“I hope to be around when the next big thing arrives,” says Chris Hemmeter
Who will be the first travel startup to create the “Uber of generative AI”? That’s the challenge Chris Hemmeter, managing director of Thayer Ventures, issued at the Innovation Roundtable at Phocuswright Europe taking place in Barcelona this week.
“Right now, we are just seeing AI being used as a tool in itinerary planning, customer service,” said Hemmeter, “but will we see it become a new computing platform as mobile was to Uber? The speed of iteration is amazing. I hope to be around when the next big thing arrives. AI is the most over-hyped and under-hyped thing right now.”
Talking about other trends he’s watching, Hemmeter believes that “everything about hospitality and tech is in play right now” given the rise of new software platforms challenging Oracle’s Micros Fidelio, which has been the dominant PMS in the hospitality industry for decades.
He also believes that “sustainability is here to stay”.
“If you look at how important it is to corporate travel … travel management companies are asking tougher questions and hotel companies are making massive statements of intention and no one has any clue how to get there.
“We will see lots of creative, green business models born to solve the problems.”
He is also excited about the change in the way is travel is being sold – from the old world of expensive search on Google which made it impossible for smaller players to compete to the new world of influencers and social media popular with Gen Z and Millennials.
This has reignited his interest as an investor in B2C models. “This will unlock enormous value because we can see the rise of verticalized brands targeting specific travellers in different ways that do not involve massive spending on ad words.”
Lisa Katsouraki, head of corporate development of eTraveli Group, believes it’s the best of times to innovate and be a startup. “It’s a good time to innovate. Opportunity costs are lower. Shifts are happening. I believe the next startup to really change things will be created at this moment.”
The investment climate though is not healthy, said Hemmeter, and startups caught between seed and raising Series A will face the biggest challenge.
“We cannot underestimate the effect of high interest rates on the investment market. If you can get 5% on the money market, why would you want to invest in something else that’s higher risk like a startup,” he said.
“This has changed the financing environment, and there’s pressure on the value chain. Public markets are shot and M&A has largely been suppressed by high interest rates, so everyone is poor across the value chain, and it’s more difficult to raise funds.
“We have moved into a world in which investors are obsessed with capital efficiency, not high growth. They’re more interested in whether you have cash flow or can break even within 24 months than some big story around unicorns.
“Any investor who tells you they are still interested in backing the next unicorn is either full of s… or is 25 years old.”
Having said that, he said, “it’s an even more exciting time to be in travel” and besides, “all the noise is gone and I think it’s a healthy thing.”
Thayer, he said, has four investments and has just signed two term sheets. “Post pandemic, there is more interest from the supply side. Travellers have changed, more tech-driven and there’s ground swell in the green model space. The top of the funnel has changed – more social, more influencers.”
