Arnie Weissmann
Arnie Weissmann

Similar to the giant balloons that will rise above the high school marching bands and floats that carry celebrities through the streets of Manhattan in the Macy's Thanksgiving Day Parade, a philosophical framework hovered over the parade of presenters who took the stage at the annual Phocuswright Conference last week in Los Angeles.

This year's overarching theme was "Power Paradox." Mega-OTAs like and Expedia, as well as media giant TripAdvisor, have obvious advantages over smaller competitors, but their scale means their weaknesses are also amplified. Expectations and complications grow alongside revenue, so if performance lags, they must, as TripAdvisor is currently doing, make painfully public and risk-laden pivots.

And smaller rivals are not without advantages. Phocuswright senior director for research Maggie Rauch drove the point home, reviewing the extinction of big, lumbering dinosaurs that, when faced with a catastrophic crisis, were ill-equipped to find the small, niche paths to survival that birds and mammals were able to exploit.

The irony of the example ­-- Expedia a dinosaur? -- could not have been lost on legacy travel agency executives who time and again had endured similar comparisons early in the history of this 23-year-old travel-tech conference.

Indeed, the leading legacy sellers of travel at the dawn of the web, American Express and Carlson Wagonlit, were surpassed on the Travel Weekly Power List a decade ago by OTAs, but they have nonetheless managed to hold on to spots No. 3 and No. 5, respectively. Perhaps more to the point, many "traditional" agencies on the list are less than 20 years old.

Other conceptual frameworks were introduced during the conference that I felt also applied to the competitive landscape inhabited by OTAs, small travel-tech startups, investors and offline sellers of travel.

For example, Jeff Ma defined the dangers of groupthink. Before Ma was hired as senior vice president of product and analytics at Duetto, a hotel revenue management optimizer, he was one of the Massachusetts Institute of Technology students who, using data analytics, devised a system to beat casinos at blackjack. (Their exploits were chronicled in the best-seller "Bringing Down the House" by Ben Mezrich and the movie "21.")

Groupthink, Ma pointed out, can prevent the best blackjack players from winning because they fear upsetting others at the table, even if they know analytics have demonstrated that certain behaviors are crucial to winning. The example he gave involved splitting 10s when a dealer was showing only a six. Win or lose, others at the table were sure to hate him for doing so.

I saw groupthink come into play a couple of times as startups and innovators received live, onstage reaction after their presentations (think "Shark Tank"). Monish Luthra, CEO of Odysseus Solutions, demonstrated how his company had grown by packaging cruises with air and hotels in a business-to-business product for travel agencies. He nonetheless received two "thumbs down" solely because he was providing a travel agency solution rather than going consumer-direct, revealing a groupthink mentality shared among investors with a bias against human travel advisers.

On the other hand, Paul Tumpowsky, CEO of Skylark, a hybrid that pairs online booking with live advisers to sell luxury travel, got a warm reception from a different set of onstage judges who were willing to support the presence of human advisers at a tech conference.

Skylark, developed within the Ovation Travel family, set out to solve the problems encountered by both luxury travel agencies that can't scale and OTAs, which "have never been known for great service." Tumpowsky asserted that conversion rates are comparable to OTAs, but client retention rates are closer to a luxury agency.

When looking at the sum of the 35 presentations by startups and innovators, there were some strong takeaways that speak both to the advantages of data-driven companies (online or offline) and also the dead-end trails that exist within perceived data advantages.

Tumpowsky, for example, said he thought Ovation's database of lawyers and other high net worth individuals who use the agency's corporate business services would be relatively easy to convert into leisure bookings. That was not the case.

What did seem likely after listening to eight hours of presentations was that the bigger the data sets, the bigger the opportunity. A company called Tinyclues looks for differences in travel behavior patterns between, for example, those who go by their given name Timothy and those who use the nickname Tim.

That level of granularity struck me as absurd, but CEO David Bessis claimed that these small differences add up -- a Tim is just ever-so-slightly more inclined to book a seat in United's Polaris class than is a Timothy. Bessis said his "serious" approach to artificial intelligence yields demonstrable revenue gains.

Travel advisers have shown themselves to be nimble, quick and able to exploit small opportunities that larger competitors can't. But perhaps the true power paradox hinges on whether the brontosaurus-size companies that can exploit huge amounts of data will uncover enough miniscule advantages to help them outmaneuver their small and nimble competitors.

I think I know how Jeff Ma would bet on that possibility. How would you?

(Phocuswright is owned by Northstar Travel Group, which also owns Travel Weekly.)


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