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Trust and travel's future at the 2025 Phocuswright Conference

• Jeff Borman and Matt Brown

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AI was, predictably, everywhere, all at once, in every session at this year's conference, but there was a distinctly humanist air to it all as well. Trust, connection, authenticity, reality, face-to-face communication were thematic touchstones throughout. We still want recommendations from real live honest-to-goodness human beings, and AI can help facilitate that. (Right?)

Matt Brown:

Greetings from San Diego, Jeff.

Jeff Borman:

How are you?

Matt Brown:

I'm doing good. This has been a great week here at Phocuswright and we want to do a little bit of a roundup. We've kind of split our forces this week, which is unusual. Typically, we're we're kind of both working on the same thing. You are working on a special episode for Monday, Thanksgiving week. Uplifting. It's going to be very uplifting. The preview that I've seen of it is uh is heartwarming. But you know, tragedy tomorrow, comedy tonight. Yeah, we're gonna do some dispatches from the 2025 Focus Right Conference. It is so well done. It's an intimate affair. It's not huge by design, and that is great because you get to meet a lot of people. I think we joked at the beginning of the week that you cannot play a drinking game using the word AI at this conference because in about three minutes you'll be done for. That hit the minute that you get on the exhibit floor. You don't even get into the sessions. It's like every booth on the exhibit floor has uh AI powered, either in the company name or the slogan. It wasn't just a drinking game, it was like a it was a distillery uh for the entire week. And you know, everybody's confident, projecting confidence at least, but this is a a somewhat tentative age of exploration for everybody. I think that confidence was probably summed up by uh Barry D this morning. Barry Diller did one of the opening sessions this morning and he's pushing his book titled Who Knew?

Jeff Borman:

And I I take it by the title, he the book says that he did. He did, yes.

Matt Brown:

There's a good spoiler alert. And you know, he's done a thousand of these panels. He was up, he was up at this thing 20 years ago. Of course, he looms large, not just in Hollywood history, but travel history. But you know, I gotta say, he's still got it. He's pretty impressive on stage. And he what did he say? He said, you know, for 20, 25 years we've been serfs uh in the land of Google, and that AI is upending that. And that I think everybody is kind of latching on to that idea. What's the what's the little finger line from Game of Thrones? Chaos is a ladder. And I think everybody is hoping that they have the lottery ticket that's gonna kind of get them through this this challenging time, which is why one of the other terms you hear uh at the conference this week is disintermediation. Uh so there is fear. There is a fear-based, uh, squid game-esque sense that musical chairs is kind of happening right now, and that there's gonna be this mass reduction in the use of intermediaries uh between producers and consumers. And who's at the top of that list? I think OTAs were mentioned often when people are wondering who's gonna get kind of frozen out, the new world order.

Jeff Borman:

Did they really talk about why though? Because you and I've had a discussion where there's a case you can make uh both for and against the OTA in the rise of AI, right? Do intermediaries get intermediated, or does the mountain of data they sit on become exponentially more valuable?

Matt Brown:

I mean, that's a big debate. Does anybody directly question it? No. Directly, no. Indirectly, of course, right? It's it's it's the subject of every conversation. The OTAs themselves are very well represented at this conference. So I think everybody's being respectful and everybody's waiting and seeing what's gonna happen. Uh, there's not a burn the OTAs down kind of uh thinking at all. Hotels want their tech partners to integrate live data into AI platforms, and this encourages direct bookings and reduces reliance on OTAs. I think where the rubber's gonna hit the road on this is uh once you start having links in Gemini, and uh those links are gonna be for specific travel providers, you're gonna have be in a situation where you want a travel itinerary and the link will show up and it'll say, Would you like to purchase this ticket for $349? You'll immediately be able to ask your online agent, give me a cheaper price, go look for a cheaper price. And how's that gonna work when your sponsors and your partners get angsty? Right? Like if they're gonna put all this money to partner up with chats, you're gonna want to see something for your partnership and you're gonna want to strangle competition. Trust, even more so than some of the other uh drinking game words, trust was the operative word for the entire week and that value will come from trust. And customers have to believe that the system is acting in their best interest, not just optimizing them for profit, and that the small failures in travel communication will affect that confidence and that consumers trust AI most when they know that a human can step in, especially for kind of more complex emotional or kind of bigger high-stakes decisions, and they want humans in the loop. Now, I believe that, but I also wonder look at the way that we kind of consume things over the last 25 years. And do we always believe that Instagram is working in our best interest? Do we believe that Amazon is working in our best interest? Verdicts out, it's been out for a while. Do we apply it to things like product reviews? Do we apply it to experiences? And I think for travel, we do, or at least the hope is that we do. Brands feel like their established knowledge and their trust will save them. So for every travel brand up there, it's like we've built a community, we have equity here, people trust us. Going into the future, people are going to rely on that trust. So they're all in community, partner, service, relationship building. Nobody ever thinks bad things will happen to them. Kodak, PayM, Zenith, Pontiac, these are the most trusted brands in the world. And they had dedicated communities and loyalists during their eras. And it took about five years of Honda Civics and Sony Electronics to upend their worlds entirely.

