00:00:17: Welcome to ITB Berlin's Travel Hero podcast.

00:00:21: I am Dirk Ogel, Managing Director of TravelCommerce and one of the members of ITB Berlin Convention's Board of Experts.

00:00:29: This is a very special episode as we celebrate ITB Berlin's sixties anniversaries this year.

00:00:35: And today we are joined by truly distinguished guests who have helped shape the travel industry and ITB Berlin over decades.

00:00:44: Neither of them has appeared primarily in the role of historians yet.

00:00:48: Instead, they are visionaries who have repeatedly anticipated key developments in the travel industry with remarkable accuracy.

00:00:57: And I'm highly confident this podcast will once again be the case in today's anniversary show, which will certainly not be an ordinary retrospective one.

00:01:09: A warm welcome to Lorraine Cileo, the senior advisor and co-founder of Focusrite Research, very welcome Lorraine.

00:01:17: Thanks for having me.

00:01:19: And it's a pleasure Lorraine and a very welcome to Stephen Kaufer, the founder of TripAdvisor.

00:01:25: He's been CEO of TripAdvisor for twenty two years, stepped down in twenty twenty two.

00:01:31: But is anything else as a retiree as we will learn surely today?

00:01:36: Welcome Steve to the show.

00:01:38: Thanks so much pleasure to be here.

00:01:40: Starting with Eulerain, you've been an essential part of the ITB Berlin Convention for a long period of time.

00:01:46: You run Focusrite at ITB as a specialist show from ITB Berlin Convention together with Phillip Wolff, the legendary founder and president of Focusrite.

00:01:56: You started this event more than twenty years ahead from now.

00:02:00: Back then online booking was a completely new phenomenon in our industry.

00:02:05: And when you look back at the early days of online distribution in the global ecosystem, what impressed you most, Lorraine?

00:02:11: So before I answer that question, I do want to say what an honor it is to be sharing this virtual studio with Mr.

00:02:17: Steve Kalfer, who is a founder, a leader, an entrepreneur, and a champion of the industry in a focus right.

00:02:25: So I don't think Steve has been in many focus right conferences.

00:02:29: I'm not sure Steve, if you were ever at focus right at ITB.

00:02:34: I know your predecessor was Matt Goldberg when he was with Lonely Planet.

00:02:39: So we started Focusrite at ITB.

00:02:42: You're right, they're twenty years ago.

00:02:44: I loved it.

00:02:44: It was two thousand and six was our first event.

00:02:48: And for Focusrite, it was a struggle for us to get an audience in Europe, being a U.S.

00:02:52: based company.

00:02:54: So when Philip had that vision, he was very friendly with Martin Buck and had that vision of doing the conference within a conference.

00:03:02: So where we had kind of a built-in audience at ITB, so we started there twenty years ago, and I think we did about ten major events there ever since.

00:03:11: And I mean what impressed me first of all about ITB was the first day we were there, they were just building the walls, and I was like, this was a phenomenal thing to see.

00:03:21: And I was like, you know, it was really cold, there was no heat, and this was during the rehearsals.

00:03:27: And of course the next day everything was all built up and warm and place was jamming and there was a buzz and I learned how big and awesome that place was.

00:03:35: and so many fond memories of ITB and of Berlin.

00:03:38: What impressed me about the industry when I look back over those years and it's actually been twenty eight years I think I've been in the industry longer than you see and is the resiliency of it.

00:03:51: So For us, there was, again, we were there very early days, trying to get people excited, and then seeing what the industry has been through with, you know, there was nine-eleven and there was, you know, stock bust and, you know, the financial bust and, you know, we had COVID, so many things that could have set back the market and how resilient this travel is and consumers are in terms of how much they love to travel and how the industry just keeps going.

00:04:19: And reinventing itself, you're over

00:04:21: here.

00:04:21: Oh, sure, Lorraine.

00:04:22: And you both, guys, you saw a lot of disruption.

00:04:24: You saw a lot of game changes.

00:04:26: Of course, one of the game changes has been the user reviews.

00:04:29: And you, Steve, you took a major role in that whole new game.

00:04:34: you invented, user reviews.

00:04:37: What was underestimated at the beginning when user-generated content started to influence travel decisions at scale?

