Welcome to Travel Again presents the weekly travel Roundup, covering the headwinds and tailwinds impacting the business of travel. Please welcome our hosts, Mike McCormick and Ed Silver. Hello Mike, good to see you. Hey, how you doing today? I am doing awesome, Mike. Welcome again to season 3, episode two. Man, we are off to a great start to the season and I just continue to be so jazzed about the guests we have planned. Our guest today is just another amazing luminary of the travel industry, so I am thrilled to get us going. Sounds good to me.
All right, with that let’s just dive right into the news. Mike, I have chosen six articles for article one because there are so many news stories covering this. Mike, what is the problem with air travel? What is the deal with all these airplane crashes? We have got one Delta flight upside down, we had a Southwest near collision, we had a flight to India rerouted due to a terror scare, we had a Delta flight from Atlanta filled with smoke, we had a flight in Scottsdale with a medley crew member on board, one dead. All of this just since our last recording. I personally, just to give you my take real quick, I do not see a pattern here between all of these incidents. But if you would give our listeners some perspective, what is the deal with all the airline mess, Mike?
Well, I think your comment is dead on. We don’t want to jump to any conclusions. You have to have an abundance of caution here to try to force a pattern here where there isn’t one. I don’t think there particularly is one here. I think there is a certain amount of probability of with all the flights in all the world, you are going to have incidents. That is just realities. No system is 100% perfect or infallible. However, there are a few things to take away. One is that any incident makes the headline news. Of course, travel safety is always a high interest to the public, and so therefore the news and media covers it. The other issue, though, I think is more important, and we covered this when we first talked about the midair collision here in DC and the tragedy there, that it is important also that we really do understand the root causes and take action where action is needed. I think in this case, the investment that’s needed in modernizing our air traffic control is just been on the docket forever through multiple administrations. I don’t think there is any disagreement that it needs to be done. The issue, of course, is funding. So that one has its own kind of set of issues around it. But again, I think back to the point of you can’t draw any conclusions that there is some sort of pattern here at all. It’s just the fact that this always makes the news.
Okay, thanks for that perspective, Mike. Moving right along from the air travel system to hotels, Mike, I picked up two articles, maybe a third which we could talk about. Hyatt to acquire Playa Hotels and Resorts for $2.6 billion. They plan to acquire Playa Hotels and Resorts for 2.6 billion, marking a significant expansion of its all-inclusive resort portfolio in the Caribbean. I also picked up that Hyatt is to launch a select transient brand. A lot of action for Hyatt and a lot of action in the hotel space. Help our listeners get some context here, Mike.
Just stepping back from the hotel industry at large, I think largely I would say the hotel industry and the major brands continue to be very bullish about the future needs and demand, and maybe really unmet demand out there in the marketplace. Marriott, separately from this article, their CEO really talked through their plans for expansion. The number of properties that they have coming online is hundreds and hundreds of properties in all sectors. They are certainly very bullish about the future and the need for expansion. Hyatt has been doing it more through building properties but has also been very acquisitive when it comes to all-inclusive and resort properties as they try to fill out their portfolio. The time it takes to build a property involves a lag time that is hard to predict demand that far in advance when you’re talking two, three, or four years out. Properties like that, part of it is more of a long game; acquisition is more immediate. But again, the major brands’ desire to continue to expand and grow their footprint seems to just roll along despite what is happening out there in the marketplace. That is positive news for travel overall.
As a separate note, you and I talk about this. Woven into all these articles is always another brand launching yet another sub-brand, another new name, another new brand powered by Marriott, Hyatt, etc., such as Hyatt Select. I just, from a consumer marketing perspective, still don’t understand having that many brands to support. For a consumer, if you took all of the brands on one side and took all the major hotel groups’ names on the other side and tried to draw the lines to connect the dots—who is SpringHill with, who is Select with—we work in the industry and we would never get 100% on that test. We would probably luckily pass it. For the consumer, I just don’t understand. Consumers can relate to a brand. I understand that within those brands they have properties at different types supporting different needs in the market—roadside, midscale, upper scale, luxury—I get that. I understand the need for some sub-branding, but man, when you’re carrying 50 sub-brands, I don’t understand how that gets supported from a marketing perspective, or at least very well. It certainly adds to consumer confusion, but obviously there’s a strategy there, Mike.
