Emerging Business Models in Travel Tech

To paraphrase Lenin (Vladimir, not John), “there are decades where nothing happens, and then there is NDC”. For those of us who have worked in travel tech for more than a few years, it may feel like decades are suddenly happening in months, if not weeks.

And it’s not just technology innovations like NDC and AI that are shaking things up. The pandemic gave many companies breathing room to experiment with new commercial models that give their businesses more solid footing to ride out unexpected economic dislocations like Covid, as well as more evolutionary changes to the industry.

The agency model in particular (both corporate and leisure) is facing disruption from multiple angles. Suppliers are testing social commerce channels and moving budgets away from traditional paid advertising like Google and metasearch players. Loyalty programs are shifting from usage-based points earn to spend-based status tiers. Subscription models and membership programs are gaining traction in surprising new corners.

What does all this turbulence mean for the traditional supplier, agency and distribution ecosystems, not to mention ad-based models like metasearch and Google that have dominated budgets? What will the travel world look like once these new commercial models take hold, and who will be the winners and losers?

We’ll talk to two experts who weigh in on some meaty topics:

•  NDC to the rescue?
•  The future of the GDS…is there one?
•  The next gen distribution model: lower costs, higher prices, more value
•  Subscription v. transaction models
•  The impact of AI on new commercial models: packaging, personalization, ancillaries and service
•  The emergence of social commerce channels and new types of travel sellers: is this the end of the OTA as we know it?

Follows:

Gilad Berenstein - host

Cara Whitehill - host

Jeff Klee - guest

Alice Ferrari - guest

Go Deeper:

ASTA continues public fight with American Airlines - TravelWeekly

For Amex GBT, NDC Takes A Village And 162 Items To Solve - The Beat [$]

CitizenM Looks for Emotional Connections Through Fledgling Subscription Model - Skift

Influencers and Social Commerce in Travel - PhocusWire

Tripadvisor Plus Is Case Study in Online Travel Hype - Skift

How Influencer Content is Reaping Rewards for Travel Companies - PhocusWire

Transcript

Cara:  Well, hello. And thank you for joining us on our latest episode of Travel Tech Insider. I am Kara Whitehill. 

Gilad: And I'm Gilad Berenstein. And we are thrilled to have you with us for the first episode in a short series of conversations focused on the core of our industry's current evolution, the evolution of business models, distribution, and loyalty.

In today's conversation, we will dive into new business models they relate to distribution, focusing on NDC, and we'll conclude with a look at AI, creators, and a bunch of similar topics that relate. Next week, we'll focus on the loyalty side of things, as well as on subscriptions, and we'll continue these conversations throughout the pod.

But before we jump in, Kara, how are you? How are things going on 

Cara: your end? I'm great. I'm happy to be home after what seems like endless weeks of traveling. We've been on a lot of the same conference circuits recently, and then had a little vacation in there. We went down to  Chile and Patagonia, which was incredible.

Got some hiking in and whatnot, but it was kind of marinating in a lot of the different elements of the travel industry over the past, uh Month or so, but, uh, what's going on in your 

Gilad: world? Yeah, no, exactly the same. I'm thrilled to be home today after many events and conferences. And it was just such an exciting year in our industry with so many innovators coming into the space, looking at a whole new set of technologies, you know, AI being just one of them, but of course, just as exciting is the innovation we're seeing on the business model of things and on the way that we distribute the way we market.

And the way we personalize. So it was an exciting year and I'm trying to just digest it 

Cara: all. Me too. I'm, uh, I'm very excited for this, this episode in particular. And, um, you know, to paraphrase Lennon, that is Vladimir, not John, there are decades where nothing happens and then there's NDC, right? So for those of us who have worked in travel tech for more than a few years, it really feels like decades are suddenly happening in months, if not weeks.

And it's not just technology innovations like NBC and AI that are shaking things up. The pandemic gave many companies breathing room to experiment with a lot of new commercial models that give their businesses. Some more solid footing to ride out some of the unexpected economic dislocations like we saw during Cove it as well as some more exciting evolutionary changes to the industry.

Um, when you look at the traditional agency model, that's really been upended. Um, the economic foundation of loyalty programs is shifting as we're seeing with announcements from Delta and and it's more and others. And then social commerce channels like TikTok have really proliferated among a newer generation of travelers.

So there's, um, a lot to talk about in terms of business models. So what does this all mean? What does this turbulence all mean for the traditional agency and distribution ecosystem? Not to mention ad based models like Metasearch and Google. And what will the travel world look like once these new commercial models take hold?

And who will be the winners and losers? 

Gilad: Well, we have two perfect guests to join us to have this conversation with us. First, we have Jeff Klee, the CEO and co founder of Amtrav, a leading corporate travel agency that has been at the forefront of NDC evolution, and Alice Ferrari, founder and CEO of Kite, a next generation distribution platform connecting travel sellers and airlines using API based technology instead of the legacy GDS systems.

And with that, 

Cara: let's get started. Great. Well, thank you both for joining us today. So we will get started if you can take a quick moment and tell us a little bit about yourself and your business. Um, we'll start with Alice. 

Alice: Sure. So I'm Alice. I'm the CEO and co founder of Kite. Uh, Kite is a four year old company and essentially we offer a standardized API, uh, enabling airlines to be much more plug and play with the entire travel ecosystem.