00:04:44: It

00:04:44: was a really funny beginning because we certainly didn't invent user reviews, Amazon, eBay had them, and we hadn't even invented them, if you will, for travel because there were plenty of travel blogs and other sites that had reviews.

00:04:59: We came about it from a, let's organize all this travel content and let ordinary users chime in.

00:05:06: versus just the experts, just the guidebooks.

00:05:09: And pretty much everyone said, oh my god, that's going to be ridiculous.

00:05:14: It's not going to be enjoyable.

00:05:16: The only people that are going to write bad are going to write reviews, are going to write horrible reviews.

00:05:21: Because why else would anyone take the time to actually write a review?

00:05:25: And that scared us, because we didn't want a site that was just telling horrible travel stories.

00:05:33: That certainly was not going to inspire anyone to travel.

00:05:37: But in our test and learn philosophy from day one of the company, we said, hey, try it.

00:05:43: And sure enough, the reviews turned really positive.

00:05:46: So this notion that we could take what was coined then as the wisdom of the crowds and turned it into a recommendation that was more timely, more accurate, more balanced than.

00:06:02: a single professional reviewer having stayed at a hotel or eaten at a restaurant was pretty obvious, but it's only obvious when you start to have dozens or hundreds or eventually thousands and tens of thousands of reviews on a particular property, restaurant attraction, etc.

00:06:24: You know, from the other players in the industry, there wasn't anyone in the actual booking space, Expedia or Travelocity or Prevy Travel way back then, that was willing to put up a review that could be negative about a product that they were selling.

00:06:44: So, hey, frankly, any of those companies probably could have put TripAdvisor out of business in the first couple of years if they had been willing to do that.

00:06:57: But I understand the supplier tension.

00:06:59: And so they gave us close to ten years before they got serious about collecting reviews.

00:07:06: And, you know, it obviously worked out well for them, but gave us plenty of runway.

00:07:11: And now reviews are everywhere, whether it's a branded site, whether it's you're selling a television or just about everything in travel.

00:07:19: And we think that that's awesome.

00:07:22: Some of my favorite memories of tricked advice were being at places like ITB, Berlin, where a travel supplier in a small part of the world that maybe I've heard of but I've certainly never been to would come up to me and say hey just want to say thanks because the reviews on TripAdvisor for my guest house for my attraction for my whatever really enabled my family to succeed in the hospitality business.

00:07:56: I, of course, would say, look, we're just the platform for the reviews, your service, and you're caring about your guests.

00:08:03: And your offering is what makes everyone want to stay with you or eat at your place.

00:08:09: But the platform did provide all that free marketing.

00:08:13: And I do think that that had a meaningful impact on where a lot of people travel to.

00:08:20: making it far less nerve-wracking when you're going far away.

00:08:24: And of course a lot of micro influence in terms of where to stay, where to go, where to eat, what to do, all that.

00:08:32: After a while TripAdvisor really became essential for most parts of the industry, not only for hotels, also for online marketeers, for influencers and so on.

00:08:42: Certainly in the beginning it was the opposite isn't it?

00:08:45: can you remember your first visited?

00:08:47: it be Berlin how to became traction how to how to became audience?

00:08:51: was it easy at all from the start or was it a challenge for you.

00:08:55: No it was always a challenge to gain the audience which you know.

00:09:01: Google organic search helped a lot in.

00:09:04: our online marketing team was phenomenal at being able to pull in the visitors.

00:09:10: And then we worked very hard to get enough of the visitors to write reviews.

00:09:15: Because once we had enough reviews and enough traffic, like every year it was getting easier and easier to reach out to the hoteliers' attractions, the folks, the destination marketing organizations that wanted to talk to an audience.

00:09:32: At its peak when you had four hundred million users a month, everyone knew you.

00:09:38: In the beginning, Almost everyone was was fighting us because hotels and travel agents professional guidebooks We were disrupting some of their value proposition and or threatening their reputation in a way that was brand new to them.

00:09:57: They all of course adopted or most adopted.

00:10:01: the hotel started to license our reviews or collect their own reviews and really work hard with their staff to get better reviews.

00:10:10: Well, that's great.

00:10:11: I'm proud of that.

00:10:12: as an improvement in service.

00:10:14: Travel agents started using TripAdvisor themselves.

00:10:17: It's a free tool after all, so they could make recommendations to their clients and say, yeah, this hotel is great.

