It has been trendy for travel companies to create startup accelerators – think Marriott, British Airways-parent IAG and Travelport.
A seemingly less well-trod route is partnering with an external expert although there are companies, including CWT and easyJet, that have gone down this path.
Tnooz hears from Stephan Krings, director of business development, group strategy for TUI.
On the innovation strategy…
Everyone is looking more and more into corporate partnerships because you can’t do everything by yourself any more. Google and Apple (and others) are working together on artificial intelligence which is something that five years back you could not imagine.
There is also the learning side. It’s important to have great innovation ambition in-house but with all these challenges of digital and accelerating growth and technology, there is more the need to like at these startups.
On deciding who to work with…
We took a number of different directions. We talked to other corporates, including Lufthansa, Daimler and Axel Springer, to gather information. We also talked to venture capitalist companies in the US with a record of connecting corporations to the startup ecosystem.
Plug and Play is very active and very vibrant and has a good choice of startups that are linked to travel. What is special is that it has some focus areas in travel. Every year it has about 20 to 25 startups which is the biggest travel accelerator in the world.
On finding interesting startups to work with…
There is an event where about 40 to 50 startups give a three-minute pitch presentation so that is the first opportunity to get familiar with the startups.
You get a basic understanding of the technology they are offering and the areas you are interested in.
We are seeking the most relevant startups and trying to involve the most relevant parts of TUI, such as technology architecture, the mobile department, so that the people that should be close to new technology can then commonly decide.
On the need to move quickly…
The main advantage with startups is to move quickly. As an organisation, you might take six to 12 months to do something but if you are a dedicated startup you can do a pilot in four to six weeks.
It is important to define a very precise scope because we don’t do full integration initially. You get an idea of whether it will work within the organisation.
The first phase is proof of concept, (requires invest of a low five-figure sum) and the second is minimum viable product, which takes a further two to three months and requires a bit more investment as you start to link to internal processes.
On what’s interesting so far…
There are two levels. One is the key technologies we have identified in the past six to eight months that really change the industry.
Artificial intelligence is one because our understanding is that it will enhance the customer experience in terms of increased personalisation. Blockchain is a second we are already active in.
Travel Genetics (see video clip) is using big data you can find on the about a hotel and matching it with internal data to create even more customised offers with higher conversion rates.
It’s not something programmed by people but understood by the machine which can handle more data.
A second level is things like autonomous vehicles. It’s a nice story and it will take such a long time but it can work within a well-defined space such as a holiday resort. We can make it so easy for people. It’s an excellent space for autonomous driving.
It’s a good example of how new technology can work in travel.
On the challenges of working with startups…
TUI is still in the learning phase. One box already ticked is that we have learned how startups work and it’s great to see how such small companies are achieving such great results.
You also get a lot of insider inspiration that you will never other wise. We have never had so much experience until now on how much integration is needed.
You don’t want to kill the spirit of the startup but there will come a phase when you want to scale up. So, how can you ensure a great idea is being steered to a successful scaling up process.
On the disconnect between large companies and agile startups…
We normally try to keep things separate for as long as we can so the startup still has the environment to develop one thing successfully. You don’t want 80% of their energy to go into developing interfaces and discussions so the basic philosophy is let the startup be the startup.
Why not do something internally?
When we look at startups, we are also looking at the people. When it comes to technology you often see people moving from the left side to the right side. It’s not just about acquisition, it can also be that we are looking for talent.
TUI also already has its mobility hub internally which developed its Digital Assistant and is working on a digital butler for its hotels.
This is step by step to see how startups work, get a lot of inspiration, find uses cases and MVPs. Everything beyond that is in the learning process. We want to strengthen our business and our ecosystem with these startups.
If it comes to a conclusion that the startup is important from a strategic point of view then we would look at an acquisition.