Be it. Uh, the traditional travel agents, but also more modern, uh, players in the ecosystem like, [00:04:00] um, companies who are actually offer services directly to the airline. Our API is, um, inspired by NDC. It's based on all the basic flows of NDC, but it has, uh, more modern functionalities that allow, um, every airline to use our API as their own, meaning that it's.

requires only one integration by the travel agent or other player to connect to all the airlines using the Kite API. The real goal for Kite here is to actually make NDC faster and easier to consume. Um, NDC is more than an API. We like to think of it more conceptually as a way for the industry to become much more interoperable.

So the idea that is that the kite API reduces those technical barriers by making each integration faster and much simpler so that it doesn't necessarily require someone [00:05:00] with Really significant technical skills to integrate with kite. Awesome. 

Cara: And Jeff, tell us a little bit about Amtrav and your work there.

And, um, a lot of the, the work that you've done most recently around NDC. 

Jeff: Yeah. Uh, thanks Karen. And, and first of all, um, Amtrav is an all in one, uh, business travel platform where, um, For those that think in these terms, you can think of a TMC and an OBT combined into one. And what we try to do is with corporate travel solutions, you know, we typically you either provide great value to the Uh, you provide a great easy to use experience for the travelers.

Uh, we we're trying to do both. And I think, uh, NDC, that's a nice segue is really helping in that effort. Uh, I think if you ask how NDC is going, I think if you, uh, If you're inclined to want to find positives, I think it's going really well. Uh, it's. We've had a really big year with a lot of progress building out some of our NDC connections.

And a couple months ago, we passed what was an important milestone to me with American Airlines. We had, as probably most, uh, your listeners know, uh, Americans been, uh, discriminating on, on fares, whereas NDC channels have lower fares, uh, about 50 percent of the time. Versus edifact. Uh, so we were early in the year.

We were shopping both and we would, if it was, the fare was the same, we'd book it in the GDS. If the fare was better, we'd book it in NDC. We're a hundred percent NDC now because the, the end to end experience, including servicing is now better in NDC. And it is a net effect. And that, um, I'm really excited to be able to say that because, um, it's taken a lot of work, but, uh, and it's only going to get better and better.

So I'm really bullish on where things are going. I think next year is going to be a huge year for NDC. And I look forward to it. 

Gilad: That's awesome. And Alice, if you could tell us a little bit more about NDC and specifically who benefits from NDC and are there any losers out there who are missing out because of it?

Well, 

Alice: that's a very difficult question. Um, so let's start with the foundation. So NDC originally was created. By the airlines themselves and together with IATA in order to bypass the legacy intermediaries and be able to own that content and own much more the customer experience that then they could in turn, uh, deliver through, uh, third parties, obviously from a, from an airline's perspective, this has grown to become a great benefit from a cost perspective because they're cutting out, uh, uh, sort of a layer into the into the value chain, but also because in a market where there are a few powerful intermediaries, airlines tended to be much more sort of in a In a, uh, less advantageous position and in a, uh, and, and so much higher costs, whereas now with NDC, they're seeing themselves in a much stronger position because they have an alternative, they can connect to travel agents, they can reach those corporate customers outside of the GDSs, and that's put them in a more powerful position to say, actually, no, if you want to work with us, It's on our terms, and these are our roles.

So, for sure, uh, airlines have benefited from it, but they can't do this alone. And actually, um, you know, NDC does come with significant challenges. Every airline's NDC API is different. Every [00:09:00] API is complex and laborious to interpret. Unless you're from the airline industry, it is very difficult for you to understand and connect to these APIs.

Um, and so There needs to be other players there who can work together with the airlines to make sure that that content is easier and more digestible by these sellers. Um, and therefore there needs to be more players out there in the market to collaborate. Um, from a travel seller perspective, I think ultimately there's been the travel sellers have had to go massive amounts of development work of restructuring of their businesses.

So the, the, the, the, the sort of scenarios have changed, the environment out there has changed significantly for them as well, but I think ultimately it will benefit the sellers. Uh, as well, because a better customer experience means that their customers will be more happy, be [00:10:00] happier with them, and therefore, um, you know, it opens up opportunities to really engage with those, those travelers, be it corporate travelers or leisure travelers in a much more meaningful way.

Um, and, and to some extent, I think, uh, you know, the GDS as well evolve and, and. Maintain a position in this industry, even in an NDC world, but we have yet to see whether this there if they're really able to grasp this opportunity as well, or if they'll stay behind. I 

Jeff: mean, one thing you don't mind. I'd like to add.

I mean, Alice alluded to this, but the biggest benefactors of NDC will be the travelers. I mean, especially in the corporate travel world. I mentioned it earlier. There's that friction between. Companies want a managed travel solution. Travelers don't because they get better experiences on the supplier direct sites.

N. D. C. Is is our last best hope to to bridge that gap, um, to eliminate those content gaps and functionality gaps that exist in the [00:11:00] between the supplier sites and the online booking tools. It is really easy to change your ticket now on the United app or the Delta app. It is not really easy to change a ticket in a GDS powered booking tool.

Um, NDC will fix that and it's, will be a great thing for 

Gilad: travelers. So Jeff, you touched on, um, something I wanted to ask you about, which is, you know, one of our favorite pastimes as an industry is talking shit about the, You know, the GDS systems and the quality of the technology and how old they are. And I'm wondering, you know, lots of entrepreneurs have tried to obsolete the GDSs and so far, none have been successful.

You know, where will they be in a few years from now? I've been 

Jeff: saying for probably about 10 years, at least that a few years from now. Every GDS will have to be radically different or they'll be gone and I've been wrong Um, there's they're still here and they're like shockingly the same as this they were when I [00:12:00] first started saying this But I'm gonna double down.

I'm gonna say it again. I think you know, even though the industry has been Slower to move than some of us would, would, would like. I mean, I, I think the, um, the technology and the commercial models of the GDSs are not fit for purpose in, in kind of the new world of the way airlines sell their products.