Buried in the Marriott news is the return of the Starwood brand. To your point, adding another brand name that they had acquired but then killed and here it comes back to life. There must be a strategy there. I’m not sure I totally understand it. Maybe people understood Starwood and Marriott felt they should bring it back for some reason. Well, there’s a little bit of a backstory there because when Marriott acquired Starwood from Barry Sternlicht, part of that deal was he kept the name Starwood. He retired it and didn’t do anything with it. They waited years and years and, without knowing the agreement and understanding exactly how that was structured, maybe there was a time period on it before he could bring that back to the table. Now Barry has since developed some properties under the Baccarat brand and done some work in the luxury sector. Maybe now they are ready and able to bring it back. He still owns properties in the Marriott system and is a major property owner within Marriott, so he has some say there in terms of the future. It sounds like they are ready to bring Starwood back to the market somehow collaboratively. It is a little unique behind the scenes, but it will be interesting to see how that fits into the equation. Certainly, from what we were just talking about, it’s yet more brand noise and confusion. But hey, what do I know? It seems to work because everybody doubled down on it. Best Western and Choice do it too; they all develop all these micro sub-brands. It’s a bit of a dilemma to me, but I like it from the perspective of action in the space. I like seeing big acquisitions; it means that things are growing and that is a good thing. I’ll take all this as positive good news.
On that front, Mike, I’m going to change gears and switch to the corporate travel world. UK Regulators have reversed their stance on the CWT deal. The Competition and Markets Authority of the UK announced on Tuesday an about-face in its assessment of the planned acquisition of CWT by American Express Global Business Travel. The CMA has provisionally concluded that CWT is a significantly weaker competitor than in the past and has likely continued to weaken in the future, and there are other suppliers who will offer customers an alternative to the merged business. Mike, this is exactly what we said last time we talked about the CWT-Amex GBT deal. Why the reversal here and what does this mean generally for m&a?
Well, first off, I think the original objection from the UK authorities was misplaced. I just think what you really have to understand is the corporate travel market and how fragmented it really is. Although Amex GBT is a major player and, in the relative scheme of things, is one of the leading companies, they clearly do not in any way have a dominant majority share of the marketplace. You have got entrants like Navan, which raised almost a billion and a half dollars on a seven-and-a-half or eight-billion-dollar valuation and are growing share. You have TravelPerk, you have the traditional players like BCD, and you have a whole longtail of next-tier, third-tier, and fourth-tier players in that market. You’ve got upstarts like Solutions Travel that have built a new approach off of Spotnana. When I looked at the marketplace, it is so fragmented still. I do not understand the objection. I think it was misplaced. I am kind of glad they backed off. This isn’t a political statement at all about market power; there’s a place at which that makes sense, but this isn’t one of them. It just touches again on not really understanding the dynamics of how the travel industry works, in this case, corporate travel.
I was glad to hear that they backed off of that. The market needs competition. CWT was a weakened competitor. Consolidation made sense for them given their economic situation and their ownership. If it wasn’t Amex, it was going to be someone else—BCD or one of the others—that was going to propose a merger of some kind that had been talked about. That had been attempted multiple times over the years. They have been altered different ways with different potential acquirers or partners. Again, I just think in the scheme of things this was not a place to take a stand. I just don’t see it. I think it’s good they did that. Hopefully, the US regulators will follow. I think their combination is actually good for competition, honestly. I don’t think it’s a bad thing. So, we’ll see where it goes. The betting markets are showing that the deal is likely to go through. I checked; you can bet on these things these days. We shall see where it goes.
Mike, that is our news for today. So on to our guest, and what a guest we have for today. We are bringing on Terrell Jones. Terry really is a true luminary of the travel industry. He is the founder of five startups; two of them are billion-dollar exits. He is a noted speaker on AI, innovation, and disruption, and he is a speaker who actually has done it. He is a board member of 20 companies with billion dollars in exits. If I read every company he worked with, we would be here all day—Travelocity, Kayak, Am-Gen, Sabre, American Airlines. He was telling us a story about American Airlines in our preset. I think it’s easiest just to bring him on stage and let him tell his story because it’s a great one to hear. Please welcome to the stage Terry Jones.
Terry, welcome. Hey guys, hey Terry. Great to see you. Nice intro by Ed. My personal part of it is that I got to know Terry back when I was working with Philip Wolf back in the early days of PhoCusWright. Terry even then was in the early days of Travelocity and early online travel, which in itself would have been a big enough success on its own. What I think is amazing is you not only saw the future in terms of building that business and leveraging and bringing—maybe sometimes kicking and screaming—Sabre in that current environment into the online world, but then you saw the next iteration of that which was meta search and pivoted to that with Steve Hafner and Paul English, co-founding Kayak. Again, I just think you’ve always kind of seen what’s coming. Maybe others saw it too, but you always were able to take action and turn it into reality, which is exceptional. Happy to have you here. You’ve always been a great ambassador for the industry too, so welcome. Great to have you.
