The boundaries between finance and travel are becoming blurred. Financial companies are expanding into adjacent sectors, such as travel, based on their competitive advantage of deep understanding and control of consumer transactions. Conversely, some major travel agencies operate much like traditional financial services companies.
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With every new technological revolution, there are obvious and taken-for-granted immediate value uses that fail to demonstrate the technology's full potential. This is Wave 1. With the Internet revolution, early startups focused on simple ideas like putting restaurant menus or newspapers online. Later, disruptive models such as food delivery platforms and social media companies transformed the market. In the travel sector, Wave 1 Internet applications included online directories and static websites that provided basic information about hotels, flight schedules, and prices. Disruptive uses such as OTAs and review platforms came later.
Likewise, the smartphone revolution ushered in early basic tools like calculators and flashlights. Later, apps such as ridesharing, mobile payments, and app stores emerged that created new markets and behaviors, opening up a new ecosystem of developers and businesses. In travel, the mobile revolution has ultimately brought innovations such as mobile check-in, digital boarding passes, real-time navigation, local search and recommendations.
Today we are seeing many startups riding the first wave of AI. Many of these have a short shelf life, lasting only until the next generation GPT model is released. This could include a variety of GPT wrapper apps, for example customer service chatbots, AI-generated travel itineraries, etc. What is the disruptive killer AI app for travel? Who knows? But those companies that have deep insights into spending preferences and habits and are closest to customer transactions are well-positioned to emerge winners. These companies may not currently be travel companies, but they may also be financial services companies expanding into travel. For example, Ramp (see story #2) and Nubank (see story #3) could be strong competitors. Only time will tell.
Ramp is one of the world's fastest-growing startups focused on saving customers time and money. Manages over $35 billion in total purchasing volume (TPV) annually. Last month, Ramp announced a $150 million Series D-2 round co-led by Khosla Ventures and Founders Fund, valuing the company at $7.65 billion.
Artwork by Packie McCormick, Ramp and the AI Opportunityhighlight lamp travel, released on June 4th. Packy is optimistic about Ramp.
Ramp has the opportunity to own and ultimately provide information on the most valuable real estate on the Internet: transactions. It's worth more than searching. It's a trillion dollar opportunity. — Pack McCormick
He explains how Ramp's transaction ownership strategy opens up new business models that shift from cost management and bill payments to travel.
Seeing an early version of Ramp's travel product at the time opened my eyes to the scale of the opportunity for the company. This wasn't just about building better software for corporate cards or finance teams to use, it was about improving every part of the business that involves transactions. […] It seems likely that Ramp will use its position in the deal to recommend better-priced options to customers, undermining some of the power and market share of OTAs and taking a cut of their profits. […] With Travel, Ramp saves your customers time and money by automatically booking flights and hotels and organizing all costs incurred on the trip based on what it knows about your employees' schedules, travel details, preferences, and travel policies. can. . — Pack McCormick
According to Packy, Finance AI will have the clearest path to creating and capturing value in other categories that don't look like finance, such as travel.
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Nubank, Latin America's largest fintech bank and a global leader in digital banking with over 100 million customers, has officially launched NuViagens, a travel platform powered by Hopper. The platform will be rolled out gradually to Nubank Ultravioleta users over the next few months. NuViagens offers a lowest price guarantee on flights and hotels, price monitoring and recommendations on the best time to purchase flights. Nubank Ultravioleta customers can purchase in up to eight interest-free installments via NuPay, the exclusive payment method for Nubank users. Additionally, you can receive 1% cashback upon purchase. Free 10GB eSIM When traveling abroad.
Learn more about NuViagens and its travel benefits. here (Translated from Portuguese to English) Or read the original version. in portuguese.
Nubank in April Partnership with Wise, a UK-based international money transfer specialist, has launched a global account and international debit card for travelers, offering a range of benefits. Linas Beliūnas described this partnership as a “match made in heaven.”
