GMH Bonus: Sam Shank on How AI Could Reshape Online Travel

0:16Sam Shank: All right. Good morning listeners. Welcome back to the show. I'm Wil Slickers and today I am with the one and only Sam Shank who is a co-founder and CEO of Hotel Tonight which was acquired by Airbnb. We've had him on the show before. But Sam, we're here at SCIF Global Forum, and I think there's been a lot of OTA talk, and you're the man to talk to around this. We'd love to get your thoughts as we're talking about AI and what that impact is going to do to online distribution. And I think you're going to have a lot of good thoughts. So welcome to the show.

0:47Wil Slickers: It's great to be here. Great to be in person with you, and great to be back on the show. And it is a really pivotal time, I think, for OTAs because I have been thinking for a long time about what happens when you have an agent, an agent like the, in the movie Her, you know, that is your perfect executive assistant. And everyone has one of these. What happens to an OTA experience where you don't need to go to a website anymore to book a hotel? And that changes a lot of different things for an OTA. And what's relevant for this discussion is that with Instinct coming out and Muse coming out over the past few weeks and really capturing hearts and minds, it also has captured the hearts and minds of Wall Street.

1:30Wil Slickers: Oh, yeah. The public OTAs have definitely suffered because of the perceived threats that are there. And for me, the biggest threat that I see, and I think why booking and Expedia are more exposed than Airbnb, is that an agent doesn't care about rank order and search order, which is sponsored, and doesn't care about sponsored placements as well. It can ignore all of that. So humans have a bug in their code. Humans do that. They think that something that is sorted from, you know, one to N, that number one is somehow the best, no matter what that is. Right. So even though it's paid, somehow we think that the first thing on the search results on the list is better.

2:14Wil Slickers: An agent doesn't have to like, you know, have that conclusion. It actually can look at everything, all 900 results for New York, and then determine what's best for me. And so that blows a huge hole in one of the most lucrative, highest margin areas for Expedia and booking, which is their sponsored results. And that's an enormous threat for those businesses.

2:36Sam Shank: Totally. And as I'm thinking about it, I was hearing Dara talk about how a lot of their traffic, he's not fighting the Google game like Expedia is or booking.com because a lot of his traffic is organic in an app. Do you think, same thing with Airbnb, right? Like Brian has stated multiple times, a lot of their bookings happen via mobile, or at least on the app. And they're not really fighting for that top placement on Google or whatever search. And so do you think that will also have anything to do with these new AI agents like Muse coming in? Or at least with the difference of getting to the site on mobile or via online web traffic?

3:12Wil Slickers: Absolutely. So the other reason that Expedia, but especially in this case, Booking.com has a lot of exposure is that a lot of their transactions and like most profitable transactions come from a Google search, paid search, right? And that's been an enormously successful partnership between Google and Booking over the past 20 years. Booking.com is the number one advertiser on Google. It's a great relationship. it only works if people keep searching on Google. So what happens when you just tell your, instead of saying, I want to book the XYZ hotel, you know, in Milan and the first result there is booking.com and you go to booking.com and book it, right?

3:55Wil Slickers: What happens instead of when you tell your agent, go book the XYZ hotel in Milan for me. The starting point for those commerce searches is the most lucrative place to be in the entire consumer information and consumer economy. me. Right. And that's been Google for many, many years. Um, and so now, and before that it was, you know, newspapers and the phone book, right. The yellow pages, that was very lucrative too. Um, but, uh, but when it becomes a agent or muse or instinct, um, that is going to open up new opportunities for, for businesses to, to optimize for that. And the same way that booking.com is optimized for Google SEM.

4:41Wil Slickers: I think that they have a lot of exposure to look eventually like what TripAdvisor looks like now, which optimized for SEO. And when SEO went away, so did TripAdvisor.

4:53Sam Shank: Well, these are billion-dollar companies. So I'm curious, what do you think the speed is in terms of true threat level, like threat level midnight, if we're going to pull a Michael Scott reference from the office, but like, I can't imagine them just evaporating, right? Like there's, they're too big almost to fail, but how long do you give them in terms of the, this timeline of like, Hey, you guys really need to make some changes before you could crumble. And they're not going anywhere.