00:10:25: It's number four on TripAdvisor in Puerto Vallarta.

00:10:28: It's that added expertise to the travel agent, the customer already knew of TripAdvisor.

00:10:35: And that sort of, but to your question, yes, that took many, many years to develop.

00:10:41: Lorraine, let's look back a little bit of your time at ITB Berlin, focus right at ITB.

00:10:45: You said it's a twenty year long story.

00:10:48: Do you have any memories or any funny moments at ITB you'd like to share with us?

00:10:55: I remember once we couldn't decide if we were going to do a morning or an afternoon show.

00:11:01: So we actually did two identical events.

00:11:05: back to back with the same speakers, with the same questions and the same topics.

00:11:09: Okay.

00:11:10: And I'd like to think we got it right the second time.

00:11:13: But I thought that was a bit unusual.

00:11:15: When I look back, I would have to say all our speakers were really wonderful to go along with that.

00:11:19: You know, you had to go along with the big crowds.

00:11:22: That won't happen to ITV Berlin conventions this year, I can promise.

00:11:26: There were so many people that you just had to go around their schedules.

00:11:29: That's what we tried to do.

00:11:30: So that was a lot of fun.

00:11:32: It's a busy time.

00:11:32: But when we look a little bit into your discussion, we talked about online travel, talked about user reviews, user generated content.

00:11:40: Do you have any significance learning you took from the ITB Berlin Convention or from the trade?

00:11:46: Any impact you took from your business?

00:11:47: Question to both of you, starting with Lorraine.

00:11:49: Well,

00:11:50: ITB, like any other event, I mean, you talked about just about anything that was happening.

00:11:55: So whether or not it was the experience market, or it was inspiration, or we had folks from Google

00:12:03: and

00:12:04: booking and all the startups.

00:12:05: So it was really an amalgamation of

00:12:10: all

00:12:10: the different forces in the marketplace that were coming together.

00:12:13: There were certainly things that were hyped.

00:12:15: There were topics that we I would say mobile was huge.

00:12:19: For so many years, we talked about how mobile was changing the marketplace and how it was mobile first in Asia and how that really changed the way people were accessing content in Europe and the US and beyond.

00:12:33: So certainly watching how that impacted the market.

00:12:39: In general, there was also a lot of that kind of offline processes going online.

00:12:44: watching the market in a global scale, Europe was always, you know, in the past, it always seemed to be a kind of step behind because there was so many of these entrenched businesses, right?

00:12:52: Legacy businesses, and you know, all about it being in the German market, what I'm talking about.

00:12:58: That took a lot of time for them to say, how do I get this content digitized?

00:13:02: And what is this internet thing all about?

00:13:05: And, you know, is there a way to to fight it?

00:13:06: because people like packages and they want it all together and they don't want to make their own decisions.

00:13:10: And so it was interesting to see how that market kind of changed and said, yeah, we need to decouple our product.

00:13:18: We need to think about selling differently.

00:13:21: And eventually Europe became really almost more advanced in the US in terms of online distribution today.

00:13:28: Yeah, it

00:13:29: took a while, but sometimes we're learning indeed here.

00:13:31: Steve Lorraine talked already about hypes.

00:13:33: I think that's an interesting point.

00:13:35: I mean, we know not every hot topic is becoming a sustainable trend.

00:13:39: So has there been any topics you discussed in Berlin or wherever?

00:13:42: In insights, the industry spent too much time or energy on it.

00:13:46: I do remember a couple of years where the blockchain is and blockchain that for travel.

00:13:52: I actually understand the technology a little bit.

00:13:55: I've got nothing against it.

00:13:56: I'm sure there are great Places for a piece of technology to be used.

00:14:03: But I thought at the time like why the heck is the travel industry?

00:14:07: Excited about it.

00:14:09: It might help in a couple of areas, but this is in you know on stage, showtime, let's talk about how blockchain is revolutionizing travel.

00:14:20: So that one I think has proved out to be, yeah, it's a useful technology in some cases.

00:14:26: I enjoy hearing from entrepreneurs pretty much around the globe with new travel ideas.

00:14:32: They might reach out to me on LinkedIn or something.