Some of today's largest travel companies are financial companies in nature, as Ramp and Nubank are expanding into the travel sector. Hopper, for example, began its transition from a travel agency to a financial services company during the pandemic (more than 70% of its revenue as of 2022 comes from fintech).
in bank in disguise, Marc Rubinstein writes about how companies like Carnival, Delta Air Lines, and Travel + Leisure (formerly Wyndham Destinations) operate as hidden financial institutions. Founded in 1966, Carnival utilized customer deposits generated from cruise bookings to fund its operations similar to a bank. Delta's SkyMiles program generates significant revenue through $8.4 billion in deferred credits through mileage sales and partnerships. Travel + Leisure provides loans to finance timeshare purchases, contributing $427 million to 2023 revenue.
Chris Paik wrote a short but provocative piece. The end of software, highlighting the similarities between the media industry and the software industry. Before the advent of the Internet, creating media was expensive, time-consuming, and required significant investments in people and resources. Consumers paid for content through subscriptions and purchases. The Internet revolutionized this by reducing distribution and production costs to almost zero, leading to an explosion of user-generated content. Media companies that are unable to compete with the cost-effectiveness of these platforms have seen their value diminish as control shifts to the content distribution platforms.
Likewise, creating software is currently expensive due to high developer salaries. This cost can be paid through licenses, subscriptions, and other pricing models. However, LLM can significantly reduce these costs by automatically translating human language into code. As the cost of creating software plummets, a variety of software solutions will proliferate, similar to the Internet's content boom.
Vogue wasn't replaced by another fashion media company, it was replaced by 10,000 influencers. Salesforce will not be replaced by another monolithic CRM. This will be replaced by a set of things that dynamically serve the same intent and problem. Software companies will be replaced in much the same way as media companies, giving rise to a new set of platforms that control distribution. — back chris
Chris points out that the “old” model of building a software business, where the costs associated with software development were the moat, will be significantly disrupted by the rise of LLMs. This could potentially make today's computer science majors as useless as journalism graduates from the late '90s.
According to a recent report from McKinsey, the tourism and hospitality industry is on a journey of disruption due to changes in source markets, new destinations, and evolving trends. Tourism and Hospitality Status. The 68-page report highlights four key themes in great detail:
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More local travel, emerging travelers, new destinations
We are pursuing steady spending.
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How we travel. Our survey of travelers reveals different needs, generational gaps, and emerging traveler archetypes.
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Updated perceptions of today's luxury traveler
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Preparing for tomorrow's tourist flow
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6 trends shaping new business models in tourism and hospitality
The McKinsey report highlights the growing importance of experiences for travelers, noting that this space remains highly fragmented. Many operators are small businesses with a limited digital presence, which presents the greatest opportunity for technology-leading companies. Private companies such as Viator, GetYourGuide, and Klook have leveraged this to achieve significant growth. GetYourGuide quadrupled its revenue between 2022 and 2023. Viator's revenue grew 49% over the same period, and Klook reported double the number of new customers in 2023 compared to 2019.
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The graph above is a bit older (1990-2014), but I found an updated graph comparing the performance of founder-led CEO companies and the S&P 500 that says something similar.
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The founder's job is to inject risk into the business. It's overflowing with new ideas, things that seem difficult to do, ideas that no one dares to try, and making the kinds of bets that only the person who started the damn thing would be willing to bet. – Jason Fried, Founder and CEO of 37signals (maker of Basecamp and HEY).
Other approaches to thinking about where AI is headed include: in Evolution of AI: Hoplite, Centurion, Napoleon, Fritz Oberhummer draws parallels with the evolution of human warfare to explore how AI might evolve. He takes us on a historical journey, from hoplites to centurions to Napoleon's tactics, and illuminates the future trajectory of AI. In the process, he even manages to inject a travel twist. Despite the tumultuous tone of the post, there is a hopeful and happy ending, imagining a future where AI and humanity coexist in harmony.
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