Thanks, Mike. Well, with all that, we’ll say goodbye now and wrap up now. I’m really excited to dig in because of all that. First, just a personal question: what truly does inspire you to do this and what did inspire you in travel to take part in these and really help drive a lot of the success in the industry?
Well, I was with Sabre for a long time, as you know, and before that had been in a couple of startups. I was CIO, which is a terrible job. You’re trying to coordinate a lot of people who don’t want to go in the same direction. We had this little online thing that was on CompuServe and Prodigy and AOL. They gave that to me and I thought, “Wow, why isn’t this thing on the internet?” Pretty soon I said that’s going to be a lot more interesting than being CIO because it’s about putting customer needs together with technology. We proved with Easy Sabre that that was going to work, but the internet let us break free and do it on our own. That was so exciting.
Then Kayak, the same thing. We had a dinner with Steve Hafner and Paul English and a guy from Microsoft and a VC. We talked about the fact that 90 plus percent of our customers are searching with us and buying somewhere else. Why don’t we solve that problem with meta search? Then I got a call from Ginni Rometty, the chairman of IBM, and she said, “Can you come and teach IBM Watson about travel?” That sounded like a fun thing to do and that ended up in an AI company where I was chairman and Noreen Henry was CEO. We were too early. The tech worked great; the tech actually increased conversion significantly, but we couldn’t get hotels and cities really to sign up. It was too early. Which is why I’m excited now to be chairman of Am-Gen, which is deploying AI into the TMC world. I think it’s about either listening to customers and figuring out what technology could solve their problem or sometimes as a CIO or in a business saying to the business, “Did you know about this new technology? I think it could help here.” It’s being that maven between business needs and technological capability. That’s what’s fun about it.
As you have gone through this process over the years and been a part of these different ventures, any surprises along the way? Things that happened that you didn’t think would or vice versa?
Sure. I mean, look, I was too early with a lot of things. I was talking with the Am-Gen guys yesterday about it. I’m an idea guy and I was driving my team crazy because I was always coming up with new things at Travelocity. So I ended up having just two programmers who work for me, and all I did was prototypes. We would put these prototypes out and see what happened. We put out flight paging, for example. That’s how long ago it was—we were paging people. We were the first people in the world to do that and that was a huge hit. Then I put out a fare calendar; you could click on the date to get the price. The New York Times loved it; consumers didn’t click on it at all. Fares on a map—nobody did it. But the point was we were experimenting and failing and learning. So there were a lot of surprises, mostly because I was ahead of the customer in terms of what they were still trying to figure out. Can we put our credit card in safely? In fact, we put up an 800 number so people could call in and give their credit card because they felt safer that way. We didn’t tell them that when they called in, we put it in over the internet, of course. You have got to work on the customer’s desires and their fears of new tech.
It’s always the marketing challenge. Consumers—you can survey them and talk to them all day long, and even at times what they say they want and what they ultimately do in terms of how they vote with their money and time is not always the same thing. Even as we get into the conversation about AI, it just seems like a massive experiment going on right now, as it should be. Testing and learning. I don’t think the roadmap has been set yet; it’s still way early.
The big thing is the AIs are learning all the time. As a lecturer on AI, I just was with a thousand people in the mining industry yesterday. If your competitor has a learning system in its products, operations, and logistics and you don’t, how are you going to catch them? That’s what I think will be the most impactful part of this: that they are learning systems. As somebody said, you’re not going to lose your job to AI; you’re going to lose your job to somebody who’s deploying AI better than you.
Would you say that fear of losing out to competitors is what’s driving a lot of AI experimentation these days? No, I don’t think that’s it. I think people are seeing a new technology where finally the time is right. We’ve had this intersection of big data and very large LLMs. We did Wayblazer; my partner wanted to go B2C and I said we can’t do it. We can’t adjust the whole world. Somebody’s going to ask, “Where do I go for the best Singapore Sling in Singapore?” We’re not going to know and we’re going to get trashed on social media. We can do a hotel chain, but we can’t do the whole world. Now you can do the whole world. So you have this big data, but it can be consumed by LLMs and you have GPUs. They’re coming together to create the right environment for AI.