Now that that doesn't mean, I mean, just to be clear. That doesn't mean that the, the, the g the GDSs can't evolve and, and, and remain relevant and remain significant players. And, and I think, you know, Alice touched on that. Um, so I'm not saying the, the, the GDS companies are, um, have no future, but I am saying that the G DSS products, the, you know, the, you know, edifact, the, these, these big.

Mainframe hosts, and I know some of 'em have been move, moved off the, the mainframes, but they're still the same technology, whether they're on a mainframe frame or not. Um, [00:13:00] the, the, the, the GDSP and R being like the, the, the most, this primary data structure that, um, is used throughout the industry to. Move data around.

I mean, we need to radically break free of all that. And we will. And the GDS is can be part of the solution, or they could be left behind. And, uh, I'm Not sure what, I mean, I, I think the GDS has faced a tough problem, and I, I, I'm sympathetic to them. Their customers, most of them, don't want change. They want, even their approach to NDC is, is fine.

We'll take NDC, but just make it the same as, as what it's always been. Make sure it fits into the PNR in the same way. Make sure it's gonna integrate with my mid office and my back office, which are also very old systems. I'm not gonna have to change anything. So, you know, the GDS is have to either. Um, I mean, what I think they [00:14:00] need to do is to do some pretty bold things that in the short term are gonna piss off a lot of their customers.

But in the long term, their customers are gonna love them for it. If they 

Cara: do it, well, and I think, um, you know, the only other industry that rivals travel for this kind of complexity is health care. Right. And, you know, Alice, your point on interoperability is is a good one because we're starting to see in the health care world.

They've made some major shifts for that, and they have some legacy players that Um, have very entrenched technology and commercial models that, um, really were a big impediment for that. And it actually took the government coming in and mandating, um, electronic health records for that to, to shift gears, right?

So we haven't seen quite the same thing in, in travel from a regulatory perspective. But, um, commercially we're seeing some of those same things. But that's a, a, a good transition point on the commercial side of things. So, um, one of the things I've heard frequently from, The TMC channel and from a lot of big corporates is a fear that [00:15:00] NBC and this ability to kind of hyper personalize.

If you will, the offers that are presented will actually make it easier for travel sellers to charge more. Um, how do you both think of that or address that? Is that a fair criticism? Is that like an overreaction Um, you know, I kind of look at it like, well, you can charge more if you're delivering more value.

But by and large, is it, um, you know, is it gonna drive higher cost, lower cost, um, somewhere in between? 

Alice: In my view, this is a very competitive industry and even in, in, in most sectors, it is very, very price driven. And so it's very hard for travel agents to stay competitive if they can charge more. Unless, as you say, they're really justifying this with a real, real value.

Um, I think. There is an opportunity to reduce the costs and therefore increase the [00:16:00] margins, for sure, because technology is able, allows us, eventually will allow us to, to, to remove certain layers of complexity, remove certain actual manual processes that require staff to deliver the same, same end result.

Today, um, you know, A good sort of 50 to 40 percent of business travel is still done manually. We will see that shift, especially as, um, you know, more and more corporate travelers are of newer generations who want to. Actually own the journey themselves and be much more in control. But as we know, NDC is not just an additional sales channel that's delivering cost savings for airlines, but it's actually an avenue for an airline to offer more flexibility.

And that flexibility will translate in a traveler having that power to manage their own flights without having to depend on an agent. Who will, you know, who [00:17:00] can actually spend the time today hours on the phone or hours changing a flight that, you know, we wouldn't have the capabilities to do today. So ultimately, I don't think so.

Jeff: I mean, I think there are two ways. You can look at that from the the cost of the travel. I mean, we do hear a concern from corporate buyers about NDC that, hey, if NDC is going to show me all of these ancillaries and extras and upgrades that, um, that we don't have in our Concur today. For example, is that going to cost my company more money?

And I mean, it's a fair question. It's a fair concern. Uh, I mean, my philosophy on that is, you know, these things are out there anyway. Um, customers can buy them supplier direct after they make their booking. They can do an add on. Um, so I, I personally don't think the best way to control costs is to pretend like certain [00:18:00] products don't exist.

Um, I mean, I think a good corporate travel platform will allow you to set your policy. Uh, in whatever way you want and identify what's in policy, what's out of policy, uh, so that your travelers are, are staying within the, the, the guidelines of, of, of, of what you want. And you also have the ability with NDC bundles to negotiate things.

Um, if you're a company that has a lot of leverage, you can negotiate free wifi and NDC has the way to deliver that. to your travelers, whereas, uh, Edifact did not. So, so from that standpoint, it could potentially save your money. But then there's the other, the other question is, is agency fees, are they going to go up or down?

And I mean, the commercial models, the, the, the agency related commercial models are, are so really, I mean, absurd. And we've had this, you know, TMCs, they get money from airlines and commissions sometimes. Um, The [00:19:00] Tmm, the airlines pay the GDSs a ton of money. The, the GDSs rebate that money to the, the, the TMCs or some of it.

Um, at the end of the day, the traveler is paying for all of it, or the, the, I should say the, the company is paying for all of it. So I, I think we have an opportunity to make the, the, the flow of money simpler and more transparent. Uh, I mean, I think that. I mean, to, to Alice's point, I, I, I think that TMCs, there's a, there's an opportunity to automate a lot of things and reduce costs, which will hopefully lower the, the, the end costs to the customer.