00:14:35: I remember at the time how TripAdvisor focused so much energy on that magical but elusive combination of travel plus social because of course you always wanted to get great recommendations from your friends and TripAdvisor tried and Lorraine you can probably confirm like every year there's another three or four startups that are trying to solve this problem because it is so tantalizing if you could get it to work.

00:15:11: And I do think someone will be able to get it to work, even if it hasn't been that way so far.

00:15:17: So yes, a lot of time spent there, not much results to show for it, but that one I'm more hopeful for.

00:15:24: Do you have any idea what's a big topic of ITB burning conventions this year will be?

00:15:30: What is the hype topic?

00:15:31: As we talk about AI, I do absolutely believe this is a game changer in the travel industry.

00:15:41: It is not accidental that every major LLM large language model announcement almost everyone has a travel use case and you know give me a five-day itinerary in Paris like the joke is oh my god.

00:15:58: Arthur Frommer delivered that to us fifty years ago but Now I can go in and customize it.

00:16:07: And nobody can book that now in an AI system.

00:16:12: The conversation with something like ChatGPT is just that.

00:16:19: It's a conversation that doesn't yet know you the way.

00:16:23: a travel agent doesn't have the trust level of a trip advisor.

00:16:28: thousand reviews on the hotel.

00:16:30: People use it as an answer machine, a summary machine, a better than Google, but you really don't have to squint to see how this can be really super powerful to get you the right trip for you as whichever engine you're using learns more and more about you and has access to more and more information.

00:16:55: Stephen in your last appearance live on stage.

00:16:57: it was the date it be two thousand nineteen.

00:17:00: i think you said remarkable things about a i already and i just quote yourself.

00:17:06: the travel of the future is going to be a concise trusted recommendation personalized for you do.

00:17:14: you invented the agent seven years ago from from now

00:17:18: a timely quote perhaps in twenty nineteen but come on.

00:17:24: This is what every traveler has wanted all the time.

00:17:29: This is what a travel agent before I was born was telling their customer, here's a great personalized recommendation for you that you can trust because I'm your travel agent.

00:17:41: TripAdvisor just improved upon that as a recommendation engine because the travel agent had been to under places and TripAdvisor had been to a million with a million different data points on, hey, the hotel's great in the summer, but not the winter.

00:18:00: And people change, service levels change.

00:18:02: So it was a major improvement.

00:18:06: AI now has access to even more than a great site like TripAdvisor does.

00:18:13: And it's very, very good at summarizing, but it is not at all proven that it can pull out recommendations from people like you.

00:18:25: It's not at all proven that it can confidently make a set of recommendations.

00:18:32: I absolutely stand by the statement that it does a great job narrowing down your choices, but I don't know yet that people are using a

00:18:43: Gemini

00:18:44: or GPT or any of the others.

00:18:47: in a way that's fundamentally different than what they're using Google for, which is to search for something specific to get some answers, maybe some inspiration, and maybe that is easier now.

00:19:01: It takes the first five out of the twenty-five steps in the travel planning process.

00:19:07: I do think, and I'm happy to go on record five years from now, yeah, people will be using the AI first travel planning tool for the whole trip, and it will do almost all of the combination of what all the different individual sites do, certainly including the booking, the itinerary, the sharing, and hey, maybe in five years social will be a part of that too, but I'm happier to bet on the AI than the social angle of that future.

00:19:41: Lorraine, what's your opinion on that?

00:19:44: trends come and also go.

00:19:45: Will we all become AI native in the medium term at least?

00:19:50: So I totally agree with Steve in terms of, first of all, that inspiration, that top of the funnel, we're still working on it.

00:19:57: And AI is an improvement, but it is very much like search at this point where I'm getting results maybe in a different way, maybe it's aggregated differently.

00:20:07: It's not quite yet so personalized as an individual.

00:20:10: We have to work on that as well, because it's a new.

00:20:13: I get it, it's a two-way street, but it's what is to come.

00:20:18: that is a lot more interesting.

00:20:20: And as we talk about agente commerce, and as we talk about when we do start booking and we do start having digital agents do this booking for us, if in fact that truly does happen, what that's going to look like.

00:20:35: And are we ever going to see disintermediation of some of the giants out there.

00:20:41: This has been a conversation we've had for over twenty years.

00:20:44: We have a lot of these major companies, Expedia, Booking, TripAdvisor, of course.

00:20:51: What are people going to do things differently?

