Cost-Conscious and Tech-Savvy: The Travel Industry's 'New Normal'

Speaker 1 [00:00:01] Hi, it’s John here.

Speaker 2 [00:00:02] And hello, it’s Theresa.

Speaker 1 [00:00:04] Theresa, you know, we’ve had a lot of false starts through this pandemic, but as we tiptoe into the spring of 2020 too, it really does feel like things are taking off. Just look at airports over the recent March break, people in big crowds heading off to all sorts of destinations. And I’m really intrigued by the rise of it’s almost reversed flight shaming. All my friends who are flying off to destinations far off are kind of mocking people who are stuck back at home. It wasn’t so long ago when they were being shamed for getting onto an airplane. I actually

Speaker 2 [00:00:39] love flying. I love getting to the airport early, sitting in the lounge with a glass of wine and a nice book or a magazine, and to me to start a vacation. But my partner and I, we went to the Caribbean a few months ago, and the requirements just getting into the country were extremely stringent multiple documents, validation portals and vendors that you got to go through. It’s stressful, but hopefully opening up soon and starting to feel like normal again.

Speaker 1 [00:01:04] One of the false starts I mentioned last fall, I did get into the air again. I went to London, England, to run in a half marathon. Awesome. And it was the first flight I’d been on in ages and found it really unnerving. And of course, it was chaos at the airport to get onto the plane. All sorts of procedures that people were just not ready for. So maybe we’ll all just adjust back to, to flying and traveling as quickly as we’ve adjusted to other things,

Speaker 2 [00:01:30] like less dress setters. And we’re not alone either. New data from RBC Economics just released mid-March confirms that travel spending has finally touched pre-COVID levels in Canada, though domestic tourism still outpaces international travel, of course, and the changes to Canada’s entry requirements meant an immediate bump in Canadians booking these long delayed trips abroad, and it’s also spurred international travelers to consider Canada once again. But John rising prices and geopolitical uncertainty definitely puts some of that momentum at risk.

Speaker 1 [00:02:01] So right, Theresa, I mean, we are seeing anything but normal in the new normal. We’re seeing inflation that very few predicted. Maybe it will ease through the year, but there’s no indication that it’s going to drop precipitously. The Russian invasion of Ukraine has rattled global markets and disrupted air travel as well in a significant part of the world. The next few months are not only going to be curious to watch, but there are going to be a real test for the travel industry. There’s no doubt a lot of turbulence ahead. And with a lot of innovation, and we’ve got a great conversation coming up about how those tensions may get resolved. This is Disrupters, an RBC podcast. I’m John Stackhouse

Speaker 2 [00:02:52] and I’m Trinh Theresa Do. In this episode of Disruptors, we’re looking at the return of travel post-COVID and exploring how everything from technology to global politics will affect how we travel this year and beyond to help us on this journey. We’re speaking with somebody with his finger on the pulse of Canadian wanderlust. Hussein Fazal is the CEO of Toronto-based SnapCommerce. Its flagship product, SnapTravel, is an AI powered half bot, half human service that helps customers book hotel rooms, flights and car rentals through their website, as well as through SMS, Messenger and WhatsApp. Hussein and his business partner Henry Ashi, have raised more than $100 million over the past five years, including a 2018 investment from basketball superstar Steph Curry. Hussein, welcome to disruptors.

Speaker 3 [00:03:45] Thank you for having me.

Speaker 2 [00:03:46] So last year it was a good year for SnapTravel: over a billion dollars in sales, but it’s been too long years of little to no travel for most Canadians coming out of the pandemic. What’s been your biggest learning about how travel is restarting and changing? Has anything surprised you?