On the other hand, I, I, I do think that, uh, as we TMCs or booking platforms are able to, uh, to create more value. Hopefully we can be compensated for that. So I think like has always been the case, they're going to be different players in different parts of the market that will be the, um, you know. Those who commoditize it, if all you want [00:20:00] is a very basic experience with no, um, not much service around it or not much, um, you know, control or reporting or all the things the team sees provide, you'll be able to get that really cheap if not close to nothing.

But on the other hand, there'll be providers who provide more of a full service package, uh, that. Uh, hopefully customers will be willing to pay for, otherwise they 

Cara: won't exist. Yeah. And that's a great, a great point because one of the things that we've seen emerge in the leisure space, um, and other, other aspects of travel is, um, the move to things like a subscription model or a membership model, or, um, something that's not purely transaction oriented or commission driven.

Right. Um, do you see that when, when we look at something like NDC or kind of macro level, um, Distribution costs going being able to go much lower. Does that open the door for some more creative models for, you know, kind of corporate travel specifically, but, um, you know, travel generally right when you, you know, you mentioned that the cost to [00:21:00] actually affect a booking goes to pretty close to zero because you don't really have all the same legacy infrastructure.

Um, what does that mean? in this kind of new world where you could, you could experiment with other models. I'm a 

Jeff: huge fan of the subscription fee model now. I mean, in fairness. Our customers and prospective customers are not it's been a we we propose this as an option to everyone Nobody wants 

Cara: it.

Interesting. Why do you think that is? 

Jeff: Well, I mean, I think a lot of it is when you're if you're going out and you're looking for a TMC you're there the traditional pricing which I absolutely can't stand as you charge a An offline transaction fee and an online transaction fee. So there's a two different prices.

The offline fee is higher. Um, and so if you're going out to bid and you've get, you've got like, you know, six different proposals and then they're all the same and then you have one outlier, what tends to happen is they come back and say, Oh, [00:22:00] can you frame your pricing in the same way? So it's, it's easier to compare, but I think the, the important point, and I think, I think, get there because one of the great things about N.

D. C. Um, that it It offers a possibility of his true, you know, multi channel or some people call omni channel, uh, whatever you want to call, but it's the ability that if you're a company theoretically, and if, if you're managing your travel on our platform and you've got certain, you know, united, you know, one K members who like to book on united.

com, their road wars, they always book on united. com, they don't want to go through a corporate booking tool. Why not let them? Uh, similarly, you've got your delta flyers here and, you know, pick pick an airline. N. D. C. Um, affords the promise that that we could one day say Everybody could book wherever they want.

Then let's say you book a ticket. Um, let's say you [00:23:00] book a ticket through our channel, but then you're at the airport and you know, it's a last minute situation. You want to change it on the airline app. Uh, and you do that. And then a few days later, you want to change your return. And you want to do it back through the booking tool.

You should be able to mix and match channels. Uh, but if you're doing that and NDC provides the technical foundation, at least for some airlines to, to, to make that possible, but if you're doing that, then the, the simple transaction model that we've historically used. Doesn't really work. So, so that's why I mean, I like the idea of some sort of subscription fee type pricing where a company pays a, you know, monthly annual price for the services that you're providing, but then we make it each individual user of the platform, whether they're a traveler or a coordinator who books travels for travel for others can use it the way they want, which sometimes might involve using the, the airline or supplier direct for certain things.

Um, but the, the importantly, the, Okay. [00:24:00] platform itself, we would still have visibility into everything that's happening so we can tell you where your travelers are at any moment. We can report on accurately on what you've spent, uh, and you know, whether the exchanges or transactions happen on our platform or, or outside of it.

Alice: Yeah, I, I, I think I'm seeing similar things to Jeff. I mean, just to, just to give you our perspective, we've been going for four years and for the first two years. Our business model was entirely subscription and it felt many times like we were pushing water uphill. Many people didn't like the idea of having to pay for not knowing how, you know, the usage, especially because we were either during the pandemic or just coming out of the pandemic.

And, you know, we have. A number of airlines that is, is a good number of airlines, but we don't have massive coverage because we're a quality play rather than a quantity play. And so at some point we, we have a couple of people on subscription, but took the strategic decision to then move on [00:25:00] to transaction.

And we've noticed that, you know, the entire supply chain is. based on transaction fees. So it's also easier for us to manage, you know, uh, covering our costs. However, what we've noticed recently is that there are some companies who have successfully been able to implement subscription, booking tools, um, and kind of that, that in that kind of area of the market.

And we are considering mixing and matching because, um, It does deliver some degree of, uh, of benefit to, to the, obviously to us, but also to, to, to the users, you know, knowing that you've got. You know, X amount and you can manage your costs. Um, but what's interesting, we've seen in other, even airlines trialing these certain things.

Uh, I think Cara, we, you and I were having a discussion offline the other day and I was mentioning a number of airlines who have [00:26:00] implemented subscription travel as a trial. Uh, two low cost carriers that I'm aware of, but also, um, a sort of more. Traditional carrier. Um, and they have partnered with a startup in Spain called Caravello.

Enables them to offer subscription by, for, to their consumers. Consumers pay a certain amount in a month, every month. And then they're able to travel X amount of, Of, uh, of times in a, in a, in a month or in a given year. And what was interesting is that they actually had to connect to these airlines via the NDC channel.

So for us that, you know, we, we're in the API space. It was, it was great to see that actually AP, NDC isn't just for selling through travel agents, but actually for enabling airlines to offer something as a extra value add or an additional service. To their own customers by into, by integrating with other partners in [00:27:00] the industry.

