booking.com and Google, and how suppliers can make sure they're ready for the digital environment.

Although far from perfect, Google is already addressing some of the pain points in vacation package search, testing its vacation rental solution in the UK, Germany and the U.S.

Google's Touring Bird surfaces activities in top travel destinations. This trip planning tool aims to attend the need for tools that aggregate tours and activities across providers, while there has been progressing on flight and accommodations booking.

TripAdvisor-owned company Viator is seeking to expand further with a push to get travel agents to book through its platform. TripAdvisor non-hotel revenue grew 22% to $120 million in the second quarter of 2018 - from attractions, restaurant reservations, and vacation rentals.

TripAdvisor has announced a beta version on desktop and mobile that includes a travel-specific feed of personalized recommendations from friends, social media influencers and publishers.

Skyscanners's CEO Filip Filipov mentions the importance of taking customer service beyond call center, bringing payment for discussion it deserves.

No Google budget, no external funding, and expansion through partnerships, HolidayPirates proved a differentiated business model works.


Consolidation of mobile

Mobile has shifted the way we use the internet, the way we travel and book for services. And in emerging markets such as China and India, where mobile has been the first device to access internet, a mobile presence is mandatory for services related to travel and payment.

Changing consumer behavior had the biggest impact on driving the travel industry forward over the last 10 years. As expressed by Máire P. Walsh during the Travel Tech Con 2018, the rapid shift to mobile and its future dominance in travel-related purchases will continue to force major players to overhaul their customer experiences to remain competitive.

Reduced advertising spend succeeds in returning Trivago to profitablity. Part of this success ties to Trivago's mobile app, the company reports revenue from mobile websites and app continues to exceed 60%.

The fact that the global travel market is becoming more diverse - as travelers from mobile-first countries such as China, India and other countries in Asia-Pacific - adds complexity to the industry. Prioritizing digital and mobile payments is important for engaging with travelers from countries with a heavy smartphone reliance.

Despite advancements in digital payment solutions, customers need a bit of reassurance in payment transactions, according to a study by Paysafe.


Hospitality Industry

Hotel brands aren't competing only with one another, they're also competing with giants like Google, Facebook and Amazon. Facing the current shifts in the travel industry, hotels have been moving to tech solutions and non-room products as ancillary services.

Before approaching a guest, a hotel company has to ensure that they are able to consolidate all that a hotel has to offer in a way that is simple for a traveler to comprehend, with just a click away to take the desired action. Do guests know enough about non-room products, for example?

Asia-Pacific hotel industry is having to define its digital transformation roadmap according to mobile's dominance, while suppliers need to ensure their products and services align with a mobile-first market.

Hospitality still has a lot to grow and because of the lack of sophistication in technology, the industry is in a position of retail stores, according to Michael Levie, co-founder, and chief operating officer of CitizenM.

Mobility, VR, AI, and smart rooms are some of the thoughts for the future of technology in travel and hospitality.

Finding hotels and other lodgings that are accessible to people with physical disabilities can be a challenge, as the information is often not signposted on major booking search sites and mobile apps. About 1 out of 10 people face sight, hearing or mobility issues.

Hotels are achieving higher average daily rates from consumers who book packages rather than just rooms, according to Expedia.

Hotel brands aren't just competing with one another. The real competition is with technology giants like Google, Facebook, Amazon, and even Netflix.


Airlines

While facing numerous challenges and pressures from the last shifts in the travel industry, the major airlines are gradually looking for startups who can help them solve their biggest pains, leverage customer data, improve e-commerce platforms and ancillary services.

Digital transformation has become a hot topic in the air industry to achieve a competitive edge, major airlines players have turned to startups as a source of inspiration. According to Bonny Simi, president of JetBlue Technology Ventures, technology is evolving so fast and companies can't do everything internally. To capture the full universe of innovation, it's necessary to consider what's happening in the startup ecosystem.

According to IATA's 2018 Global Passenger Survey, effective disruption management requires accurate and timely information, quick information of immediate needs, and ways to make the time spent waiting for the new flight more comfortable.

British Airways has responded to a serious data breach in 2018, which has exposed customers' personal and financial data and trying to make amends. But the vulnerability of data systems is nothing new and all travel companies are prime targets.

Next-generation airline retailing is no longer a futuristic talk. It's starting to take off, and key developments are taking place this year. Sabre will launch the industry's first Digital Airline Commercial Platform, enabling to deliver an end-to-end personalized shopping experience.

In 2018, the App Store has completed 10 years of existence. 2 million apps laters, there is a lot of room for airlines and travel brands position their apps for their overall digital strategy.

Lufthansa's platform airlinecheckins.com helps passengers check in for flights on more than 200 carriers, even customers flying with other airlines. Why? Because the company can monitor trends by the generated data, despite the limits of information.

Airlines want to leverage the rich customer data they hold, taking advantage of new AI technologies combined with new distribution standards.

Airlines have shown only their own flights on their branded websites, but in 2018 a couple of them started to rethinking this model by showing the availability and fares of competitors carriers next to their own. Such experiments suggest a convergence is taking place among supplier e-commerce sites, metasearch engines and OTAs.