Speaker 3 [00:04:03] Yeah. So actually a lot of times to have this conversation. The first thing I tell people actually catches them quite a bit by surprise, and it’s the Covid had almost two years ago, there was obviously a huge drop in travel and everyone kind of froze. But just a few months after that, we saw the US domestic travel picked up. So obviously, the international travel has completely changed with all the restrictions that I’m one being nervous. Even people within the US, let’s say, you know, flying across the country, that was an issue, but people stayed locally and they were traveling. So in Canada, we’re a bit more conservative and we didn’t travel as much. But in the US, domestic travel picked up after just two or three months. That completely surprised me, and we actually saw us getting up to almost pre-pandemic levels just a few months into the pandemic, which was a little bit crazy.

Speaker 1 [00:04:50] Hussein, do you think that’s a fundamental difference with Canadians or are we just kind of a bit or two behind where Americans were and maybe are?

Speaker 3 [00:04:58] Well, there’s a couple of things going on, too. First of all, I think it’s just Canadians being more conservative than the Americans. That’s just the way it works. I think there’s more people in the U.S. who just don’t believe in the virus and care about the virus, and let’s stop them. And then secondly, I think just the geography of the U.S., there’s just a lot of places where Americans can go, and there’s a lot of cities where you can go to nearby beach towns and nearby vacation spots. And there’s just more of that geography and more of that of that, hey, I can drive under 100 miles and I can go somewhere and get away, whereas, you know, we’re a little bit more spread out and maybe don’t have so many destinations to be able to do that.

Speaker 2 [00:05:36] Did you notice an impact when the federal government announced that there were relaxing COVID testing requirements?

Speaker 3 [00:05:43] Yeah, so that was almost instant, so if you look specifically at Canada and you look at international travel, that’s where as soon as those types of announcements come in, you see the changes almost immediately. So you see search volume go up. You see international travel go up versus domestic as a ratio. And then the other thing you also see is how far in advance people are booking. So people used to be pretty nervous and they would say, Hey, I’m just going to wait and then maybe book a day before or two days before. But as things start to open up, more and more now, people are starting to plan for their own advance. And they’re saying, now I’m going to go plan for the next holiday and the next holiday and start booking way in advance.

Speaker 1 [00:06:23] So, Hussein, there’s so much we want to talk to you about, but I wonder if we can get a sense of snap travel story. Give us give us a sense of the business model and where you’re going to take it as consumers get back on the road and in the air.

Speaker 3 [00:06:36] So the business started about five or six years ago, and when we started the company, we just heard a snap travel, as we’re talking about today, which is really about helping customers save money on hotels and giving them like great service. So our customer will come in to have a conversation with us. Similar to if you were talking to a travel agent, you can get some great deals. Then we make sure we use messaging to maintain that relationship with the customer, offer them a great service, be there for support and just build that relationship over time. What we have actually been working on and what we’ve expanded into in the past couple of years as we talk to our customers, is they’ve been looking not just to save money on travel, but looking to save money, needing to save money in other areas as well. So we’ve actually sort of expanded into what we call snap commerce now, sort of the parent company and where we’re on the verge of releasing some pretty exciting stuff around shopping and around fintech and helping their customers save money across everything they buy. But the core travel business is one that continues to do well and continues to grow. So you reference sort of a billion in sales that sort of, you know, cumulative over time. We’ve sort of got to that point with, with almost half of it just coming last year and that business continues to grow. And now, with the easing of restrictions and with people being with Covid sort of hopefully the last time now, you know, going away, we’re seeing that demand pick up. I was kind of looking at that some survey stats earlier and, you know, 67 percent of people plan to take a trip in the next four months. So I mean, there’s three of us here and now I’m planning to take a trip in the next four months. And I guess one of you, hopefully one of you are as well to prove the stats that I have and one in five, we’ll plan to take two or more trips and the next four months. So be is an exciting time seeing travel opened back up.

Speaker 2 [00:08:19] Staying on your platform for a second? I’m really curious why you chose to go down the route of a relationship based travel approach, because seems to me that we went from a period where we relied on travel agents to help us get these deals booked. But then we shifted to a largely DIY looking at the aggregators like Expedia and building our own itineraries. So why did you choose to go back to that travel agent approach?