5:22Wil Slickers: Like they're very profitable companies. Um, and, and both Expedia and especially booking.com have a really incredible inventory. And in many cases, like very unique inventory that is still going to be valuable for an agent to use. And agents will prefer to use booking.com in many cases, maybe even more cases, because it'll recognize the value that booking has where somebody may not even know booking. So I think that that would be one of the answers that I'm sure Glenn is thinking about. and one of the durable competitive advantages that they have. And also, people were worried about SEO drying up for a long time with TripAdvisor.

6:09Wil Slickers: And it didn't happen for many, many years until it all of a sudden did happen. So it's very hard to predict exactly when these things will tip. Same with newspapers. The newspaper stocks were shorted for and were really like low, you know, in terms of valuations for, I think, eight years or something before their revenues really collapsed. So, you know, the market sometimes is well ahead of things.

6:33Sam Shank: Right.

6:34Wil Slickers: And and so the newspapers had much better businesses for a lot longer. So it's very hard to predict exactly when these things will tip. Um, but, uh, but yeah, I mean, I do think that, uh, you know, exploiting a flaw in the human brain, like, you know, that is an arbitrage that, you know, may not, um, exist in a world of, you know, very, uh, cheap intelligence that is working for you all the time.

7:00Sam Shank: Yeah, totally agree. And as you're talking, I'm kind of thinking about too, like a lot of the brands themselves aren't already doing well, like, right. They, they, they have a website, maybe they're obviously like listed on booking Expedia and all that stuff, but their direct traffic is already hindered with SEO. And now if, you know, they can't be found on SEO, what makes you think an agent's really going to be able to find you? Do you think that has going to like any direct impact to the brands themselves that are listed on these distribution sites, whether they're a hotel or a short term rental?

7:29Wil Slickers: Um, yeah, absolutely. The, the discoverability, um, challenge is still there. Right. And, uh, and I, I think that I would expect that there is going to be like specialized agents that work for brands to help them get to be more visible. You know, when you say, Hey, I want to go find a vacation, a great vacation rental in Santa Fe. Right. Like now, how does an individual that has their own website get visibility there? that that is a an unknown like you know a problem with an unknown solution right now yeah but i i do expect that there will be some interesting companies created to help with sort of agent visibility um and uh and and help and there'll probably be specialized agents that that help a master agent yeah um you know with specific tasks uh so that's sort of my vision for where consumer like products are going there'll be a really good agent that you know might help with direct vacation rental bookings.

8:29Wil Slickers: And there might be an agent that helps with really difficult to get into nightclubs. The same way that a really good executive assistant calls on specialized concierges for certain things. So I think that there'll be a lot more of those. All will happen behind the scenes. It'll be seamless from a consumer perspective. But there will be probably payments from individual brands to work with these specialized agents so that they can help them get, you know, more share of somebody's wallet and help them tell their story to an agent about why they matter. Yeah.

9:07Sam Shank: Do you think that's just how it has to start with like one master agent to a bunch of little agents doing individual things just because of how new the AI is developing? Or do you think there's going to be a time like kind of what you referenced earlier with her, right? Like the perfect one agent doing one thing, all things simultaneously. Do you think it's going to eventually evolve to that? Or are we going to be stuck with managing, maybe not even fully managing on our own and not even being aware of it, but like managing thousands of agents across specific individualized specialties?

9:37Wil Slickers: Yeah, I, my vision is that it's going to look like sort of both of those, which is that I think consumers prefer to just have one place that they interact with. Same way that like Google search one, right? Right. It's there's nothing that prevented you from going to a specialized search engine for different vertical searches. It's just that like, you know, hey, I don't want to. I want to go back to the same interface, to the same starting point, same search box. Exactly. And so the same way with an agent. But then those agents, you know, may not be the very best at every sort of task. Right. There might be agents that are trained on a very specific task or have specific access to inventory or something.

10:17Wil Slickers: Right. And so there will be a relationship between your master agent and a specialized agent to solve a particular task. But it won't be something that the consumer ever sees. Yeah. Yeah. It'll be like, hey, hey, like, yeah, I did get you into that nightclub. I got you your favorite table and bottle service or whatever. Right. That that's the same way that an assistant would call somebody in Vegas and set all that up for you. But you don't know that like who they talked to or what. You just know that it was soft. Right. and that you can go to the door and give your name and have a great night.

