aiTravelers - Revolution of Travel

(R)evolution of Travel

Evolution of Travel

It is very doubtful that in 1914, when Tony Jannus piloted the first-ever commercial flight, about 100 years later there would be over 35+ million flights per year or that global travel and tourism would compensate for roughly 10% of global GDP. I would argue that Brian Chesky, who is one of the most formidable assets to the travel industry along with one of the biggest disruptors in Silicon Valley, couldn't have imagined that the travel industry had the substantial room to grow that Airbnb has seen over the past 10 years. To understand why these types of disruption and growth are possible we have to understand the past ~100 years of the industry and the frustrations that have developed.

Early Days

So, obviously, there was no way to book that first flight from Tampa, FL to St.Petersburg, FL by the phone or internet in 1914 for two reasons: First, the computer wasn't invented, and second, there wasn't formalized customer service or company infrastructure to answer calls for a "floating plane" as the aircraft was referred to. This premise is extremely important because it also rings true for the hospitality industry. At this point, the barrier to travel existed around knowledge and fear of the unknown.

As time went on, there became increasing demand for traveling as we began to introduce new means of transportation such as the car, additional railways, hotels vs. inns, and commercial flying. As a byproduct of increased demand, additional support was needed, and advancements had to be made. It went from the ability to walk in and expect availability to the need to plan and call ahead to reserve spots.

Travel Layering Begins

Fast forward to the 1950s, demand was growing, technology was advancing, and the economy was evolving. The robust uptick called for a more formalized approach to reservations in the travel industry. Despite having a reservation system that was working, American Airlines and IBM teamed up to create the first GDS (Global Distributing System) and out came Sabre. Although the incumbent was 10X cheaper, Sabre had a superior product, and it simply could not compare to the IBM reach. Sabre then split off as its own entity and created a new vertical in the travel industry with competitors beginning to pop up; such as Amedeus, TravelPort, and others, each adding additional costs to travelers and suppliers alike.

GDS did make systems more universal and streamlined, but over time, cumbersome. So, along came travel agents, both in-person and online. You could walk into AAA or go online to Hotels.com or Expedia and simply book what you are looking for. All you have to do is pay the underlying GDS costs and the commission rates the travel agents receive from the travel provider. At this point, we have two new costs incorporated into our trip, but life is improving, we are traveling, and it is getting a little easier.

Giving Travelers Options

It wouldn't be fair to not point out a couple of other juggernauts in the travel industry who made a significant impact on how travel search and bookings are made. In 2004, Steve Haffner and Paul English came out with what is known as a travel aggregator, called Kayak. This tool allows travelers to use metasearch capabilities to scrape all the booking options for a trip and give customers every possible option to purchase.

This is still widely used today, but it introduced two additional problems in travel search. First, we now have introduced a time-consuming effort for the traveler; knowing the vast array of options is nice as it may seem has opened the eyes of travelers and initiated a waiting behavior which costs the traveler hours, days, weeks, and even months of their time -heavy expense to say the least. Kayak does take a smaller percentage from airlines, but that is because they are allowing suppliers, travel agents, and tourist attraction to advertising -adding additional dollars to their balance sheet... inevitably passed on to you, the traveler. Albeit progress, we now have four additional layers of cost on our travel budget.

(R)evolution of Travel

Current Changes Happening

Brian Chesky created something special at AirBNB that disrupted typical technology protocol, but what is much more important is that he disrupted the way travelers think. He unearthed that travelers want personalization, protection around their purchase, and direct connections to the travel provider, or in their case, the host. Airbnb showed the simplicity of booking was important and even more, people can put in a budget because they know what they want to spend.

Travel Orchestration

The newest wave of travel, unlike its predecessors, is looking to eliminate the layers. aiTravelers is not charging the airlines and hotels the commissions that traditional OTA's. Uniquely, we are working through direct connects with the travel providers to eliminate the middleman costs, and with a subscription-based model, we are significantly reducing marketing overhead by transitioning to lifetime value for travelers versus unique visits and empty carts. We can't wait to see the additional growth ahead and we would love for you to be part of it.

Go to www.aitravelers.com and sign-up for a free 1-year subscription today.

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