Speaker 3 [00:08:42] Yeah. So I would I would think of it more as a hybrid, right? So I would say the major misconception that people have when they think about travel over messaging is that we are this like ultimate travel bot that has great natural language processing technology and can read your mind and you can say, Hey, I want to stay at a nice four star boutique hotel in New York, and we know exactly what we want to give you a great recommendation. That’s just not how it works, because I don’t know you to resign when you’re searching for New York. I don’t know exactly what you’re looking for. And even if I knew what you were looking for and I gave you a recommendation, you probably still want to see all the options right? You still want to see. Let me see, because I don’t know your trade off between price, location and quality. So we use messaging as sort of an entry point. And if you’ve used the service, what you’ll see is very quickly we take you to UI where you can use filters and you can see a map and you can see a list and you can sort of pick the hotel that works for you. So we’re messaging is helpful because it allows us to do some very interesting things. It’s after you’ve run your search in New York, we can continue to track deals. So if we find something that pops up and we know you’re interested in it, we can send you a message and say, Hey Theresa, we know you were looking at this hotel. You know, the price has dropped 20 bucks. Go take a look at it, right? You have a specific question. You can just pick up your phone and say, Hey, I have a question, you know, during Covid, this is actually a huge benefit for us because there are a lot of people who wanted to travel, but they were nervous and they wanted to know what’s the Covid protocol? What’s the event or even their refund policies right there? Hey, what’s the refund policy? What happens if I get Covid right? So. So messaging is great for retargeting. It’s great for continuing the conversation. It’s great for support. But it’s not necessarily better for the initial searching and browsing like, are you? A user interface is the best way to search and browse, and we continue to do that. So messaging is sort of that hybrid approach that we use.

Speaker 1 [00:10:28] If you can give away the secret and your secret sauce of saying what? What is it? I mean,

Speaker 3 [00:10:33] we’re super data driven company. I would say everything we do is around looking at data to help us optimize everything and women using that approach and just continuously optimizing. So that means optimizing supply. You know, what are people searching for? Let’s go and get the best supply over there, optimizing demand where the best demand channels, how can we match that optimizing product where people are dropping off in the funnel, right? And maybe if I sort of go back to that messaging approach that we talked about earlier, that’s an example, right? So initially it was all messaging. So you come in and say, Hey, I need a hotel in New York, and then we would say, OK, well, you know what kind of hotel you’re looking for? Or do you prefer boutique hotels or chain hotels? But like, OK, what’s your price range? We would ask all these questions to try and give you the perfect recommendation, but only look at the data. Every additional question you ask just results in more drop off. Just show me, show me you don’t like, don’t keep asking me questions. So you know, we said, OK. Well, why don’t we, you know, if someone says, Hey, I want a hotel, only now is will your city in your dates and like, here you go to cure all your options. Go take a look. And we’re glad to use messaging to answer any questions or to be able to target or have a conversation or do things like that. But the data driven approach tells us to stay focused on getting the customer a great deal and getting them that deal as fast as possible.

Speaker 2 [00:11:42] So something that was really cool with the app as there’s an option to layer in food and nightlife and other different aspects of cities. And the way that it manifests on the platform is through a heat map, which I thought was really interesting. So if I’m looking for a hotel in Chelsea, New York, I want to know, OK, is this hotel going to be close to where I can get all the great foods that I want to eat while I’m in New York? And as you were putting together the platform and as you’re continuing to evolve, how are you taking into account changing consumer preferences for travel?

Speaker 3 [00:12:14] Yeah, I mean, that’s a good question. And maybe that goes back to what I said about being data driven. So we’re always, always, always talking to our customers, even when we do have any idea as so let’s say the heat map, right? So you would think that the heat map is a great feature and the reality is there it is, but we don’t take anything for granted. So if we want to put on a heat map, we’ll go and ab test mosaic and let’s have the tropical heat map. Half the traffic will run without the heat map and then we’ll sort of see what happens. We’ll see the conversion rate difference. We’ll see that that’s with those difference. We’ll see the repeat rate difference to customers come back again because I like the experience. So it’s talking to customers keeping an eye out for what sort of product innovations out there, but ultimately being data driven and seeing what sticks and what doesn’t.