Startups

Highlights of travel tech startups and events during 2018.

Startups angling to break into travel must know the so-called travel funnel, whether they're aiming to enter at a specific level or disrupt the funnel altogether.

The Brno-based OTA Kiwi.com processed $925 million in gross bookings in 2017, while the largest travel multinationals swallow all the marketing and financial oxygen.

SeeVoov drives travel bookings through tagged videos. Instead of reading material on the destination, travelers can watch videos previously tagged by SeeVoov's system.

Booking.com is expanded its Tel Aviv development center to LABS in 2018. The workspace in Tel Aviv is part of the international chain of co-workspaces set up by Teddy SagiGroup.


Airbnb

Celebrating 10 years in 2018, Airbnb has consolidated as a giant debuting new partnership strategies and to the tours & activities segment by the Airbnb Experiences.

Airbnb Experiences and curated list of meeting-appropriate homes had been integrated into the company's business travel booking platform.

Airbnb started to target boutique hotels and B&Bs in 2018 through an advertising campaign on a clear battle against Booking and Expedia, claiming to have the guests both hospitality segments are looking for: millennials and international travelers.

On an open letter to the Airbnb Community written in January 2018, the company had messaged their vision to build a 21st Century Company while celebrating the 10th anniversary.

In 2018, Airbnb launched the Pay Less Up Front option, which allows guests to pay for part of their trip at the time of booking and pay the rest closer to the check-in date.

In 2018, Airbnb had also boosted its resources behind their platform called Experiences to the tine of $5 million to grow its tours and attractions business.

Airbnb debuted in 2018 a new partnership-driven business strategy in Japan, called Airbnb Partners. The program ranges established loyalty programs and service providers that can help Airbnb hosts to supply partners such as real estate developers.

In India, Airbnb has entered into a collaboration with Maharashtra Tourism Development Corporation to help micro-entrepreneurs in hospitality sector grow their business.


Blockchain, VR and AI

Will blockchain survive the hype? Is VR already mature for travel services? Can the potential of AI solve the pains of travel industry right now? 2018 has witnessed the rise of experiments based on these three technologies.

David Brillembourg reckons that more than 95% of the blockchain businesses around today will not survive. Has blockchain promising been overhyped in the travel industry?

KeyoCoin uses blockchain technology to gamify the entire travel experiencethrough a travel rewards cryptocurrency. Their primary function is to give travel companies a free rewards platform to help them to market their services.

Travel tech leaders are betting on blockchain to transform every aspect of the travel journey,
making transactions simpler, more affordable and more trustworthy for providers and consumers
Blockchain also has the potential to lower transaction costs and better profit margins for travel organization in all verticals.

Malaysia's low-cost carrier AirAsia is working with Google Cloud to integrate machine learning and artificial intelligence into every aspect of their businessand culture.

Although robots could never replace genuine hospitality, they can decipher big data to learn about guests faster than humans. And as guests become more tech-savvy, they expect hotels to provide the same facilities they have at home.

Many travel brands see AI as opportunity for specific areas of booking journeyto delight, engage and optimize customer's experience.As shown by some companies, AI can be useful for conversational commerce, personalization, machine vision, and recommendations.

AI can provide a better understanding of the movement of baggage, allowing airports and airlines to determine which routes cause the most stress on their systems, what factors create problems and how to deliver bags more effectively.

Singapore Airlines has launched a digital blockchain wallet that allows members of KrisFlyer program to convert their air miles into digital currency.

AI is stepping up to help passengers befriend airlines' customer reps, strongly considered as part of customer service strategies for the next 5 years.

IATA thinks that AR/VR has reached a sufficient level of maturity to be of interest to the air transport industry and would like to encourage greater adoption among airlines.


Asia

China has consolidated as a travel market and its peculiar digital landscape must be understood by companies and destinations who aim to target Chinese travelers. In addition to China, India is also booming following the economic growth of the last decade.

Why a smart mobile strategy is essential to luring Chinese travelers? Chinese travelers have distinct media-consumption habits and a unique online travel ecosystem facilitated by government censorship.

China is rapidly turning into a mature travel market, illustrated by the rise of independent travel and the emergence of second-tier and third-tier cities as outbound markets.

Hotels are developing WeChat mini-programs to drive digital bookings among Chinese travelers. WeChat mini-programs act like apps, so users save data and storage in the cloud.

The Chinese hospitality tech giant Shiji has been expanding its global push since a $486 million investment from Alibaba Group in February.

South Korean early-stage investor BonAngels Venture Partners had led an investment in VLeisure, a Vietnamese tech startup that operates a travel and accommodation booking marketplace in Southeast Asia.

Chinese travel tech companies make progress with AI handling massive data volumes, crafting advanced algorithms and improvements in computing storage.

Indian travel startups that are taking an innovative route to reach out millennials. According to government statistics, the annual growth of domestic travelers in India in 2017 stood at 17.2%.

WeChat will continue to focus almost exclusively on Chinese outbound tourists until 2021.

Thank you for being with us in 2018 - expect more in 2019!

With lots of love, yours truly,
Valentin Dombrovsky, Chief Alchemist at Travelabs, Andre Fernandes and Travel Tech Newsletter Team

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