By Kei Shibata, Co-Founder & CEO at Venture Republic Group – TRAVEL jp & Trip101
Metasearch is still a powerful tool in travel but over the last five years, we are seeing limitations: There is no integrated user experience. Users feel awkward having to switch tabs and go to a different site. They have become more impatient; they love mobile and chat and they want it quick and easy. This is where the future disruption in travel will take place: A new business that offers a great customer and transaction flow on chat.
Why are chat-based travel services the next big thing?
Before answering this question, let me ask you all. How much of time do you spend on messaging and chat apps such as LINE, Whatsapp or Facebook Messenger everyday? I am pretty sure that most of you spend a lot of time on those apps.
Apparently, most of the people in the world are now feeling VERY comfortable to communicate with other people on those messaging and chat apps in their daily life. Here in Asia, this trend seems to be even more evident. In Korea, for example, Kakao is a must-to-have app for communicating with everyone from friends to family to even businesses. In Japan, Taiwan, and Thailand, if you are not on the LINE app, it is impossible to stay connected in your local communities. People in China are nonstop on the WeChat app. They are on WeChat not only for their daily communications but also for many other daily needs such payment. Messaging and chat services have literally become a dominant communication platform around this region.
Given this big consumer trend as a background, we see that people increasingly expect to do more things than communicating on those messaging and chat apps. Travel is not an exception.
We have already seen some early successes of running travel business using messaging and chat around this region. One notable example is WeChat in China. More than a year ago, I was told by my Chinese friend that on WeChat, there were over 100,000 flight bookings and over 100,000 room nights of hotel bookings happening every day in China. In Japan, we have over 22 million followers on our official account on the LINE messaging platform, through which our users book everything from hotels to flights to packages to rental cars every single day.
While we have already seen some great cases in the market, the opportunity for travel businesses using messaging and chat is still far from underestimated. Travelers would definitely expect more and better services on those platforms, and new technologies such as AI and machine learning should allow us to make that happen.
How are they exactly working?
I am seeing that there are already a wide range of applications across the board. Let me highlight a couple of key areas of use cases.
One of the most prominent use cases is that travel companies run a customer service using messaging and chat platforms. Instead of using email or voice, more companies are now using messaging and chat for this function in their businesses. Examples are widely seen across the industries—from airlines to hotels to OTAs to many other verticals. To give you one example, I recently stayed at one hotel in Nagano, Japan called Minn Karuizawa, where I was able to do everything from check in to check out to getting concierge services via LINE messaging platform.
Another good use case is to engage the marketing activities using messaging and chat. In our example, we send push messages everyday to our 22 million followers to generate actual travel transactions. We are very impressed with the performance of this marketing practice since we have learned that the open rate of those push messages among the users is more than 10 times higher than that of emails.
What mobile messaging also excites us in this marketing game is that it allows us to better target our users. One great example is to target our users based on their location data. This practice has been particularly powerful for us during these Covid-19 pandemic times when most of the people travel only locally to their neighborhood.
Are they good for booking consumer travel?
Yes, messaging and chat are certainly good for booking consumer travels. As I highlighted earlier, many travel bookings are already happening on different messaging and chat platforms worldwide. There are now even some OTAs that run their services available only on messaging and chat platforms. SnapTravel based in Toronto, Canada, is a good example. They provide hotel and flight booking services only on Facebook messenger and SMS.
In my personal opinion, generating travel bookings using messaging and chat works particularly well for products that are not standardized, or those that are complicated and often sold at high unit prices. Group travel may be one good example. Because of the complexities of each demand and inquiries, group travels are generally not easy for people to book on OTA or suppliers’ websites. Perhaps cruise travel can also be another great example.
In our case, we have recently started testing to use chat and messaging to help our users find best Airbnb’s and vacation rentals for them to stay. Unlike hotels, those Airbnb’s and vacation rentals are not easy to select and book for many travelers because the properties are not standardized in many ways. The early results are quite promising particularly in the cases where the users look for vacation homes for longer period of stay or for a large group.
Are there any applications for corporate travel?
Certainly. There are a number of applications including the startups that try to innovate this space using messaging and chat.
Lola, an American startup founded in 2015 by Paul English, Co-Founder of KAYAK, is one of the first cases that has drawn lots of market attentions especially since this startup pushes hard to leverage AI and chatbot technologies.
I remember when I had a chance to hear Paul’s interview a couple of years ago, he was particularly emphasizing that messaging with AI and chatbot technologies works better for corporate travel than consumer travel since most of the inquiries are more standardized and structured than those for leisure travels. I agree with his opinion. Messaging and chat particularly in the context of leveraging AI and chatbot technologies can be a better fit to corporate travel than consumer travel.
If you think about messaging and chat in the corporate travel space, you might also want to pay attention to one big trend in the market: Messaging and chat are now becoming very popular not only among the consumers but also among the corporate workers through platforms like Slack. As consumers have shifted their communications from voice and in-person meeting to messaging and chat, businesspersons are now also shifting their communications from emails, voice and in-person meetings to messaging and chat through Slack, Microsoft Teams or other corporate chat platforms. Because of this big trend, I will not be surprised if business people and corporations book and manage their business trips more through messaging and chat going forward.
Risks and challenges
There are a few areas of risks and challenges if you run your travel services using messaging and chat.
One of the most prominent risks and challenges is to manage the cost of operations particularly on the people who engage the conversations with users.
AI and chatbot technologies should be available to lower those costs by replacing the people over the time. However, as far as I understand, in the current state of technological applications, we still have a lot of limitations in the actual use cases. Remember, travel is often not an easy item to buy for most of the people. It is not easy to crack this complexity by the technologies overnight.
That being said, perhaps the biggest challenge right now is to manage the cost of chat operations internally while developing AI and chatbot capabilities at the same time.