Speaker 1 [00:12:57] And tell us a bit about how you see the travel industry model and where you want to position yourself. Something I found always fascinating about travel is, in some ways, it’s a fixed pie. There’s a certain number of people and only so much we can travel. And therefore, over the decades, we see vertical integration or attempts at diversification. Are you looking at vertical integration, looking for different kinds of opportunities in travel? Or do you see it’s now travel’s future, maybe outside of travel? Yeah, I mean,

Speaker 3 [00:13:28] we’re looking outside of travel and not not for any other reason than that’s really what our customers are asking us for, right? Or our customers are saying, Hey, you just got me a great deal on a hotel. But what I could really use is to save money on Expedia. Save money on why, right? And that’s sort of where we’re leaning towards and moving to other verticals specifically on your comment about the travel industry and sort of it being a fixed pie. I think that some of that’s sort of true but also changing and that, you know, we have customers now or lose the new generation who are wanting to spend more money on experiences than spending money on things. Are you seeing almost like a shift in percentage of disposable income that gets spent on travel and experiences, which is different? So, you know, with previous generations, it’s like, OK, I’m going to have this much money to spend on trips or I’m going to go on one trip a year or whatever it is. And now the new generation saying, you know, I’m not going to own a house, I’m not going to own a car. And when you take the disposable income, I haven’t spent it on trips and experiences, so that’s happening. And then secondly, I think that people are even doing more local trips, and I think Covid actually accelerated that right. So before when you would say, Hey, I’m only going to go in one or two trips a year because you typically be thinking about getting on a plane and going somewhere. And now with Covid, there was this period of time where people were traveling, but they didn’t want to get on a plane, so they would start to take more and more local trips. So you’re starting to see this change was like, Hey, I can go in one or two local trips here and I can go on to international trips a year. So we are starting to feel like it is expanding.

Speaker 1 [00:14:58] Coming up after the break, more of our conversation with Hussein Feisal. So stay right here to see these pictures.

Speaker 2 [00:15:09] You’re listening to Disruptors an RBC podcast. I’m Theresa Do, RBC Economics and Thought Leadership recently published a report called Equal Measures Advancing Canada’s Working Women in a Post-pandemic Economy. In it, we look at the importance of boosting women’s pay and participation in the labor force and tackle some of the possible solutions. Among them establish greater parity between maternity and paternity leave and reduce the financial burden of taking parental leave, create more opportunities for upskilling and pathways for women into senior roles, and recruit more women into the skilled trades. To learn more, check out the link in the show notes of this episode and visit RBC dot com slash thought leadership. And be sure to follow disruptors wherever you get your podcasts. All places.

Speaker 1 [00:15:57] Welcome back. We’re talking with Hussein Fazal about the return of travel coming out of the pandemic, as well as some of the storm clouds on the horizon that could disrupt the recovery. We can’t talk about travel without recognizing what’s going on in the world and specifically the war in Ukraine and what that is doing, not just to that country and the region, but the disruptions it’s causing globally. Flights are being rerouted. That’s probably the least inconvenience out of the certainly from a Ukrainian perspective. But oil prices way up. How do you think that’s going to impact travel?

Speaker 3 [00:16:33] It’s obviously super sad and super unfortunate to see that happen. I mean, when this started, we actually blocked any hotel bookings in Russia. We blocked anyone from making bookings and in the currency is just extremely sad to see that type of unprovoked aggression. And our hearts are out to the people in Ukraine. Yeah, we’re seeing some increase in gas prices. We’re seeing some changes to inflation. But I think again, all that stuff normalize over a longer period of time. So I’m not I’m not too concerned about the long term ramifications of that right now. For us, or at least the way I think about personally is just obviously, no one wants this war to continue. And we’re sort of our hearts are with the people of Ukraine and that that’s the most important thing

Speaker 2 [00:17:14] as we are coming out of the pandemic, very high inflation and high costs or sensing this tension between the fact that it is frankly getting much more expensive to travel. And yet we all still want to do it because of the pent up demand of the last couple of years. So from your perspective, how sensitive are Canadian travelers to price increases and who is actually doing the traveling this year and next? Like who can afford to?

