Skift Take

The rapidly evolving landscape of artificial intelligence has far-reaching implications, particularly for startups specializing in niche AI travel services, who are at risk of becoming obsolete before getting off the ground.

Every company in the travel industry is racing to build a “killer AI app,” but it isn’t clear which companies will win: today’s dominant players or cutting-edge startups.

“I’m a little worried about the boom of startup funding in travel or online real estate or any of these verticals because incumbents are moving very quickly,” said Spencer Rascoff, a venture capitalist who co-founded  Zillow, Hotwire, dot. LA, PacasoQueue and Recon Food.

Rascoff, speaking Wednesday at the Skift Global Forum with Skift Editor-in-Chief Sarah Kopit, contrasted the current boom with the shift from desktop to mobile, which allowed new players like Zillow to catapult past realtor.com. However, with AI, Rascoff is skeptical that new winners will emerge.  

Companies like Booking, Expedia, and Amex Travel have been investing in AI for years, giving them a significant advantage over startups, Rascoff said.

Rascoff sees the future of search in the travel industry as more free-form, resembling a conversation with a travel agent, and he believes this will be the “killer app” for AI in travel.

“It knows your preferences, where you’ve been before and where you haven’t been, and works with you to make it a much better travel experience.”

Rascoff praised the design of travel apps but criticized them for being overly optimized for purchases. Rascoff feels the industry could do better in the “dreaming” phase of travel, which social media platforms like Instagram and TikTok have largely taken over. 

“The dreamy aspect of travel still feels pretty wide open,” he said, “Because dreaming doesn’t monetize well. Transactions monetize well. Where people dream of travel is not a booking engine, it’s not a hotel website, it’s Instagram and TikTok… And that’s where we’ve left open our rear flank.” 

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Tags: artificial intelligence, sgf2023, travel trends, zillow

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