Jeff Borman:

Anybody ever get into why we trust Amazon implicitly and yet revel when it comes to OTAs? You know what, actually, Matt, I'm gonna answer my own question while you think about that. I'm thinking as a consumer in one and as a business partner in the other. I would bet then the business partners who have to put their product on Amazon at terms they have no skill to compete with. Probably feel the same way Hotels do about OTAs. Never mind, answered it.

Matt Brown:

Well, and it, I mean, there's the bigger question: do we do we trust Amazon? Like, I'm not sure.

Jeff Borman:

As a customer, I do. In fact, I go find product, I know what I want to buy, and then I go see if I can get it on Amazon, even after I found it somewhere else. Yeah. You trust delivery. I trust the delivery, I trust the return, I trust they got my back.

Matt Brown:

A lot of vendors talked about that this week and service providers. Like we have the customers back.

Jeff Borman:

In the end, Amazon will eat the charge on a return. So I've I don't have to fight with a vendor, I don't have to give a million reasons, I don't have to go to you know small-time business websites that intentionally don't provide any contact method. You know, like in the end, Amazon, three, four buttons later, things returned.

Matt Brown:

Looking around the exhibit hall, it it also seemed like there was just this gold rush happening for payment companies, World Pay and KinextPay and Ping Pong and Pay Compass and on and on and on. And I was saying when you walk in there, it's like, oh my God, there's so many. Who are all these people? Who are we paying here? And I wonder why is everybody now trying to get a piece of this pie.

Jeff Borman:

You're new to the conversation, it's not a new one. Uh, and I think a decade ago, uh, the biggest brands were ahead of this and saw this coming, meaning that because the the silver bullet between the supplier and the intermediary has always been price. If I give you a better price, you will go there. In the end, people will shift the channel to buy the same product for less, period. Uh, and if you're an OTA, you're trying to give away the best price. And the suppliers are saying, no, no, no, you cannot undercut my price. Uh, and so they have all this web of MFN clauses all throughout these agreements so that they don't undercut each other. But then you kind of find all these weaselly ways to go about undercutting each other and getting that advantage. And uh, if I get my brand.com, you get the loyalty member rate. Ah, that undercuts Expedia. So then Expedia goes, I'm gonna do one key, even though it loses me tons of money, but it maintains the customer base from flooding into cheaper ways of booking the same product. To your point on you know, where and when and how did payments become such a central part of this discussion is if you pay with a booking.com credit card, you get 10% off. Well, suppliers got a hold of that idea and they caught wind of that a long time ago. And so this is just a backdoor way of giving a discount and undercutting my price and driving consumers to your to your site. It's still a heavily fought turf. It's very hard to govern. If you pay with an Amex and you buy on Amex's site through Amex travel, there will be deals out there. And is that because it's an Amex or because it's the product? You know, it gets really tangled really quickly. Ultimately, all these bank cards that are taking over the booking engines, Capital One, they're gonna be the biggest travel provider. Uh Hopper powers them currently. Uh, you know, like this web of bank to intermediary is so intertwined now. Uh I don't think there's any unraveling it. It's a matter of can you control it as a supplier in any way? And trying to figure out ways to do that.

Matt Brown:

I went to a great executive panel on business travel. Users increasingly prefer to interact with travel tools that are inside their existing digital ecosystems rather than separate interfaces. So that we should expect, and this is probably happening already out there, tools that naturally fit into a daily workflow, like Teams or Slack, instead of these siloed booking portals. And I wonder how far we are from like travel purchasing in Slack, right? That a little bot's gonna pop up in some travel channel that will make it like a two-click solution. Because everybody's looking for partners now that of course they're gonna start infiltrating Salesforce and Slack and Microsoft Teams and whatnot. People were kind of talking next to me about how all trails. I know it's a nobody was talking about this on stage, but this just a like a little mini conversation of partners in the back. How the All Trails app is now available in ChatGPT and combines our trusted outdoor platform with open AI's search technology, you know, 500,000 trails verified by our in-house trail experts, all that kind of stuff. And, you know, they gave the example, you were looking up the press release, and it's like, I have to give it a try, ask your, ask ChatGPT your question, begin with all trails, and like all trails, find me a loop near San Francisco or find me a loop near San Diego that I can get to within an hour, and it's dog friendly. We were all kind of joking that you know, every day from here on out, every company in the world related to travel and experience is going to be making an announcement like this.

Jeff Borman:

The all trails um is an interesting one because it's a travel adjacent uh app. I don't know that it particularly can drive measurable increases in travel volume. Like, you know, how many people have ever gone to all trails, seen a trail, and going, oh yes, book my flight. I want to hike that, right? It's travel adjacent. I'm not saying it's a purpose. Not yet, baby. Not yet. But but I'm really curious about the integration of related businesses that that can help each other in that way. You know, hate that I'm about to say this, like an all trails expedia cooperation makes tons of sense.