Speaker 3 [00:17:37] Yeah, it’s you know, first of all, I would say it’s not just Canadian doubted everyone is price sensitive. It has been some very difficult times for people in Covid, and there’s definitely a large segment of the demographics that have had a difficult time during Covid and now saving money is even more important. And then and then the opposite of that sort of what you mentioned is that we see prices starting to go up because there’s all this pent up demand and people have been waiting. Right. So. So I would say there’s definitely a demographic that has been saving money as that pent up demand is ready to go. And then unfortunately, there’s another part of the demographic that is now in some ways, somewhat priced out. I mean, I expect we’re going to see things normalize. I think that over the next six to 12 months, we’re probably going to see a lot of people traveling like way more than usual to make up for them for the past two years. I mean, one of them, one of the most interesting stats I have for you is that typically on any given night, about 30 to 40 percent of hotel rooms across the US go empty. So that means there is excess capacity and obviously it depends where you’re going. There’s some boutique hotels, a fancy boujee beach. They’re going to be sold out every single night for an entire year. But if you’re going to Vegas, where there’s tons and tons of hotel rooms, there’s a lot of places across the states and even plus Canada where there’s just a lot of supply. You’re going to have empty hotel rooms, so there are rooms available. And eventually the market’s going to normalize. These hotels are going to look to maximize the revenue to fill up those beds. The biggest tip I would say in terms of booking is just kind of really being aware of the booking windows and knowing how far in advance to book. So often you’ll get the best deals when you’re booking two to three weeks in advance. When you wake up to last minute could have a chance. But there’s also a risk there that you know you end up with hotels that sell out or end up filling up. And when you booked too far in advance, you’re probably not leaving yourself the opportunity for a hotel to say, Hey, it looks like we may not be a capacity. I think we’re going to we’re going to do a price drop over here, right? So. So ideally, you can you can sort of book two to three weeks in advance or if you’re booking well in advance, you’re doing that with a good responsibility policy. So if you see a price drop, you can go and say, I’m going to catch my booking and rebook Hussein.

Speaker 1 [00:19:47] You mentioned Canadians desire to travel internationally and of course, a lot of people, not just Americans, but Europeans and Asians are going to be traveling again. How do we get them and how do tour operators and hospitality operators get them coming to Canada and spending more time and money in Canada as the world opens up?

Speaker 3 [00:20:06] I think that in general, as a country, we probably need to do more. One of the things that I was really excited about and this is about four or five years ago, MGM was going to come here and they were going to come to Toronto and they were going to build out a complex. They were going to build out a casino, they were going to build a theme park. They were going to build sort of a water park. They were going to build, you know, a mall, meeting rooms. They were going to build a train from the airport straight to the MGM property. That’s the type of stuff where you can say, Hey, now, now there’s a whole other reason to come into Toronto and make this destination. Unfortunately, in order for MGM to do that, they wanted to obviously have a casino in place, and that’s something that the city ended up projecting, which is very disappointing because I mean, I understand some of the problems that come with having a casino, and I think there probably would have been some ways to mitigate those problems. But net, you talk about a major company like that. Coming in and putting in a major infrastructure project that makes Toronto more of a destination, so that’s at a country level or even a city level. We need to start thinking about doing things like that and building more of this infrastructure.

Speaker 2 [00:21:23] One of the great gifts that the pandemic gave us gifts or curses has been just the ability to connect with people across vast distances through a screen. To what extent do you think business travel will come back and how do you see airlines, airports, hotels changing their business model now, where they previously relied on that lucrative business traveler?