10:50Sam Shank: Yeah, I love it. I've always kind of thought about that. I was like, do I want thousands of agents? But at the end of the day, you're right. They won't even be seen or heard of. I'm curious, though, because I've seen on LinkedIn, you're on a lot of boards now. You've done a lot of activity with some startups. And so I kind of want to ask you the question. You're in the scene. You're seeing what's being built today. but also you built a really successful online travel agency that obviously got acquired by Airbnb. And so I want to know, like in this age of agentic and AI and just the amount of conversation happening, like you were hearing on stage, if you were starting Hotel Tonight today or had Hotel Tonight at its peak during this age, what would you be thinking about?

11:32Sam Shank: Like, what would be like something that Glenn and Arian and everyone needs to be aware of as they're kind of, I think everyone's just kind of figuring this out or trying to in the dark somewhat, but you're getting to see a little bit from the outside in. So we'd love to know like at peak hotel tonight, what would you be doing that you didn't do prior to the agentic age that we're in?

11:54Wil Slickers: Yeah, I think that the, you know, playing out the scenario that we were talking through, um, that I'm, it would be turning hotel tonight from a, an app into a specialist agent for last minute accommodations and all the logistics around that. So like when I tell my master agent, like I need, like I decided to not go home tonight. I need a, uh, a room in New York, whatever, um, that it then can route to hotel tonight. Hotel tonight has the very best inventory, it knows that those rooms are actually available and it can get you the best price. And Hotel Tonight would not only have its own inventory, it could also know where else to go to check for that inventory.

12:38Wil Slickers: So we would somehow broaden, like maybe we can even look on other sites for you and that's a service that we provide. But we also work directly with the hotels in a marketplace that's a competitive marketplace to find the very best price and great unique inventory. But yeah, I would reposition and augment Hotel Tonight as a super agent focused on, you know, I need a hotel tonight. It's sort of going back to what we started with, with Hotel Tonight. Yeah.

13:05Sam Shank: So you would literally change it from a kind of a consumer facing brand to an agent, a B2B agent. The customer is not the consumer, the customer is another agent. Yeah. Wow. That's very interesting. I'm wondering, like, do you think that's going to happen? That's going to play out like is that how the OTA role is really going to truly train like turn into because if the agent you know if no one's going on google themselves like let's say you're not even pulling up google on your phone um the agent still has to go somewhere to find this so I'm assuming google's

13:34Wil Slickers: not going to go away I mean well let's come come back in a year and we'll see like what happens but I could totally see it like an agent doesn't need a website yeah um so one of the companies I'm involved with, Nuite provides API services for hotel booking. So they power Capital One and Revolut and a bunch of other great brands. And they're very well positioned for this because they don't have a website and they don't have a margin structure that needs to support a website. So they work with a lot of the best right now AI travel agents and that then can go to Nuite, search 200 sites with one call and come back seamlessly for the customer with a really good, you know, vetted, um, price and availability, um, you know, without the agent itself having to go out to 200 different places, which would take a lot of compute, a lot of time, um, and not be good for the overall, uh, economy either because information economy, because those sites have to pay for all those, that traffic coming in as well.

14:35Sam Shank: Yeah.

14:35Wil Slickers: Um, so, uh, it's a company, it's a, it's basically a headless OTA can be the way to think of it. And that's a very, you know, positive and strategically valuable position to be in, in a world where like people are not going to websites, but agents are doing things for you.

14:53Sam Shank: Well, it's very different too. I'm thinking of like, you know, the like era of funding that our industry has had over the years. And it's like all of these consumer facing brands or even just like really big B2B brands, but to be faceless, no website. And again, I think we've heard this on many other podcasts, like all in, right. Where a lot of startups are going to be like two founders, maybe one employee and a bunch of AI. Uh, we're already seeing that play out. Um, and the fact that you don't need a website anymore, it's very different because everyone's always like, you know, if you start a business, you have to get your website and get your social handles, do this, do that.

15:23Sam Shank: And now it's like, actually it's the best product, the best speed, um, it's going to win.

15:28Wil Slickers: Yeah. And there's, you know, in terms of arts to say that there's, you know, a hundred different like hotel booking super, uh, specialist agents, right? Which one does instinct use? So there will be like essentially an app store, like, or a Google search results page, like page rank for super agents or specialist agents, um, to like, that are looking at task completion rates, like success rates, you know, uh, SLAs on speed, um, you know, cost, like a bunch of different factors that will then rank which of these specialist agents do I use for a particular task. That criteria hasn't been developed yet.