Gilad: Well, that could not have been a more perfect segue. Um, we are very excited to host one of those airlines, Alaska airlines. Um, next week we'll be asking them specifically about their subscription product, but you touched on something I think is really important in terms of kind of API driven distribution.

And, you know, I've always been a huge believer in the power of dynamic packaging, both because, you know, the one size fits all, you know, fits no one at all. Um, and because the power dynamic packaging. When done properly can create a true win, win, win outcome, you know, a better trip for the traveler, greater value being created and a greater share of wallet for the, for the travel seller.

So what are you seeing in terms of new business models that are coming up due to the API driven distribution? And are we getting any closer to the dynamic, you know, the dynamic package becoming a reality? 

Alice: So this is an area that I'm particularly interested in, um, because NDC is kind of a setting, a stepping stone.

It's a, [00:28:00] um, it's a concept of, for airlines to move towards modern retailing, which is really talked about. And the, the goal, the end goal for modern retailing is actually transitioning to offers and orders. And what that means is. It's for airlines to have the ability to no longer be constrained by legacy technology and basically create offers with more options, more flexibility, and much more tailored towards the consumer.

Now, it's much harder, uh, it's much easier said than done, but actually, NDCs opened up the door for many of these opportunities. You know, I think what airlines are envisaging is actually, how can I incorporate more aspects of a traveler's journey into the offer of a flight so that maybe I can convert that certain customer based on what we know that they'll be likely to, to purchase and bring in certain, you know, whether it's a [00:29:00] hotel room, whether it's a, you know, a car rental, whatever Or maybe something a bit more left field, so here's a voucher to go and spend at the airport because we know you're, you know, you're a gold member and you're more likely to spend a certain amount in the airport.

Or something more like, uh, here's something to use when you get to your destination, like, uh, Tony and Guy voucher for a haircut or a massage. So there's, there's lots of things that airlines envisage. Um, I think moving on from the traditional PSS is a big work that the airline industry needs to undertake.

And obviously an airline individually can't do on their own, but from NDC, we're seeing a huge amounts of. Of work of investment of attention, especially from IATA to trying to move towards that world and bring in these capabilities. 

Gilad: I remember back, um, at U Trip, you know, we did this, um, this is many, many years [00:30:00] ago with a number of airlines, including JetBlue, where we found that the opportunity to include a hotel or even an activity on the ground, not only increased share of wallet and revenue and whatever, but actually increased loyalty.

Between the traveler and the seller because they felt seen they felt the things that they cared about or all of a sudden the things that the airline in that case cared about. So I think there's a lot of opportunity there 

Alice: 100%. It's about opening up new revenue streams. But ultimately engaging with the, with the customer in a much more meaningful way.

And how do you do that? It's by bringing in additional services, additional products. And you can only do that by being much more plug and play, which is why we're so passionate about. API 

Jeff: is obviously, I mean, there is a lot of plumbing to fix and the problem with, um, you know, not in the leisure space. We don't do a ton of packaging like that, but the every connection that I think we've ever seen [00:31:00] in this industry is is just not that reliable.

I mean, things work 90 percent of the time. I mean, but 90 percent of the time really isn't that great. Like if you talk about a GDS booking 10 percent of the time, I mean, we're told from from our GDS providers. Oh, if you're if you're booking failures are under 10 percent that's considered good. And how is that good?

Like 100 percent is good. You know, 99. 98 percent might be okay, but but 90 percent is not good. And when you've got And, you know, hotel distribution is like, I would say the only thing worse than air distribution technology is hotel distribution technology. But if you're trying to package, you know, five things together, five components, and they're all coming from these, um, these legacy API's where, you know, If you know, 90 percent if you do the math, if there are five things that have to work and each of them has a 90 percent chance, suddenly you have a pretty low chance of the whole thing working.

So I, I think, um, you know, [00:32:00] this is yet another reason why we've got to flip fix the plumbing and I mean, I love the offers orders concept. Um, but those PSS systems are, you know, it's really hard to like. Uh, replace a PSS system, uh, and the existing ones don't move all that quickly. So, uh, I'm not super optimistic that we're going to, uh, uh, in, in, in my lifetime, make as much progress as I would like on this, but, um, but I think we got to keep pushing forward for sure.

Cara: Um, I want to go back to the packaging concept, because I would argue that business travel is inherently a dynamic package. Right. I mean, we think of it as like a leisure thing, but you're taking a flight and a hotel and then usually some form of ground transportation and like the Holy Grail for corporate travel.

It's like trying to get all those things in one single. Reservation, right? And booking them together and kind of having those components. And, you know, I would I would almost say that is dynamic packaging. We just have a [00:33:00] very clunky way of doing it, orchestrating it today. But do you think this this move toward N.

D. C. Or these other more flexible ways of retailing actually can work in the corporate travel context as well, like for leakage purposes and things like that? I 

Jeff: mean, there's a, um, there's a big debate, um, within, like usual, I find myself on like the minority side of it. Um, with, I mean, the, the, the reason I'm, I'm not so high on dynamic packaging in, in corporate travel is because.

I think business travelers want a lot of choices and, and, and they don't want to see a bundle like, you know, here's three options where you have your, your, you know, your outbound flight, your return flight, your car, your hotel, it's all in a bundle and, you know, business travelers are going to say, well, I want that outbound flight, the hotel is cool, but I want a different car.

Like they, they like to choose things very, um, You know, kind of step [00:34:00] by step, component by component. Now there is, um, you know, and I think we're going to talk about AI later. I mean, everybody wants to get to the point where, you know, some AI engine just creates a trip for you and you don't have to think you just, you know, I want, I'm going to a conference in Chicago next week.