Companies are experimenting and failing. I think CEOs are naive because they’ll say maybe 10% of our people are using AI and actually 50 to 60% are experimenting with it. GPT is great; you can do marketing, customer service, or write code. But more important, particularly in the industrial world, is building it into your product. I give the example of John Deere; they have self-driving tractors now that learn your field. They know where to put on water, where to put on fertilizer, and where to kill the weeds. Are you going to buy a Massey Ferguson that doesn’t know your farm? No, because I’m hooked. I think hopefully the same thing will happen with AI and personalization in travel, because personalization has been a dog; it’s never really been done very well.
You hit on some of the obstacles there. If you’re advising a leader or CEO of a company about how to deploy AI, where should they be? What kind of advice would you give them right now?
If you want to talk about obstacles, there is risk and security that you have to deal with. You really got to solve real problems that the customer has. Again, it’s listening to the customer and trying to figure that out. Somebody said to me at IBM once that the most impactful solutions could involve public data like OpenAI along with industry data—let’s say data from ARC or data from airlines—and corporate data. The corporate data is the most important because it’s not out there in the wild. The question is: what new recipe do you make of it? At Wayblazer, I can tell the story now, we went to Tripadvisor nine years ago and said, “Look, we’ve just mined a million reviews from a competitor. We could mine your reviews and really turn it into something.” They declined. They still haven’t done that, although now they’re talking with Perplexity and other people. But that’s their worth—there’s a tremendous amount of knowledge there that when combined with AI technology can create a whole new way of shopping. You have to be creative about what I have and what does a consumer want that can change the world.
Looking forward a little bit, as you think about some of the applications you’re seeing today, certainly with the companies you are involved with, where do you see the innovation heading down the road?
AI will become the new UI. You’re talking about natural language—today it’s text, but it’s also voice. It’s kind of funny; we talk to our phones but we don’t talk to our laptops. We’re still stuck in the UI that I rolled out in 1996 at Travelocity: where do you want to go and what day? That’s not what you’re thinking about. “Hey, I want to go to the Caribbean with my family. My wife likes the spa, I like golf, and I want things for the kids to do.” Even at Wayblazer we could take that and, because we had analyzed millions of images, on the next page you wouldn’t get a picture of the front of the property; you’d get a picture of the golf and a review of the spa.
People are tapping their toe in that a little bit. Kayak has an AI filter rather than clicking on things where you can say, “I just want American before eight in first class.” Booking.com has a route planner on their mobile app. I think that’s where it’s going to go. You were talking before about the explosion of brands in hotels. We know that’s driven by the franchise deals. That’s why you get three Marriotts on one pad—because they can’t sell another Hyatt Grand, they have to sell a Hyatt something else. It doesn’t make any sense to the customer but it makes sense for the business developers. In working with Marriott, for example, I didn’t know they’re the biggest operator of golf courses in the world and have more spas than anybody in the world. They actually operate more three-star restaurants than anybody in the world because most of them are run by hotels. But you can’t say, “I want to go to the best Marriott spa in France regardless of brand.” You can’t ask. So it’s scale without meaning.
AI will allow us to break through that. We’re already seeing AI in operations and analysis of what image works best. But we haven’t seen as much consumer-facing yet. A little further out will be agentic AI. I was on a panel at PhoCusWright about that. A guy was saying this year we’re going to see AI agents deployed by consumers fighting AI agents from websites. I think he’s a little ahead of the game, but I think agentic AI will be very powerful; it could be like meta search.
I’m an adviser to a startup in Israel called RoutePerfect. They interviewed thousands of guides to get advice about the best things to do. If I want to go from Paris to Milan and I like wine and opera, it’s going to tell me where to go. It’s a route planner with day-by-day itineraries, which I started doing as a travel agent in my first job—typing out day-by-day itineraries. OTAs don’t do day-by-day itineraries; they are dipping their toe in it, but they really don’t do that. It’s “where do you want to go?” When I saw this, I said it’s a drive app. 50% of hotels in both the US and Europe are from drive; that’s how people get around. We’ve seen some of those just based on GPT—I don’t think that’s going to work, they’re going to fail. But those that add their own content to it and enhance GPT with AI could be pretty interesting.
One of the reasons I think that it’s slow from a consumer UI perspective—I’m not sure I disagree that it eventually could become that—but people don’t read. Right now most of the chat interfacing is reading text. We are visual learners in many ways. How are we going to mix that?
