As Google continues to roll out artificial intelligence-powered search features, which will undoubtedly increase its dominance in travel, Rod Cuthbert, the founder of Viator and generally acknowledged as the “Godfather of tours and activities,” got quite indignant during his session at WiT Japan & North Asia in Tokyo May 14.
“How did we – the [online travel agencies] – allow this to happen?” he asked during his one-on-one interview, which followed a presentation by Yu Ukai, product manager at Google Travel, responsible for the travel search experience on Google Search and Google Maps, leveraging Google’s AI and other technologies.
Said Cuthbert, “We were the ones who were out there with the risk capital doing the development, figuring out how to do this. Everybody else followed along, right? We spent absolute fortunes with Google. We spent billions and billions of dollars. And now they come along and they say, 'You know what? We don’t really need you.' Man, that drives me crazy. And it also says to me, 'Don’t invest in anything because Google will probably take that.' Take it direct.”
We spent absolute fortunes with Google. We spent billions and billions of dollars. And now they come along and they say, 'You know what? We don’t really need you.' Man, that drives me crazy.
Rod Cuthbert – Viator
He reiterated that with Google’s increasing control and the potential for a “super app” powered by AI, the future of online travel intermediaries remains highly uncertain, posing existential challenges to their business models.
“We see in China, there’s a super app. So imagine a super app that’s owned by Google that’s got AI inside it. You see all the things they’re doing. If you’re an intermediary in travel, your future is so uncertain.”
He said this was the reason why the giant travel companies are building moats through mobile apps to protect themselves from the dominance of tech giants. “Half of their traffic comes from their app, which protects them. It builds another moat around them.”
What he’s happy about, though, is how the tours and activities sector has “become a thing,” nearly 30 years after he founded Viator in 1995. “I wish I could say I saw it,” he said. “I can remember in 2005, we were raising money, and one of the venture capital firms we visited had Rich Barton, who was the founding CEO at Expedia, as one of their venture partners. And he was meeting with us, and he said, tours and activities? Is that even a thing?”
Cuthbert and his team felt that “experiences was a sector that was going to blow up but we couldn’t convince anybody.”
Two things then happened – Phocuswright did “a really seminal piece of research” on the sector, and in 2014, Tripadvisor acquired Viator for $200 million. “It took 19 years for Viator to get to the point where the rest of the industry thought, OK, tours and activities is a thing.
“I think it’s clear that the valuations that followed would never have followed unless Tripadvisor got their checkbook out, and they were the only people with a checkbook at the time.”
He said that “historically, the travel industry’s focus has cycled between flights, hotels and other segments, but it had largely overlooked tours and activities until recent years, when the sector’s potential became evident.”
He agreed that the competitive landscape in the tours and activities sector is likely to consolidate around a few global B2C giants, similar to the evolution of the hotel and airline industries, alongside regional and niche players.
“I think there’s a fair amount of stasis now, just like, things are going to pretty much stay the same in that sector.”
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However, he said, predicting future trends in the tours and activities sector is a challenging task, as the industry is rapidly evolving and subject to disruptive forces, making it difficult for even industry experts to accurately forecast its trajectory. “It will be exciting to watch the space evolve.”
While he said that there is potential for regional and niche players in the travel industry to thrive, Cuthbert, who sits on the board of Veltra, Japan’s largest tour and activities marketplace, spoke about the particular challenge Japanese travel companies faced.
“Move fast and break things. That idea never came out of Japan. Japanese companies do not move fast and break things, but that’s who they’re competing with. And it turns out that that strategy works really well in online travel.”
Their strength though, he said, is “the deep cultural understanding, which can be a competitive advantage, especially when catering to domestic travelers with unique perspectives and expectations. They understand Japan and the Japanese mindset, which is fundamentally different to the mindset of a Western traveler.”
Finally, he spoke about the paradox of AI-powered local recommendations.
“It’s self-defeating if I say I want to find a great local restaurant near the Westin Hotel in Tokyo, and AI tells me - it’s not going to just tell me, it’s going to tell everybody. And so instantly, that place is not a locals’ place anymore. It’s overrun by tourists.”
*This story originally appeared in WebinTravel.
Phocuswright Europe 2024
What do you get when you cross one of the industry’s most respected investors and visionaries with a seasoned entrepreneur and industry maverick? Find out in this provocative Pundits and Predictions one-on-one as Thayer Ventures' Chris Hemmeter interviews Viator founder Rod Cuthbert.