Here's my trip. Um, and I, I'm not as bullish on that as, as most people are, because I think, um, at least as a traveler, I want to see choices, even though. I'm going to, and it doesn't mean I want to see 5, 000 choices. Um, but I want to see like a, a, a reasonably curated list of viable options, um, where I can see, oh, you know, this is the one flight, um, uh, going on my route that, that, that's a wide body that, that, that, you know, might have a, a bigger seat, or this is the one that has, you know, The, the in seat, uh, video monitor, the, the fast wifi.

Um, yeah, I, I think trial and the same with hotel. I mean, you know, different, uh, [00:35:00] different trips are you, sometimes it's more important to be really close to where you're going. Sometimes it's less important. Uh, so I, I, I do think that the scene choices is important. And I think, um, more so in business travel and in leisure travel.

And that's why I'm not as. Hi, I'm the dynamic packaging concept coming into corporate. 

Gilad: Yeah, no, I totally agree with what you said. And specifically when you combine the last two comments you made together with the fact that the system, the industry is not connected enough. The reason that AI cannot make the right recommendation for the hotel or flight you want to take is largely because it doesn't actually know your preferences because it's limited in the amount of information it has access to.

And I would say, imagine if you could access your emails, your calendar, your past transactions, et cetera. I better be pretty good at picking the flight you want to sit in the seat you like and the hotel you like to sit in. Is it closer to the airport or the dinner meeting or whatever? But to your point before the plumbing, it's completely broken and disconnected.

And I spent a lot of time at events, you know, [00:36:00] speaking about amazing use case ideas for AI with people in our industry and making exactly the point you made, which is until the plumbing is connected, all these beautiful ideas are basically just ideas. Now, of course, AI is probably the topic that's getting more attention than anything else other than maybe NDC.

In our industry. So Alice, let me ask you, how do you see artificial intelligence playing into distribution and the changes we're seeing 

Alice: again? Difficult question. You reserve them all for me. Thank you. Uh, I think there's no doubt that, um, AI is going It's, you know, quietly or not driving a significant, uh, transformation of this industry.

And I think what AI and sort of machine learning does, it allows airlines to really, you know, any, any retailer really to, to learn more about their customer and really perfection the way they [00:37:00] tailor. That offering to the, for that particular consumer for that particular scenario. And so I think that it's going to play a huge role, uh, in the next few years as airlines, you know, continue on their journey, be it a very tough and long one of becoming more modern retailers.

Um, and I think airlines need to be ready. And the other thing is that what I tend to tell airlines often is that they really need to be ready. Put their skates on because by the time we reach that, that sort of a goal of offers and orders that may no longer be applicable and that technology may already be obsolete.

So what, what does AI have in store for us in the next few years and how it will change the way we engage with brands and book flights or book travel? We don't know, but being ready for it with more modern, uh, set of tools is definitely [00:38:00] paramount given what we're seeing, what we've been seeing in the last few years.

Cara: You know, you, you talked about the different types of sellers and the different ways of selling and, you know, my head immediately goes to like tick tock and influencers and this creator world. And, you know, we're seeing a lot of the younger demographic that isn't going to Expedia and booking dot com and they may not even be going directly to the suppliers are kind of starting in these, these other channels.

Um, how do you see this, this modern retailing era? Yeah. Um, kind of opening up new opportunities for new types of sellers, you know, and that could be, you know, leisure or could be in corporate. But, you know, what are you seeing in that front? Or where do you think that could that could go? Yeah, I think 

Alice: there's no there's No question that these platforms have really captured, uh, the younger demographics attention and that's where they go to for, for, for many of their choices in life.

It goes back to the need for this industry to become plug and play [00:39:00] and to really. Leverage these opportunities to reach consumers in the, in new ways that they're used to. So by having a, you know, more, an easier avenue to connect and access this flight content and access this sort of travel functionalities, that's the only way that we can actually truly sell through these more modern channels.

I haven't seen anyone really do it yet, um, but I'm always on sort of on the hunt. I do try and look at TikTok and see what's, uh, if they're actually selling flights. I think, uh, Uber has tried a little bit. I don't know how far they've got into it. And I think Instagram was sort of piloting it. I don't think they're too far away to be honest.

There's 

Jeff: some pretty big moats though, to selling flights and, and I do think, you know, the move toward more APIs will for sure fix that. But right now the, um, you [00:40:00] know, in, in the old school world, I mean, just to get access to A-A-A-G-D-S requires you to jump through a a a a million hoops and then a developer.

I mean, I, I can't imagine what, like a, a TikTok developer said, oh, you know, here's the, the, um. Sabre web services guide, like, you know, figure out how to sell flights. They'd be like, what the F I'm, uh, it's not a very, uh, easy path to, to, to developing, but, and, and don't get me wrong. It's not like the NDC APIs are things of beauty either, but I think as we evolve, I mean, it, it should get to the point.

I mean, I, ideally the airlines have built these great modern e commerce platforms and they should be able to just extend those with APIs that are, you know, let people into that, whether you're like a. ARC appointed travel seller or not like shouldn't really matter. [00:41:00] Um, airlines should be able to do business with whoever they want to do business with, which would be, which would include lots of non traditional ways.

Um, so I, I, I think we'll get there, but, but right now. If a company like Uber decides that they want to get into travel or Instagram or TikTok, they really have to, they have to get into travel the old way. They have to like, find, like, you know, build a team of the, you know, the, the travel people are going to develop to these legacy APIs and, and get the legacy certification that you need to even get your, your foot in the door.

But I think that will change. Uh, you know, I don't think it will change tomorrow, but I think it will. I think that's where we're headed. 

