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Age of experience and two new distribution disruptors
Two start-ups talk to Pamela Whitby about the fundamental shifts underway in travel distribution but what does this really mean?
Impala, an API firm connecting hotel data, and UBIO, the robotic transaction automation platform, have three things in common. They are both tech start-ups backed by Howzat Partners, an investment fund co-founded in 2007 by Hugo Burge and David Soskin, who were formerly CEOs of Momondo Group, which was acquired by Booking Holdings in 2017. They are also both in the game of disrupting travel distribution with a strong focus on the hotel industry. And, although they are B2B facing and agnostic when it comes to signing customers, the founders hope their efforts will go some way to improving the overall user experience in travel.
So frustrated is Marcus Greenwood, the co-founder and CEO of UBIO, with the user experience, that he admits to having an internal presentation slide that reads: ‘Nobody wants to visit your crappy little website.’
“Have you visited an airline website recently? They are a disaster. And hotel websites are a similar story,” he says.
Nobody wants to visit your crappy little website
Although he doesn’t claim to be a travel expert, Greenwood likes to think that this market “is being significantly disrupted by companies like ours”. UBIO, a cloud automation platform that allows any website to be turned into an API, started life in retail providing a universal shopping basket to aggregator metasearch companies. But things really started to move when the solution caught the attention of Skyscanner, a pioneer in this area. Today UBIO is working with Kayak and Trivago, and has recently become a trusted integrator for hotel booking with Google. The team is also working with NH Hotels and speaking to a number of other hotel groups, large and small.
One of the reasons that UBIO is relevant to metasearch, and also others parts of the travel industry, is that it allows customers to book direct rather than being redirected to an intermediary site. “Many of the suppliers of hotels and airlines don’t have their own tech capabilities to offer these APIs so my company is one that can bridge the gap,” Greenwood explains. Right now, the biggest vertical for UBIO is hotels and “we are seeing quite a lot of interest in terms of how they can work better with metasearch, can increase conversion rates and ultimately get more direct sales versus selling rooms on Booking and Expedia, for example.”
Delivering the data
Technology integrator Impala, which has recently raised $11 milllion taking its total funding to $13 million is doing what Duffel is doing for airlines – see Duffel: helping new entrants to bag a flight and crack CX– but in the hotel space. “At Impala we're changing the way businesses connect to travel data. We provide hardware and software vendors with one rapid, extremely secure API to exchange data across the travel value chain,” explains CEO and founder Ben Stephenson.
Fundamentally, Impala’s aim is to “make it exceptionally easy to interact on a data level with hotels” and this could include anything from companies delivering IPTVs and WiFi systems to hotels, all the way through to the likes of deal sites like Secret Escapes and HotelTonight. In other words, any company that needs to access availability and rates through data from the hotel. “Traditionally this has been done by multiple intermediaries that each have a little information and take a long time to connect to,” Stephenson explains. Taking anything from 20 to 30% commission, intermediaries are expensive too! It therefore goes without saying that if hotels have better control of their inventory, they can offer sweeter deals to valued customers.
Impala is also connecting technology companies to legacy firms like Oracle, which has faced growing competition from property management system (PMS) start-ups like Apaleo which have been making inroads thanks to their easy and open data connectivity. The Impala API enables Oracle to overcome issues of PMS connectivity for its hotel customers so that it can focus on its core business of moving customers to the cloud.
Shifting landscape, shifting power
The way travel inventory is distributed and where the money flows to and from is, unquestionably, undergoing fundamental shifts. The growing number of companies like UBIO, Duffel and Impala are part of this change but not everybody believes this shifting new world order is an improvement. The agency model, for one, which derives much of its bread and butter revenue from the global distribution systems (GDS), is coming under intense pressure. Jerker Elming, Business Area Director of BIG Travel Sweden, for example, recently told EyeforTravel that he sees a Wild West, with a power game playing out between airlines, distributors, and technology firms, and this does not necessarily benefit the consumer!
Is this just another shift of power – to the ‘new monsters’, the powerful platforms like Google, Facebook and Amazon?
But is this all really as disruptive as one first might first be led to believe, or is it just another shift of power – to the ‘new monsters’, the powerful platforms like Google, Facebook and Amazon. Jeroen van Velzen, CEO of corporate travel platform Roadmap, points out that a few years ago the Holy Grail of travel suppliers was to own and control the channel to the customer. “Now travel suppliers are saying let’s open up these platforms and let’s spread these APIs and data [through companies like UBIO, Duffel and Impala] to a thousand developers and let’s see what they come up with,” says van Velzen. “On the one hand this is crazy but it’s also beautiful because it creates a whole plethora of other opportunities which means that anybody can become a distributor.”
The future age of experience
Clearly, this is not good news for powerful intermediaries but if this is the age of experience and customer centricity, this is of now concern to the end user. Stephenson and Greenwood believe wherever you sit in the travel ecosystem, this is where the focus needs to be. They predict two future trends:
Power to the platform
In Greenwood’s opinion, any visit to a website today is no more than a chore. Cookie messages “the most absurd thing to happen to the Internet in recent times,” and “endless form filling” is the last thing that users want! In five to ten years, he believes that a large percentage of flights and hotels will be booked in centralised places like Google, Trivago or other meta portals, or on the supply website. And UBIO will be one of the companies powering a large portion of these interactions. Better still, as a self-confessed optimist he hopes that “crappy websites” will soon become a thing of the past so that “humans can spend more time doing more fun stuff”.
An example of this already playing out is how Google Duplex Technology is enabling Google Assistant to book restaurant reservations over the phone, which being extended to other “annoying tasks” like buying movie tickets or even hotel rooms!
In Stephenson’s view, in context booking will become the order of the day. His company will enable more niche OTAs focusing on specific market segments, whether those are deal sites like Secret Escapes, LGBT friendly travel or even tied to an event. “In context booking and niche booking is the future,” he says.
The end-to-end journey will also be crucial and to highlight how some companies are thinking about this, Stephenson says he recently met somebody involved in fleet management at Porsche. One pie-in-the-sky idea is that the car, knowing where you are heading, could book a hotel for you before you even arrive at the destination.
The battle continues
It is still early and experimental days for companies like UBIO and Impala and their partners, and it seems unlikely that travel heavyweights will lie down and roll aside.
Greenwood accepts this: “It takes a lot of effort to break those relationships and convince people to do things in another way. But the good news is that to date we have managed to win some significant hotels and airlines and get them to trust what we are doing,” he says.
It takes a lot of effort to break those [traditional] relationships and convince people to do things in another way
The next step will be to see if they can extend that tech provider relationship to the OTAs – like we said earlier these middlemen are supplier agnostic!
Stephenson, a software engineer who consulted on Amadeus and Sabre web service installations, is also hopeful. It was the time-consuming and excruciatingly frustrating nature of GDS implementations that made him believe he could do something better, and Impala is aiming high. Within five years this start-up’s aim is to take on, even replace, the GDSs - to “provide exceptional connectivity to data that is extraordinarily important to people building great booking platforms”.
There is everything to play for in this new Wild West, and nothing is set in stone. The winners will be those that build the right product or service for the right market, and ultimately that will come down to what the customer really wants.