How Incumbents can Shake-up the Travel Industry

By Giovanni Donaldson, Mathilde Carraro, and Ezra Konvitz,

Key takeaways from our joint travel breakfast with Founders Factory featuring a star-studded panel talking about their experiences of corporates working with start-ups in the travel sector.

  • Robert Carey, easyJet’s Chief Commercial and Strategy Officer;
  • Michel Taride, Former Group President of Hertz International and Strategic Advisor;
  • Ana Jakimovska, VP of Product Management for Content at Culture Trip;
  • Irra Ariella Khi, CEO and Founder of Zamna (previously known as VChain).
  • Moderator: Cat Jones, MD Travel and Media at Founders Factory.

This was followed by eight pitches from travel start-ups disrupting the travel sector — from innovative hotel distribution management platforms to chatbots and challenger travel insurance products.

Every corporate wants to be innovative, but a select few are more successful than others. This is particularly true in the travel sector, where companies — airlines, hotel chains, and cruise lines — work in a highly regulated environment dominated by legacy players and where tech adoption has been traditionally slow.

In a world dominated by very thin margins, complex operations and legacy IT systems, innovation has centred mainly on driving efficiency and unbundling services to increase ancillary revenue — i.e, charging for services such as checked bags, meals, or late check-out — instead of initiatives that are targeted to improve the overall travel experience.

Customers today are expecting the same level of personalisation when they travel as they experience when shopping online. This was confirmed by a recent study which highlighted 90% of travellers worldwide claim that the standard traveling process is no longer fit for purpose. Incumbents that are slow to put the customer at the centre of their innovation strategies risk losing ground to tech players like Google, or OTAs like Booking.com and Expedia who are all investing heavily to provide personalised and frictionless connected-travel experiences.

But the reality is many incumbents lack the skills and speed to innovate efficiently and effectively in-house. “We’re living in a time of unprecedented level of disruption, consumer needs are changing. So with a 100 year old company, the question is — how do I change my core to survive?” noted Michel Taride, former group president at Hertz International.

There are at least three key benefits from corporate / start-up partnerships:

1. The skillset for disruption

2. Innovation at pace

3. Adjacent opportunities

“We realised very quickly that we couldn’t implement our innovation strategy because we did not have any tech, nor developers,” explained Michel Taride. “The bottom line is that you’ve got to bring fresh thinking — partnering with start-ups was key”.

Many travel companies have started to understand the gains of partnering with start-ups: Corporate investments in early-stage rounds in the travel sector increased by 20% since 2013 and made up 21% of all travel start-up financing in 2018. Together with corporate experimentation with internal accelerators and innovation labs, these trends show that travel companies view start-up collaboration as an effective innovation vehicle.

But collaboration challenges remain: a lack of understanding of the needs of both the start-up and the corporate, poor governance mechanisms and a lack of clear objectives and milestones are some of the roadblocks in the way of successful innovation.

Incumbents shouldn’t despair — there are many solutions they can put in place to bridge the start-up/corporate collaboration gap. Our speakers offered a clear set of learnings and takeaways to overcome those barriers:

1. Corporates need a strategic roadmap

2. Put yourself in the start-up’s shoes

It’s not only on the corporates to make this work — start-ups also have several ways to prove themselves and succeed. Irra Ariella Khi, CEO and Founder of Zamna, suggested three main strategies to win the corporate/start-ups collaboration.

1. Aim to deliver impact early

2. Be transparent on deliverables

3. Get senior sponsorship from the start

At Founders Intelligence, we help companies craft innovation strategies than can address their sector challenges, develop new propositions by partnering and investing with start-ups and ensure the successful implementation of those collaborations. We’ve seen a lot of the challenges in driving innovation and we know what it takes to push an entrepreneurial agenda in major corporates. This conversation highlighted some of the key ways to forge ahead in the travel sector — we’ve also looked at how best to do it in other recent panels discussing incubating start-ups within corporates and corporate/start-up partnerships across industries.

List of start-ups

  • LuckyTrip: Awarded Apple’s Best of the Year in 2016, this innovative travel inspiration and booking app focuses on ‘quirky’ destinations with interesting activities allowing users to search by overall price instead of date/destination and simply book a trip in one tap.
  • Pluto: Winner of the “Pitch on a Plane” competition sponsored by British Airways and Founders Forum Pluto is a challenger travel insurance product allowing users to make all their purchases and claims seamlessly in a mobile application.
  • HotelRunner: HotelRunner provides a complete online sales and distribution management platform for all types of accommodations. HotelRunner also serves the travel agencies with its HotelRunner Connect division, providing supply acquisition and contracting, automated onboarding and more. They already partner with some of the largest global brands such as Booking.com, AirBnB, Agoda etc. present in 193 countries with 36,000+ accommodations.
  • Adrenaline Hunter: The world’s largest catalogue of adventure activities from shark cage diving in South Africa to dog sledding in Norway. With a selection of over 70 different sports in over 30 countries, Adrenaline Hunter partners with travel companies to offer a wide selection of unique in-destination activities and boost their ancillary revenue.
  • Howazit: A mobile-first customer communication platform powered by AI. Howazit allows brands to proactively engage with their customers at any point throughout the journey allowing companies to upsell/cross sell or to address any negative situations.
  • Ruuby: A digital beauty concierge offering wellness and beauty treatments in people’s homes, offices and hotel rooms via their website and app. Partners include the Nobu Hotel, the St James’s and Onefinestay with 24/7 treatments available.
  • Poplar: Augmented Reality content creation made simple. A brand or agency simply uploads their brief to the platform and a community of content creators complete the production faster and cheaper than current methods.
  • GroupDesk: Simplifies how travel agents sell group travel by allowing them to make bookings and manage their trips.

Founders Intelligence is a team of entrepreneurs and strategy consultants. We help corporates understand how digitally enabled business models are affecting their industries and what to do about it.

Our team has extensive cross-category experience, working with Fannie Mae, Visa Europe, Shell, Unilever, Diageo and numerous other FTSE 100 / Fortune 500 companies.

Founders Intelligence

A new type of strategy consultancy, we enable at-scale organisations to reinvent their industries through technology.

Founders Intelligence

Written by

Founders Intelligence

A new type of strategy consultancy, we enable at-scale organisations to reinvent their industries through technology.

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