Matt Brown:

1000%.

Jeff Borman:

It does.

Matt Brown:

This is just the tip of the iceberg. It's gonna be this is gonna be everything. If it's your trail, if it's your if it's an app that tells you the bars and restaurants in your uh neighborhood that are dog friendly, that is absolutely gonna link up with as many partners as possible. One of the last sessions today, Jennifer Shea from Marriott. Do you know her by James? I do. She is, of course, a total pro and Mitra led the uh led the session on it, and they uh they had to get Saunder out of the way immediately. And I had forgotten that it wasn't too long ago, we're talking like three years, that that company was valued at 2.2 billion. That just goes to show you what valuations mean. But she got ahead of it early. It was the first question out of the gate. Everybody in the audience kind of wanted to know. And and you know, she she did the she focused on the customer. It was the right thing for the customer. They didn't want anybody getting locked out, that kind of thing. Um, so it didn't get too heavy into the mechanics of the partnership, and it's probably because everybody knows what the mechanics of the partnership were. They they sort of threw Sonder a lifeline. You know, this partnership's only one year old. I mean, this is obviously a cautionary tale, right?

Jeff Borman:

In a world where evaluations are done on intangible value, like there's what do you have? You have somebody else's piece of real estate that they let you rent a little bit. Okay. I mean, it's kind of a we work thing. There was a time and place where it made a lot of sense. And it was really, really easy to see that time and place disappear. It's also a lot harder when you think about supply of hotels. Building a hotel is a commitment. A massive commitment. It's a long-term commitment. You have to be prepared to weather the bad times. You can't just simply shut it down because they lost a little money last quarter. You cannot turn the four seasons into a courtyard because next year looks bad. Saunder to me never found its place. And it always seemed like the easiest thing not to do, not to have. So, you know, Airbnb and that kind of inventory, it can immediately rise and fall. And that's okay, because these are people's homes. Now, if people are buying real estate in order to only sell it out on Airbnb purposes, you know, those platforms like that, uh, that becomes a much riskier thing for that owner and that buyer. But again, they can usually, because it's got a residential backfall, backstop, uh, they can go back into, okay, it's condo again. You know, uh, you know what, next month I think I'm not gonna Airbnb it anymore. I'm just gonna sell the unit and be done with it. Like you can do those things very nimbly, whereas you try to buy and sell a hotel, the process alone is gonna take you six months.

Matt Brown:

Also, speaking of tight ropes, uh, I went to the uh a session with Jeff Freeman, who's head of the U.S. Travel Association, and he spared no quarter. He did a good job. He's got a uh quite the balancing act um in DC. And he came out right out of the gate saying there's no legitimate explanation for why a government should do this to an industry. You know, 13,000 air traffic controllers, 50,000 TSA agents, reduction of bookings by at least 10%, could be more by the end of the year. You know, he had some complimentary things about the Trump administration and what it's doing for travel, but you know, he also mentioned that nobody feels like they're winning. International travel to the United States, it's projected to be down 6% this year. And the most startling fact is that the U.S. will be the only nation in the world this year to see a reduction in travel. Did he say that with disdain? He did. I mean, he went over a lot of things. He mentioned that you know his counterparts around the world are actually giving him a thank you because we are driving travelers into their arms. We're making their markets more competitive. And specifically, they went into this um $250 visa integrity fee and then this bond fee that's been floated around that if it goes through will make the United States the second most expensive country in the world to visit next to Bhutan.

Jeff Borman:

Bhutan. I know I know. Matt, of the 192 recognized countries, uh, and you'd asked which is the most expensive to enter. We'd have been here a while.

Matt Brown:

Well, they have I we need to look this up. I'll I'll I'll come up with a better answer for this, but there is something about their travel policies that is sort of traffic related, that they've made it expensive to come into the country. But he no, he was, you know, point blank. He's like politicians in Washington need to get their act together. You know, he he brought up uh this great example. You know, he was speaking to this Republican senator not too long ago, and that he's saying this is a competition. We are in an era of competition with travel. We cannot take for granted that people want to come here automatically. Other countries are moving very quickly when it comes to system requirements, changing customs, entry processes, streamlining the whole experience. And we are not. Saudi Arabia, he mentioned, is spending like $75 billion a year on a travel economy. And the Republican senator that he was talking to, and giving him the whole spiel, was like, well, I don't have any interest in going to Saudi Arabia. And he said, you know, with all due respect, I don't think you're the target audience. The global economy isn't just about goods, it's about services. And we need to get right with the Lord on that pretty soon. Anyway, it was a great time. It was a great time at Focus Wire and learned a lot. I know we're just kind of skimming over some of the some of the things that stood out here. There's so much information that after like three days of it, you just can't process it all. Your brain kind of goes to jello. But uh yeah, amazing conference. If you are at all connected to hotel data, you should seriously think about coming in the future.