One, if you just have a search box, which travel sites don’t have… if I go to L.L.Bean, I can put in “I want a blue XL button-down shirt.” I can’t do that on Marriott; I have to say what city and what day and I can’t ask that question. If you just have a search box, it’s not a chat—it’s just “this is what I want” and you get the answer right on the next page. There’s another way to do this and we found it worked very well at Wayblazer and I’ve seen it work in retail. If somebody said to us in chat, “I want to go to Thailand,” we’d immediately show hotels in Thailand graphically and then we’d say, “Why do you want to go?” Because one of the things AI allows you to do is capture intent, and intent is gold. OTAs and hotels don’t have intent. You say, “It’s our anniversary,” and wow, there’s a picture now of a man and a woman and a sunset and a beach and a bottle of champagne. “How much money you have? Eight? Okay, changes to hostel.” But you don’t know when they’re going to jump off. I was shopping for kids’ toys for my grandkids the other day. I said “I want kids’ toys.” They gave me toys and said “What kind?” I said “Wooden.” He said “Okay, what kind of wooden toys? Trains?” You just go down the filter talking generally to people. But those UIs that ask 22 questions up front—everybody says I ain’t got time for this. You have to have prompt response all the way through if you want to engage with AI.
I agree with you. When we start to get to those consumer-based examples… “I’ve got a family, I’m going here,” even just to put together a draft itinerary of what to do with the kids in Florida for four days and give you ideas you can iterate on—that is incredibly valuable. As the PhoCusWright study shows, a tremendous number of people are experimenting with that. The problem right now is it’s not connected to buying. At RoutePerfect we’ve connected it to buying. Then you have a mobile app that you’re using when you’re in the city and suddenly it says, “Hey, it’s raining. Let’s recommend some different things for you,” because it has spatial awareness.
I think for a business traveler you can even do the, “Hey, I’ve got these three meetings, where should I stay? What’s the optimal?” Exactly. If you look at what we’re doing at Am-Gen, we’ve started because about 60% of offline bookings are email. The current email process is terrible: you send an email and say, “I want to go to New York on Wednesday, stay at the Hilton, come back Friday,” and you get screenshots back. We use NLP (Natural Language Processing) to read the email and come back with three suggestions—a hotel and car if you asked for it—that fit policy and preference, and you book. To me it’s like many years ago when I had an assistant and would say, “I want to go to New York on Friday, stay at the Hilton, come back Saturday,” and it would happen. That’s much easier than spending 30 minutes mucking around with these ancient user interfaces. You can imagine building that into your calendar or whatever app you’re using—Salesforce or something else—so it understands the context of your trip and says, “By the way, this is close to your meeting and this is where everybody at General Motors stays. It’s the best hotel and it fits in policy.” You’re done. That’s what we’re about at Am-Gen. We’re also doing group air where we found people with massive spreadsheets of people going to an incentive typing forever. We can do that in five minutes. Or we can send forms out to thousands of people and then conform it to policy. There’s lots of stuff that doesn’t sound sexy but saves a lot of money and time. We have got all the big guys working with us, so it’s exciting.
Our wrap-up question—this is our season three question and we’re debuting it on you. We’re all faced with real and perceived chaos in our personal and professional lives. How do you cope with chaos in your life?
I have a pretty rigid to-do list that I work with. Even now, the last 20 years I’ve been working for myself, but juggling all these boards, I just got to focus on that. Then I make a bunch of time for reading what’s new. I use Flipboard and lots of different apps where I can collate the things I want to know about—whether it’s AI or blockchain or whatever. I can get the latest news and then I’ll read it all on the airplane before I make my next speech. I think it’s about being both rigid and flexible. Rigid enough to get stuff done you have to get done, but flexible enough to deal with the chaos and what’s going to try to take you off course.
I’m going to say look out on the horizon a bit more. Maybe one day we’ll have NDC and things like that. GDS bypass has been talked about since I had hair. Some of these themes—what’s old is new again. We just keep laughing. I’ll leave you a story: I was talking with some people about a cybersecurity lawsuit where I might be an expert witness and I said we never had that problem with Sabre. People were terrified we hooked it up to the internet. I said, “Let those guys in. It’s written in Assembly language with a terabyte flat file. They won’t know where in the hell they are. There is not a chance they’ll know what to do.” And there are only five people left on Earth who know how to work on it anyway. Exactly, nobody knows how to hack it.
Terry, great thanks for joining us. Really appreciate it. Terry Jones is currently chairman of Am-Gen and a public speaker on technology. Terry, it was great to have you on the show. Thank you for your time. You can find him at terryjones.com. Best of luck, Terry.Great speaker, just amazing background and has so much knowledge and perspective. Mike, that’s our show today. If you have a challenge in your business or you want to better understand the chaotic world of travel, reach out to us at traveladvisory.com. We are here to help. We will see everybody back here in about two weeks for our next show. Thanks again from Travel Again.