Skift Take

“It is impossible to rip out and replace everything we’ve got, because we are an industry where we have fragmentation,” one investor told us.

Christiana Sciaudone

Chris Hemmeter, managing director at Thayer Ventures, and Kurien Jacob, partner and managing director, Highgate Technology Ventures, spoke Tuesday at Skift’s Data+AI Summit. One theme: How hotel tech needs to evolve.

‘The Traveler Has Changed‘

• “We find ourselves now with this incredible technical debt and in a real problem, because at the same time that our industry, and I’m talking mostly hospitality here, has been sort of playing catch up and just layering technology on top of itself, the traveler has changed. I mean, humans have changed the way that we engage with every aspect of our lives,” Hemmeter said. 

• “We are in this mess. There is no changing that. It is impossible to rip out and replace everything we’ve got, because we are an industry where we have fragmentation,” Jacob said. 

• While in the past the travel industry might have shunned automation and technology in delivering hospitality, Hemmeter said, the world is a different place now.  “If you really examine the way Gen Z is engaging with travel, inspiration, planning and even booking, a surprising percentage of their activity is being driven through social networks and connections. An incredibly insane percentage of their decisions about where to stay is being driven by what they find on streaming content, which is really striking.”
• “They don’t want to stand at the front desk like a bank teller and wait for 10 minutes to be asked who they are again and given a room key. They want to make the choices about what they can engage with and when they can just sort of manage it on their own. And so, you know that interest is totally decoupled from what the tech stack can deliver.”

• The travel industry is so far behind that even something as simple as a room assignment is still being done manually. “Go to any hotel and check in. I would guarantee that in 90% of cases, somebody has either sat through the night or during the day to figure out which room you’re going to get. And I don’t know on what basis, maybe they like your last name, or your first name, or some other weird stuff. But obviously some people pay a higher rate, they might be given a different room. But that entire room assignment can be automated. Why does it even exist?” Jacob said.

What Does AI and Google Mean for OTAs?  

Can AI help drive direct bookings and bring on the end for OTAs? It’s going to be a fight, for sure.

• “The biggest battle that will play out over the next several years, and has been playing out over the last several years, is between the origination of travel, which is search, aka Google, and their biggest financial customers, which are the OTAs,” Hemmeter said.

While there may be a conflict, Google will never, ever disintermediate incumbent OTAs, Jacob said. 

• “It’s never going to happen. The reason is, the lowest rates today are found in OTAs because the industry is addicted. And you have people going and saying, run this promotion. They’re going to run the promotion. They’re getting too many bookings from there. There’s no time to look elsewhere. No matter what happens. It’s not a technology issue. It’s a behavior issue.”