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CNBC

The robot revolution is coming to the travel industry, this CEO says

‘It will be less point-and-click websites’ and more ‘spoken work and chat bots’ says Kayak chief

PUBLISHED : Monday, 19 September, 2016, 11:01am
UPDATED : Monday, 19 September, 2016, 11:01am

Americans spent US$814 billion on domestic travel last year, according to the US Travel Association. As it happens, they’re also spending a lot of time online planning that trip—with a little help from automated friends.

Nowadays, there are no shortages of options to find good vacation deals. Since moving away from travel agents, planning a trip has meant multiple searches on desktop sites, in addition to mobile and through apps.

A study found in the six weeks before actually booking a vacation, prospective travellers visit up to 38 sites. That search can include online travel engines like Kayak, Expedia , Orbitz , and Priceline , plus airline, hotel and review sites.

However, Kayak CEO Steve Hafner says new technologies are now starting to change how travelers plan and book their trips.

“It will be less point-and-click websites,” Hafner told CNBC’s “On the Money” in an interview. More and more, potential vacationers will now be helped by “spoken work and chat bots.”

Disruptive technology shifts have broad implications for the travel industry, Hafner explained. “What we’re seeing is there’s a whole generation of people who are more familiar with text messaging and voice via Siri who are looking for a different interaction with an online travel agency,” he said, speaking of Apple’s automated helpmate.

Kayak, which is part of Priceline, has been investing in “a lot of artificial intelligence” and “services that help the younger generation connect with us,” the CEO said.

“We’ve got a Facebook Messenger chat bot for example. We have voice interaction with Alexa, which is a service from Amazon, where you can actually talk to Kayak…and say, ‘Hey Kayak, what’s the status of my flight to Denver later today? Where can I go this weekend for US$300?’“

Hafner describes the new technologies as a work in progress. “The services are pretty good. They need tuning over time , we’re reasonably smart about our answers, but they’ll just keep getting better.”

As is, many travellers are turning to mobile technology to look for travel deals.

According to a recent TripAdvisor study this year, 42 per cent of global smartphone users turned to their smartphones for searching part of their trip. Committing to a deal, however, was more difficult: Just 11 per cent booked some travel using a travel app on a mobile device, and just 8 per cent booked a hotel room.

While Kayak processes 1.5 billion search queries every year, and the site refers users to other websites to complete transactions. So if you don’t buy a ticket or hotel room from Kayak, how do they make money?

Hafner explained that “Kayak is a lot like using Google. We don’t need to make money on every transaction or every time you use the site. If we can get you to use the website and occasionally you’ll click on and purchase something from the services that we offer, we’ll get a small piece of that transaction.”

Advertising revenue accounts for more than half of Kayak’s total revenue. About 30 per cent comes from sending referrals to airlines, while 15 per cent from hotel and car rental companies, according to analyst estimates.

Hafner tells CNBC “it’s up to the consumer for where they want, where they have the greatest comfort or familiarity where they want to book from, personally, I book direct with the airlines.”

Looking ahead, Hafner says consolidation in travel has been “good for the American consumer, there are fewer airlines now, but there are more flights and it’s cheaper to fly now than it used to be.”