As WiT Singapore 2018 took its first steps Through the Looking Glass at Marina Bay Sands this morning, Robert Rosenstein (co-founder & chairman, Agoda) sat in the hot seat to reflect upon how the travel industry has evolved in his years running Agoda.
In a past interview, Rosenstein described travel as a “market of monsters, copycats and startups”. Fast forward to today and Rosenstein stands by what he said, arguing that he still believes it is a fair assessment of the industry today.
The key difference being that many of the companies that were just starting out in the travel space have stayed long enough to become the monsters themselves, Agoda being its own example.
“Everybody is interested in the travel space and the big story we’re all following is… it all started with disruption by adding inventory to the mix that didn’t exist before… and then it became about disrupting the technology itself,” said Rosenstein.
Out of that technological disruption came the emergence of “super apps” or ‘single ecosystem’ apps that are working to bundle multiple experiences and services into a single platform. Grab and Gojek are key examples of this – offering food delivery, ride hailing and more through their app.
But Rosenstein took a critical view of this by asking, “Are we really changing behaviour or putting everything together to make the most of already addressable markets?”
Perhaps the move is less innovative than it is opportunistic, when considering this view – though seeing how these businesses develop from this stage will be what truly marks their success.
Nevertheless, companies following this growth track could be regarded as having been born into a particularly blessed period of travel, where capital flow seemed limitless.
“I think what we’re seeing today is a function of capital. There has been such a flood in this industry… the access to capital in the amounts we have seen has been great for some businesses, but it may be negative for today’s entrepreneur. Many aren’t prepared for a potential return to a very restricted capital environment,” said Rosenstein.
“If companies have gotten too addicted to spending money for market share without figuring out the trade offs, that’s going to be a very painful transition for some of these companies [when capital runs out].”
Adding to the point, Rosenstein remarked that he did not believe it is particularly great time to start a travel business. “I would only do it if it’s something you’re willing to do for free… you have to be prepared to fail.”
Though that’s not to say incumbents are on safe turf. He warned that incumbents must always keep an eye on potential future avenues for disruption, citing Airbnb and Traveloka as a newer, potentially more powerful breed of company. Established, traditional players risk losing their stake if they do not anticipate how the industry will move, and how they can adapt.
“Laziness is a sure way for a big company to become a small company… [you need] competitiveness and humility – that’s the key. You have to want to win but not take yourself too seriously.”
Reflecting more generally on travel, Rosenstein remarked that for all the immense growth in travel and its ability to impact economies, “the impact on local communities hasn’t always been what we really want it to be.”
“Travel can be a force for good but the way it’s played out in many local communities hasn’t worked out, nor for the ecosystem or the environment.” But what duties does a ‘monster’ have to protect the very thing that feeds it?
Rosenstein strongly advocates fostering greater cooperation and a tighter relationship between the public and private sector, exploring social, or smart city initiatives that could greatly benefit local communities. However positive initiatives are difficult to scale.
“I think things need to start small… and [we need to] look at the world from a bottom up perspective.”
