✈️ The new travel experience
Travel tech trends revealed by Airbnb's summer release
Good afternoon everyone 👋
Welcome to the 26th edition of our weekly insights. Today, we’re going on a trip to explore the Travel Tech industry, and reflect upon new trends in searching for, booking and planning a trip.
As always, feel free to like, comment or share. And if you like this edition and still aren’t a member of Upscalers (😱), join us!
Ready? ⬇️
✈️ The new travel experience
On Tuesday May 3rd, Airbnb announced a big earnings quarter, confirming that the company was one of the rare success stories from the pandemic in the travel industry. As part of the announcement, the company posted a shareholder letter hinting at ‘the biggest change to Airbnb in a decade’.
🥁 drum roll
On May 11th, the big change was introduced with this video ⬇️
What Brian Chesky essentially tells you in the video is that Airbnb is reshaping its product around three major features:
Airbnb categories — a new way to search for a destination
Split stays — a new way to organize longer trips
AirCover — a comprehensive travel protection
Doesn’t sound that groundbreaking to you? Well… under the looks of a perfectly orchestrated marketing show, this announcement depicts a pretty good picture of where the online travel industry is heading.
Let me elaborate on this.
1. Airbnb categories — the end of the search bar tyranny
With Categories, Airbnb’s plan is to “make it easy for guests to discover millions of unique homes they never knew existed”. In the app, homes are no longer organized based on location only but based on their style, distinctive features, proximity to a travel activity… What Airbnb intends to move away from traditional searching to add a new element of discovery.
Searching for travel online has pretty much worked the same way for the past 25 years. Users were given a one-size-fits-all search box, where they could enter a location and dates for a trip (even if they had no clue where they wanted to go).
With millions of people now being flexible about where they work or live, the ‘tyranny of the search bar’ has never seemed so close to an end. Flexibility has triggered major product developments from online travel giants to improve the browsing and booking experience, with Airbnb leading the way.
In May 2021, the American giant released the “I’m flexible'“ feature as a new way for guests to search for a trip when flexible about location and dates. And it proved to be a good move… the feature has been used more than 2 billion times since its launch. Seeing Airbnb now doubling down on its strategy by introducing Airbnb Categories doesn’t come as a big surprise anymore does it?
As Brian Chesky phrases it himself, “40% of people come to Airbnb and they either have no destination or date range in mind”. In the post-Covid era, people do not come to booking giants to book a trip anymore, but to be inspired.
That sounds like a change of paradigm. In the future of online booking, the depth of supply is not what will matter most. Instead, inspiring guests by offering a dynamic and personalized experience will be the key competitive advantage. Companies able to leverage machine learning, data analytics will win the race, while travel communities, videos and immersive content will fuel guests inspiration and improve conversion.
… looks like there is still much to do, and a new champion of online travel inspiration to build.
If you’re a member of Upscalers, we might have found this champion you could invest in. More on this on Wednesday ⌛
2. Split stays - removing friction in travel
Split stays is Airbnb’s way to allow guest to book multiple accommodations as part of the same trip, with a seamless experience.
People stay on average 2.4x longer in an Airbnb than in a hotel. In Q1 2021, 24% of all nights booked were for trips of 28+ days. In Q1 2022, the company reported that nearly half of nights booked on Airbnb were for trips of a week or more.
People are going for longer trips, while travelling from one location to another is increasingly complex. With Covid, the paperwork and processes around international travel have grown in complexity and confusion. Non-air transportation alternatives are growing in number with sustainability concerns. Price-unbundling makes travel products more difficult to read. Purchase funnels for ancillary services are still fragmented and not well integrated into the customer journey…
Streamlining and managing the entire travel experience for customers will become a key success factor for online travel companies in the future. With their business model focused on aggregating and merchandising travel content, retailers seem to have an edge in putting order into this mess.
With Split Stays, Airbnb is actually taking the first step as they try to remove the friction of planning a trip to multiple locations by offering an integrated accomodation booking journey through a single interface.
First step is accommodation booking, then experiences… all the way to ancillaries, financial services, commuting options or paperwork management? It seems to me that Airbnb is slowly making its way to becoming a new travel Super App…
3. Aircover - blurring the lines between travel and fintech
Aircover is presented by Airbnb as the most comprehensive insurance protection in travel. It includes (for free): booking protection guarantee, check-in guarantee, get-what-you-booked guarantee, 24h safety line.
It doesn’t come as a surprise that Airbnb is adding new insurance products to its core offering. In fact, insurtech/fintech and traveltech are already colliding in pretty exciting ways.
First, fintech apps are going into travel as a way to increase their customer base stickiness and tap into higher income audiences. Revolut launched its own travel features such as travel insurance, Smart Lounge access and more recently hotel booking with Stays. The BNPL giant Klarna recently expanded into travel by acquiring Inspirock an online trip planner to “bring smooth travel planning to its customers”…
Second, travel companies are trying out fintech products. Hopper, which raised another $175 million round in August 2021, now claims that 70% of its customers buy add-on fintech products on top of their ticket booking. The UK-based travel payment service Fly now Pay Later recently raised a $75 million round to expand to the US. Airbnb is offering its own insurance product… expect them to leverage data to build financial products into the customer journey next.
Travel and Fintech are blurring the lines, and this is perhaps the most exciting trend in the travel industry right now… I’m excited to see to what extent a new travel Super App will emerge to integrate the full travel experience, thus correcting what Hopper’s founder say is “an anomaly of the West” not to have one already.
I hope you had a great time reading.
I would love to get your thoughts on the trend too, so feel free to comment.
Otherwise, I’ll see you next week.
Tim 👋