00:20:54: Will there be different brands out there?

00:20:57: We see a lot of banks getting into the market now and they want to... They're attaching travel with loyalty and with card usage and payments.

00:21:06: So maybe there'll be some different brands.

00:21:09: And I think that's very interesting.

00:21:11: But one thing that hasn't changed is trust.

00:21:14: And as a consumer, we're looking for trust.

00:21:17: Not sure I trust AI yet.

00:21:19: Great recommendations.

00:21:20: And I'm not just saying this because Steve's on the call, but you still need to go to a trip advisor.

00:21:26: And you still need to check on things.

00:21:27: And you still need to make sure, hey, you know that.

00:21:30: particular property out there.

00:21:32: you know there really isn't that construction going on to.

00:21:35: you know block away.

00:21:35: that's just going to be really loud at three in the morning.

00:21:38: so these are certain things that you know we still aren't getting from AI.

00:21:42: the personalization still isn't there.

00:21:44: so there is a lot to talk about which is great for ITB.

00:21:47: right because these are the conversations this is what the travel industry loves about technology.

00:21:51: is it something that you know?

00:21:52: every year we bring it to The stage and we analyze it and we talk about it and we talk about investing in it and what's next and so it makes it for a very exciting conversation.

00:22:04: It's certainly owning the top of the funnel as, uh, as these, uh, AI engines now do for a lot of people.

00:22:13: Doesn't mean they're going to be able to have enough information, enough

00:22:17: trust

00:22:18: to be able to handle the lower funnel piece.

00:22:20: So, you know, Google launched.

00:22:23: book your hotel on Google.

00:22:25: They were certainly the big ones, they had the audience, they had the intent, and then they had to close it down.

00:22:31: Because they didn't have enough of the content, enough of the detailed information to make people comfortable putting down their credit card for this five thousand dollar vacation.

00:22:45: So, I, Agente Commerce, if I want to buy something I know, and I can just say, hey, I'd like another bag of peanuts for the house.

00:22:56: Sure, I know what I'm getting.

00:22:58: It can handle.

00:22:59: It's a little smoother.

00:23:01: It's probably going to buy it the same place I bought before.

00:23:04: It ease, but no big deal.

00:23:07: Booking a trip, it is still a complicated procedure.

00:23:12: A trip versus, hey, AI, can you please rebook me at the Marriott next Tuesday night, the one I stay at in San Francisco?

00:23:21: OK.

00:23:22: That booking, if you will, wasn't going to Expedia anyways.

00:23:26: It was going to Marriott, and guess what?

00:23:27: That's where the agent is going to book it anyway.

00:23:30: So, like, it's a little easier, not a big shift.

00:23:34: On the consumer side, I do think this ability to be inspired, the top of the funnel, that so many of the sites, TripAdvisor and Expedia and booking, all included, really didn't do a great job solving.

00:23:51: Hey, now you've got wonderful inspiration capabilities.

00:23:57: These engines are going to make it.

00:23:59: I don't know if they'll ever focus in on travel, but it's such a massive case that I suspect at some point they will, at least on the top piece of it, the top part of the funnel where nobody else is doing a great job.

00:24:16: But I think they'll still be dependent upon all the current set of providers to actually fulfill the needs of the trip.

00:24:23: And it's revolutionary from a consumer experience, but maybe it'll be a bit more evolutionary from the supplier perspective.

00:24:34: And then finally, like, yeah, of course, booking an expedient trip advisor on there and every other travel site on their homepage will have a conversational AI.

00:24:44: based interface to navigate their sites.

00:24:47: Because why wouldn't they?

00:24:48: And probably, Steve, some new startups may help.

00:24:51: You just invested into Direct Booker, a new company from you.

00:24:55: You'd like to tell us a little bit about it?

00:24:57: Yeah,

00:24:57: so Direct Booker, absolutely an AI first company, not a consumer-facing company.

00:25:03: Because Direct Booker just looks at this ecosystem and says, these front-end engines, Gemini, GPT, et cetera, They have an absolute need to present the best direct rates

00:25:19: from

00:25:20: any hotel to their consumer because that's what consumers want.

00:25:23: Seventy percent of consumers want to book direct.

00:25:26: How are those engines going to solve that use case?

00:25:31: They already are trying to solve Booking a hotel through booking an expedient and the other engines.