Gilad: I've got a call coming up with the guy who runs the travel vertical for TikTok. And I'm quite excited to hear what they're thinking about and working on. But before we run out of time, Jeff, I want to bring up one more question in the realm of AI.

And you know, one area that I've been paying close attention to is the rise of what I think of as the new AI driven travel agency [00:42:00] or the AI native agency, whatever you want to call that. Is that something you're paying attention to as well? And how do you guys think about using AI within your business?

Jeff: Yeah. I mean, I think. Right now, the, the, the best uses of AI are to, to drive out costs like to, I mean, we've got so many manual processes, um, in our industry and, and so many times you, we've got so many, we, we throw people at problems, uh, or we throw people at their kind of, you know, technical shortcomings.

And so, I mean, AI. I mean, without a doubt, if you look at all the different processes involved in, in, in running a TMC or an OTA there, there are a lot of applications for, for AI, the, the bigger question, I think the more interesting question is. From a, from the cons, the user experience standpoint, and while I, I don't, I have no doubt that [00:43:00] AI is going to change things in ways that I'm not at all smart enough to even conceive of, of the, like things are going to look so radically different that, that they won't even be recognizable, but in terms of like the, the typical uses of AI that are often thrown about, like I said, to get that perfect trip to, you know, without you having to, um, even select anything.

I'm just less convinced of that. I think for the average traveler, the I mean, I needs lots and lots of data and the average traveler. Um, I mean, you know, I might travel. 15 trips a year, say, and then, you know, that seems like a lot, but that's not a ton of data, like from 15 trips a year. Could an AI engine really glean exactly what I want to book for my 16th trip?

I don't think so. I don't think there's enough data there. So I think that for now, like where we are today, there's tons of use [00:44:00] cases for AI To, um, you know, to automate manual processes behind the scenes. I think, but, but on the front end and even the, the chat bots, and of course we pay lots of attention to that where we we've automated some of our chats, but it's not a human is still better.

Uh, and I think most people, if you ask them, would you rather talk to a bot or a human, they, they rather talk to. Human. Now, I have no doubt in my mind that we will reach a point where it's like, Oh my God, I got stuck talking to human. Like the bot is so much better and quicker. But, but we're, we're, we're still not there.

So we, we want to, um, we're going to go slow with that while we'll hopefully go more quickly with the, you know, the, the back end stuff. Uh, that that can be 

Gilad: automated. Yeah, absolutely. I think there's something inherently human about travel, and we certainly do not want to take the humans out of the travel experience.

Yeah, I agree. Well thank you guys. This was an amazing conversation, and we really [00:45:00] could have gone on for another hour, but before we let you go, we do have some lightning round questions. So we're going to limit each of you to 30 seconds for your answer, which is hard, um, and Kara's going to kick 

Cara: us off.

Okay. Um, Jeff, I will start with you. And, uh. Please tell us, what is your go to karaoke song? Piano Man. Okay! Some Billy Joel, very nice. Alice, how about you? Well, with 

Jeff: the caveat that I don't Often do karaoke. 

Cara: That's okay. That is quite alright. We'll, uh, next, next business travel conference we're at, we'll make sure to rectify that.

Alice, how about 

Alice: you? I'm gonna lose all your respect here. It's uh, Hit Me Baby One More Time, Britney Spears. 

Cara: That's amazing. Yeah. 

Gilad: That's a classic. You can't go wrong with that. Alright, Alice, you're gonna go first on this next one. If you could be on a reality TV show, which would it be? 

Alice: Okay. This shows that I really hardly ever watch TV.

Um, it [00:46:00] would probably have, uh, be one of those, um, you know, those that go into an Island. How do you like 

Cara: survivor? Yes. Or I'm a celebrity. Get me out of here. 

Alice: Exactly. Something like that. That just shows you. 

Gilad: What about you, Jeff? 

Jeff: I mean, this is, this, this is a little bit of a cop out, but my wife watches all of those shows and.

We have this conversation many times that I would not survive a day on any of them. Like, no sir, I'd be voted off the island immediately. I can't, you know, if I don't have my like door dash app to be able to order food, I don't know how I'd survive. So, 

Gilad: um, you see, how did you guys not say top chef? I want to go be a judge and eat all the food on the show.

Jeff: That's a good one. 

Cara: Good. Okay. Final, final one. Um, Jeff, we'll start with you. What is a hidden talent you have that most people don't know about? 

Jeff: Well, I, I should probably go something outside of the industry, but I'm going to, but [00:47:00] when I was, cause I started this company when I was really young. And so we had kind of a, um, became almost like a.

Drinking game kind of thing. Try to come up with a city code that Jeff doesn't know. Uh, I, I, and I'm not as good as I used to be, but in my, you know, when I was actually like, you know, booking flights for people, I knew every city code in the, in the world and my friends found that extremely amusing. 

Cara: And you see them on license plates everywhere, don't you?

Alice hidden talent. 

Alice: Um, Well, this is kind of spooky, but if you tell me your birthday, I'll 

Cara: remember it. Okay. September 26. Very good. 

Alice: It's done. Oh my God. 

Cara: Very nice. Well, 

Gilad: thank you guys. This was just a wonderful conversation about a really important topic, not just NDC, but of course, distribution in general.

And we really appreciate your sharing all your wisdom with 

Alice: us. Thank you [00:48:00] very much. Really nice to share the evening with you guys. Thanks 

Jeff: a lot. Thanks for having 

Alice: us. 

Cara: Well, that was fun and certainly a bit wonky, but, um, it's definitely a wonky topic and very critical to what's going on in our, our industry right now.

