March 15, 2018
The Giants of Tourism
March 15, 2018
The Giants of Tourism
For decades, travel agents dominated the tourism industry. Trips would be planned with very little transparency and clients would never be privy to all details. However, the rise of the internet shook up the tourism industry by introducing a level of transparency which displaced most travel agents. Today, millennials are traveling more than ever. This new generation of travelers has different priorities than their predecessors. On average, millennials take 2.38 vacations per year, which is nearly 25% greater than the vacation habits of the previous generation. However, vacation frequency is not the only difference; millennials pursue more experience-oriented vacations whereas generation Xers and baby boomers are more focused on leisure and relaxation.
The Initial Shift to Review Aggregation Sites
To find new and authentic experiences, millennials are dependent on technology. This can be seen in the way millennials mainly search for activities by sifting through information and reviews online. Specifically, millennials tend use review-aggregation sites such as Airbnb or TripAdvisor, which offer insight into activities, accommodations, and restaurants that were never available before and essentially replace the expertise required of travel agents. Most importantly, all this information is offered for free. The free insights resulted from an industry shift: centralized technology companies became the key winning factor to companies success in the tourism industry. Companies such as TripAdvisor and Yelp grew tremendously during this time and now have market capitalizations of over $5.5 billion and $3.5 billion respectively, making them huge players in the industry.
The Big Player’s Monopoly
Review aggregation sites have a tremendous impact on a business’s revenue. Statistics show that the top spot in the Google search results will on average get 32.5% of all search traffic, with second place getting 17.6% and tenth place getting as little as 2.4% of traffic. This means that getting to that top position can make or break companies. In other words, there is considerable incentive for companies to manipulate ratings so that they appear at the top of the search results.
This makes the crowdsourced data highly susceptible to bias. While these sites are making an effort to curb fake reviews and information, the sheer volume of information makes this a nearly impossible task. For example, there was a fake restaurant in London called the Shed at Dulwich that got so many positive fake reviews that it ended up as a top-ranked restaurant in London. It held the position for weeks until it was revealed that the restaurant never existed and had been pushed to the number one spot by fake reviews and a multitude of hungry customers who had left positive reviews in an attempt to secure a reservation.
While review aggregation sites do provide information that was never accessible before, their vulnerability to manipulation indicates that there is room in the industry for an upgrade to unbiased platforms. In fact, the unreliability of the current incumbent platforms has led to a shift towards searching for local advice.
Competition Backed by Blockchain
The shift of interest to local advice indicates the beginning of a change in the tourism industry. Many companies have recognized and have taken advantage of the change by launching local, experience focused offers. This can be seen in large corporations such as for Airbnb, which launched a “local experiences” offer, which allows travelers to connect with locals for one-off activities. New startups which leverage blockchain technology to guarantee trust have also emerged, such as Dubai’s Tourism Blockchain and Cool Cousin.
Dubai’s Tourism Blockchain looks to connect the country’s hotels with tourist organizations in an effort to provide transparency and options. The goal is to provide a real-time list of available rooms and prices, eliminating the need for sites that aggregate prices and take a cut, such as Trivago or Priceline. By putting the power into the hands of consumers and businesses, it streamlines the process of travel and ensures that fake reviews are no longer possible.
Cool Cousin looks to create a bespoke travel experience for people by connecting them with locals, called “Cousins,” that have common interests. To make sure that a traveler and his Cousin are compatible, Cool Cousin allows travelers to choose cousins based on shared hobbies and interests.
The advantages to this approach may not be obvious at first blush, but locals hear news faster than any online sources. For example a restaurant on TripAdvisor may have fantastic reviews, but the reviews might not reflect the fact that a new chef was hired and the quality of food dropped whereas a local who frequents the restaurant would. Connecting with a local also allows tourists to avoid common traps and scams while being able to experience the location “like a local.”
A More Efficient Future
Both Cool Cousin and Dubai’s Tourism Blockchain are effectively replacing services that thrive on taking advantage of travelers lack of information. By providing transparency and integrating blockchain technology, fake reviews will no longer be a concern. Both services are also big time-savers for travelers. They forgo the need to sift through mountains of information to find activities or to book rooms. Through their systems of reliable information and points of contacts, the effort needed to make well-informed decisions is greatly reduced. Cool Cousin and Dubai’s Tourism Blockchain are effectively building on top of review aggregate sites and providing a new, more efficient type of service.
While Dubai’s Tourism Blockchain is still being developed, Cool Cousin has seen a rapid adoption of their services, demonstrating the beginning of what could be another industry shift. The company’s growth has been exponential since it’s 2017 launch and it now has over half a million application users and is active in more than 70 cities worldwide. Over the past six months, the user base has grown by over 350% and new cities are being launched every five days. In coming years, review aggregate sites such as TripAdvisor and Yelp may find themselves in dire straits.
Courtesy/Source: The Finance