16:09Wil Slickers: It will, and there will be an entire industry around optimizing your specialist agent to be seen in the most positive way by a super agent.

16:19Sam Shank: Yeah.

16:20Wil Slickers: I don't know. It'll be like agent optimization. Just wait for it. There will be a term for this. Yeah, there will. You heard it here first, listeners.

16:30Sam Shank: Actually, my last question for you is, as I know we've heard on stage here at Global Forum about security and trust. I think truly trust maybe is a word that gets overplayed in our industry. Everyone's like, oh, you have to build trust with the consumer. And yes, that's true, especially for short-term rentals or whatever. But I don't trust giving my credit card to an agent yet. What are your thoughts just around security and safety with AI and how this is all going with agentic?

16:59Wil Slickers: I think, you know, in the early days of the internet, people were uncomfortable with like doing a purchase online. Right. And then, you know, there were two things that happened. One is that, you know, enough people did it, you know, that you, you hear from your friends that they've done it. And so it feels comfortable. Then, then the second is that the convenience, you know, went up so much because you can save money, you can save time. And I think that, uh, both of those will happen as well, you know, with, uh, with the super agents and yeah, you have to like, it's a leap of faith. Like you have to trust them, um, to share your inbox with them, but the return you get in terms of productivity, um, is, um, just absolutely incredible.

17:40Wil Slickers: And when people say, all right, that's the trade, it's like, actually, yeah, it's, it's totally worth it. Um, so, uh, You know, it'll happen over time, but it's up to these services to really prove their worth and, you know, to do all the things they need to do to keep everything private, which I think they're doing a nice job of.

18:00Sam Shank: I was just going to ask you that. I was like, do you think they're moving too fast to worry about security? Like, I feel like, you know, we are hearing, you know, these new updates from, you know, OpenAI, Cloud, or Anthropic, and they're like, oh, maybe we're going a little too, like it's building too fast. do you think that's like security still top of mind when that's happening or

18:20Wil Slickers: i don't know yeah i mean there there's uh i mean they're going too fast is is also a concern just about the capabilities of these models and can you know we keep them you know can we understand what they're doing and make sure that uh we're not unleashing something you know to the world that's dangerous right so there's that there's that concern and then in terms of the overall security of the platforms. I think that it's a bit of an arms race. And so the models get better that are defensive models, the models get better that are offensive models. And so there's a continuous tension there. But for most consumers, even if the worst case happens, getting hacked is very undoable.

19:06Wil Slickers: And I don't know, my social security number is all over the internet, I'm sure. And it's okay. Like, I mean, it's, uh, you know, I'm, I'm fine. I'm still here. I'm not breached. Right. So, um, so I think that there's, there's a little bit of a, of, you know, maybe misplaced concern over like what, what is the, you know, the, the worst thing that could happen maybe. Um, but, uh, but I also, um, I think it's, these companies also know that if they do have a breach that, you know, you only have, you know, one chance to lose people's trust and then you're, you're done forever. So if there was a massive breach, like people will shift from instinct to muse or back and forth.

19:44Wil Slickers: Like the, and I would do it in a heartbeat, you know, the minute that they lost my trust. So they know what the stakes are. And I think that because of that, I trust that they're investing their resources wisely.

19:56Sam Shank: Well, it makes me think of brands that are a lot smaller, right? Like a Capital One or a Marriott or a Airbnb. They have huge IT departments to make sure that they're like protecting consumer data. But if you're like a smaller brand, I don't think it was maybe front and center for a lot of these smaller companies. But now it's like, oh, yeah, we really actually have to protect our consumers' data because that's part of the trust part, right? Like if something gets unleashed and you're not safeguarded or doing two-factor authentication, basically, with your client data, that's something to be mindful of.

20:28Sam Shank: And yeah, I don't think that was front and center three years ago, right? So, yeah. Absolutely. important to lock it down.

20:35Wil Slickers: Yeah.

20:36Sam Shank: A hundred percent. Well, Sam, thanks for joining me on the show. Again, it's so great to be in person. Uh, thankful for the time and for all the listeners, make sure to obviously follow around and follow and, uh, like, and subscribe with what Sam is doing on LinkedIn. Sam, thank you again. All right. Thank you.

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