So, um, something that I enjoyed a lot, but Gilad, what did you take 

Gilad: away? Oh, my gosh. There's a lot I took away from that conversation. But a few things that I loved, um, is, you know, Jeff talked about the fact that travelers have multiple options on where they book things. And I love that. I've spent so much time talking to agency owners, both in the business and the leisure side.

And reminding them your customer is not an idiot. Your customer knows there are multiple ways to book travel. And the reason they book with you is because you provide some differentiated value, make it easier, better, faster, whatever. Um, so I love that he said that because I've spent so much time trying to remind people that.

There are a lot of places to do this. And your agency just has to create real [00:49:00] value for travelers in order to stay engaged. Um, the other thing I thought was really interesting. He talked a lot about the need for more transparency and specifically talk about money flows. And it made me think about traveler.

And self book and some of the startups out there that are really working right now on giving a lot more transparency and where money is going and maybe even the ability to take commissions and other things and to split them away from the core payment up front to save a lot of time and a lot of effort of kind of the reconciliation that happens behind the scenes.

So I thought that was a really cool Um, kind of insight that he shared. Um, and then the last one that comes to mind for me is the way he talked about the flexibility needed by business travelers and it's one, it's like all good insight, it seems obvious in hindsight, but I thought that was a really important point when he used the analogy that business travelers want that flight from package one of the hotel from package three and the thing from package five, and they want to put it together themselves because at the end of the day, most business travelers.

Our frequent travelers, the [00:50:00] ones who are doing it regularly, so they really do know exactly what they like and what they want. Um, so I thought those were just three interesting takeaways. 

Cara: What about you? Yeah, I, um, you know, it's, it was refreshing to hear Jeff talk about, um, the nature of corporate travel needing to change and the recognition that, you know, people don't have to book through a corporate travel platform.

They can book wherever they want and still focus on getting the right level of service. And that's. Function that things like N. D. C. Enable. And I think that's really where, um, you know, we're seeing this convergence of leisure travel behavior and business travel, and it's been going on for a while. And I think a lot of folks in the corporate travel sector wanted to stick their head in the sand and really try to force people back into the forces horses back into the barn.

But, you know, technologically, we haven't been in a place to support that. And now things are changing. And we have, you know, N. D. C. Coming up and that kind of creeping forward. And then we'll Um, you know, with kite and what Alice and her team are building [00:51:00] and full disclosure, I'm an angel investor in kite.

But, um, one of the things that really impressed me was just the fresh perspective of like, if we had to start from ground zero, what would distribution look like? And it wouldn't look anything like a GDS, like what we have today. And the GDS served a purpose for a long time. And that's kind of what the industry needed at that point in time.

But it's kind of. Um, outlived its usefulness, if you will. And I think the notion of modern retailing, which is truly a P I based in this notion of, you know, orders and offers and having a shopping cart type of experience that goes back to the persistent profile of that traveler, right? Is much more realistic and modern than the concept of a P N R, right?

Which is a single artifact for a single reservation for a single moment in time, and it loses all context of the person that Um, is traveling on that PNR after that trip ends, right? And so, um, you know, it's certainly a lot of inside baseball that we dug into, but, um, it was refreshing to hear that, you know, folks like Jeff and Alice are really thinking forward [00:52:00] thinking and, and really kind of pulling the industry that direction.

And we're starting to see the industry, um, be less resistant to that, that change. So that was, that was 

Gilad: exciting. Yeah, absolutely. I mean, there's certainly a number of travel companies out there that would use their product. It really feels like they built a product focused on one customer going on one trip with no consideration of the fact that people go on multiple trips and have multiple itineraries going.

So I thought that was a really interesting insight. The other thing I love about Kite is I always think about them a little bit like I think about Plaid. And the idea of doing like the inner piping, which as we, as Jeff pointed out, you know, like there's such disconnection within our industry, between the data flows, which makes, you know, the connected trips and these beautiful visions from AI that we hear from everyone.

And I'm into all of these visions, but you can't make it happen without the piping. Um, so it was really cool to see a company like Kite really focused on that specifically. Yeah. 

Cara: I found interesting to hear. You know, for my past life, I spent some time in the corporate travel space and the notion [00:53:00] of a subscription model.

I hear that so often. I think suppliers, whether they're, you know, airlines and hotels or the agency providers or booking tools, they are ready to move that direction. And the funny thing is that I would hear from a lot of buyers that they really liked the concept of a subscription model because it made their costs much more predictable.

And so when they're looking at other parts of their company and how other divisions outside of travel pay for vendors, pay vendors or pay for services, a lot of it is on a subscription basis. And so they're like, why can't my corporate travel vendors do the same thing? Well, they can, but then when it comes down to it, when you have, you know, 80 percent of them on the old transaction model and you have two that are trying this new model and you're going through an RFP exercise, it makes it very difficult to try to compare pricing.

And so they kind of. You know, go back to to where they were before. Um, I would love to see somebody really jump in and just go for it and say, You know what? This is what we're gonna do and kind of change the model going forward because [00:54:00] technically we're there. We can do it. And I think it unlocks a lot of additional value and probably cost savings for for corporates themselves.

But they just have to, like, Jump in with both feet. 

Gilad: Yeah, absolutely. I'm excited to see how the disruption here matches up with the disruption we're going to be talking about in the next episode when it comes to subscriptions and loyalty programs and kind of the other side of this. Um, so this is a really exciting topic and I'm glad we're digging into it.

Cara: Yeah. And, uh, likewise, looking forward to our next episode on loyalty and subscription and all that fun stuff. So get your popcorn ready.[00:55:00] [00:56:00]