00:25:37: great But what about the folks that book direct?

00:25:40: direct bookers built an mcp?

00:25:42: That is connecting with all the major hotel chains all the independence to say to chat gpt and Gemini and everyone else Hey will be the pipe for your direct booking for any of your consumers that want to book direct.

00:25:57: you know most of them do and we're Again, it's not a very sexy way to describe a company.

00:26:03: But for Direct Booker, being a pipe for all of these transactions to go directly from the AI engine to the hotel's own website to Direct Booking for the hotel, and Direct Booker has the technology that allows it to do it at scale.

00:26:24: And hotels really need that technology.

00:26:26: They really need to be optimized.

00:26:28: They need to be optimized.

00:26:30: Not a pitch for Direct Booker, but the notion is like, All of these hotels have all of this tremendous content available, including best rates, availability, closed-user groups.

00:26:41: Direct Booker pulls it in, presents it to the AI engines, and Expedient Booking can't even do that.

00:26:49: They don't have a field in their database for what temperature the pool is at for the hotel.

00:26:55: Well, guess what?

00:26:56: With AI, you don't need that.

00:26:58: You can just add as much information as you had.

00:27:01: And so Direct Booker is set up to be able to present all of that to the AI engine.

00:27:06: So those engines can present the best possible answer to the consumer.

00:27:12: And right now, with ChatGPD at least, it's very hackish.

00:27:18: You have to go do a branded call.

00:27:21: Hey, Expedia, please do blah, blah, blah.

00:27:24: I'm sure that will go away over time.

00:27:28: the right engine or the right backend provider, hopefully direct booker, whenever anyone is trying to do a direct booking, will get invoked automatically to answer that user's query.

00:27:41: And that's what we're betting on, and that's pretty darn transformational from the direct hotelier side of the industry.

00:27:49: So finally, what's next for you, Lorraine?

00:27:51: What's on your agenda currently?

00:27:53: Again, you're looking at how everything is evolving and trying to to understand where it's headed and So that's what we do continue to do with focus, right?

00:28:07: We tracking the marketplace looking at looking at experiences right now as a you know, Steve course a big piece of a trip advisor and understanding how you know, that's continuing to grow and be very exciting part of the marketplace.

00:28:21: and

00:28:23: Like I said, anything AI.

00:28:24: So I think it's gonna be very interesting to see how the consumer adopts agentic

00:28:29: AI.

00:28:30: Does consumer really even want that technology?

00:28:34: We want some of it, but maybe not all of it.

00:28:36: So to see how that evolves, because of course we all love the search as well from when it comes to travel.

00:28:42: So let's try to keep the consumer in mind.

00:28:45: I'm happy to go on record saying the agentic angle is still several years away.

00:28:53: the inspiration angle, the connectivity, the need to make sure whatever product or service certainly in travel is seen and understood by AI, the SEO angle for these AI engines, that's here today.

00:29:12: Changing, but here today and moving it a decent amount of traffic.

00:29:18: Agentec still has so many technical non-standard hurdles and you still have too many companies figuring out whether they want a gentic based booking bots crawling their site.

00:29:35: So I think that one will be a few years out before before listeners need to worry about it in particular.

00:29:44: Now Barry Diller who was speaking at the FocusRide conference last November And of course several people have said this as well.

00:29:51: Your travel is one thing AI can't replace, right?

00:29:53: I mean, you have to physically be there to experience travel.

00:29:57: And you also did the quote, and this is to your question, Dirk, about is AI going to replace us all?

00:30:00: is I'm going to count on human folk walking around thinking, talking and relating to each other.

00:30:07: I see we are truly prepared for the next disruption for the next type.

00:30:12: We keep on rolling.

00:30:13: Thank you so much, Stephen Kaufer.

00:30:15: Thank you, Lorentzileo.

00:30:17: It's been a pleasure with you and.

00:30:19: Thanks to all our listeners for today.

00:30:22: See you soon.

00:30:22: live at ITB Berlin from March, March, March, and for those who missed to come in person to Berlin, perhaps live at ITB.com and in our coming episodes of ITB Travel Hero podcast.

00:30:35: Thank you.

00:30:36: Thank you, Lorraine.

00:30:37: Thank you, Derek.

00:30:38: A real pleasure to be here.