Speaker 3 [00:21:46] Yeah. So this is this is an interesting question that we talked about. So I can tell you internally how we think about it. So we are now approaching 200 employees. We are about, I would say, 60, 70 percent here in Canada, about 30, 30, 40 percent in the U.S. and globally. These are just executives who used to travel quite a bit. I used to travel almost once a month to New York, to San Francisco, and obviously in the pandemic, it was almost two years of almost no business travel. I just recently, I made a couple of trip to New York and San Francisco. It what it feels like is that some business travelers are going to pick up. There’s still no replacement sometimes for having dinner with someone or meeting in person. But I just don’t think that’s going to be at the same scale as before. So I expect that a lot of staff and a lot of meetings can just happen online, but that’s like deep relationship building of those strategic partnerships. That’s the type of stuff that I think is going to happen in person.

Speaker 1 [00:22:41] Hussein, as we move towards close, I wonder if you could share some parting thoughts on how we, as travelers may be changing. Something that fascinates me about travel is that it brings humans together, and we probably all longed to be on those crowded streets in Manhattan or even those awkward moments of being squeezed between people getting to their seats on an airline or trying to find a spot on a crowded beach or have a seat at a crowded cafe. And yet, after two years of pandemic, all that kind of seems weird now. Is that going to be the normal again anytime soon? Or are we as a traveling species going to be a little different coming out of this?

Speaker 3 [00:23:21] I think it’s a little back to normal. Some lifestyle changes have happened like there’s been people who move from downtown to the suburbs and people who are, you know, have more space and maybe are working from home cause they’re just not going out as much. But I think the next time you’re going to get into crowded coffee shop or a crowded beach, you’re not going to think twice about it.

Speaker 1 [00:23:39] So if I hear you correctly, what you’re saying is I’m going to have to stand elbow to elbow with people again to appreciate a painting at the at the moment.

Speaker 3 [00:23:46] I think so. I think

Speaker 1 [00:23:47] that’s OK. I’ll look. I’ll look forward to that moment. Hussein, thanks so much for being on RBC disruptors.

Speaker 3[00:23:52] No problem. Thank you for having me, John.

Speaker 2 [00:23:56] That conversation has me itching to plan my next trip, maybe even with an AI powered chat bot. I really love the optimism that Hussein had about where travel is going and the opportunities we might have to travel. Given the changing nature of work, that extra flexibility means that you might be able to do two weeks in a far off city as long as you can check into your computer every day and get your deliverables done. And at the same time you’re in a new place, you can close your laptop and then go out and explore a new city and eat great food always comes back to food. For me, that’s what I’m really, really jazzed about. How about you?

Speaker 1 [00:24:33] Yeah, it makes me want to get on a plane probably two to three weeks from now, but I also realized how technology really is changing travel, not in the ways that maybe some of the extreme thinkers thought that we’d all sit in our basement with our VR goggles on and go places without having to leave home. But it’s technology that is optimizing the ability to travel for all of us. It’s not only making it more affordable and accessible, but as Hussein was saying, we’re getting better and better deals. Maybe not as good as we’d like all the time. But with technology getting better, the opportunity to travel will improve with it.

Speaker 2 [00:25:13] And the best part is you have a machine searching up those deals for you, and you’re not spending that time trudging through websites yourself. Well, that’s all for now. Thanks to our guest again, Hussein Faisal of Snap Commerce. Next week, join us for the latest tech and innovation buzz with our 10 minute take series. Until then, I’m Theresa Do and I’m John Stackhouse.

Speaker 1 [00:25:33] This is Disruptors an RBC podcast. Talk to you soon.

Speaker 4 [00:25:42] Disruptors, an RBC podcast is created by the RBC Thought Leadership Group and does not constitute a recommendation for any organization, product or service. It’s produced and recorded by Jar Audio. For more disruptors content, like or subscribe wherever you get your podcasts and visit rbc dot com, slash disruptors.

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