Core Insights Summary
Based on years of observation, Rafat Ali, the founder of Skift, offers key advice to travel entrepreneurs: Don’t just focus on the massive $10 trillion market; instead, look for opportunities in the power dynamics within the industry—the crucial questions are ‘where the future value will flow’ and ‘who will be able to distribute that value.’ He breaks down how to identify these opportunities across seven dimensions: whether a company holds a core position in the supply chain, the real flow of money, leveraging structural contradictions among giants, focusing on the pain points of businesses (B-side), building a smaller ecosystem first, adapting to capital models, and the shift in user power brought about by AI.
1. Assessing Long-Term Value: Are You Irreplaceable in the Supply Chain?
To succeed and make money in the travel industry, ask yourself five questions:
- Will mainstream channels be willing to sell your products?
- Will customers turn to you immediately when they encounter problems?
- Will consumers specifically request your services?
- Do you have control over payment and booking data?
- Does the industry’s infrastructure rely on your systems?
For example, Airbnb can afford to not open its listings to certain AI agencies because users trust its brand; many people search directly for “Airbnb” rather than using AI to find accommodations. However, smaller distributors don’t have this advantage and are left out by AI, leading to frustration. Another example is Hipmunk, a once-popular travel search tool that was shut down after being acquired because it didn’t control the core aspects of transactions and user data—it was merely a “function” rather than a “key node.” Just having a good experience isn’t enough; you need to be in a position of power within the supply chain.
2. Don’t Chase User Access Points—First, See Where the Money Goes
The travel industry isn’t a single, large pie; it’s composed of multiple layers of “toll booths”—from content creation and search to booking and operations, each with its own fee collectors. For instance, a hotel that costs $500 might only receive $350–$475 after all the commissions and fees are deducted.
For decades, the battle in travel technology has been about “grabbing the toll booths.” Now, with AI, search, planning, and even booking could be taken over by AI agencies, potentially reshaping the revenue models of OTAs and search platforms. Rather than creating a more attractive app, consider who can become the new “fee collector” in the new transaction system.
3. Opportunities Lie Where Giants Avoid Going
Giants talk about valuing AI, but they still spend the most on marketing, branding, and traditional channels because they’re reluctant to abandon their existing profit models. Entrepreneurs should look for areas where giants’ actions could harm them, not for things they haven’t done yet.
For example, Booking can help hotels increase online sales but won’t reduce their dependence on the platform (as that would lower commissions). If your startup solves this issue (such as helping hotels build their own customer base), it creates a barrier for giants to enter. Leveraging these structural contradictions can make you irreplaceable.
4. B-Side Pain Points Are More Valuable Than C-Side Ones
Rafat Ali believes that it’s becoming increasingly difficult for C-side travel startups to attract VC investment. Google controls traffic, Booking manages transactions, and airlines direct sales directly, while AI agencies also capture user data. If your startup can address these issues (e.g., by helping hotels build their own customer base), giants will have to make significant changes to compete with you. The key to finding opportunities lies in identifying which corporate executives have the budget to solve these pain points. Pain points without funding are not viable business opportunities.
5. What AI Really Changes: Who Controls Users’ “Travel Memories”
AI doesn’t just generate itineraries; it also shifts user relationships from OTAs/applications to AI agencies. In the future, users might simply say, “Arrange a three-day trip for me,” and AI will handle everything. Whoever controls users’ “travel memories” (e.g., preferred hotels, types of rooms, price ranges, travel schedules) will hold significant power.
In the past, banks had payment data, and OTAs had booking data, but no one had comprehensive information about users’ travel habits across multiple trips. If AI can accumulate this data, it could become the new industry infrastructure. The next wave of entrepreneurial opportunities may not involve creating new apps but helping AI agencies, hotels, and banks connect these data and transaction capabilities.
Final Word: The Essence of Travel Entrepreneurship
The goal is not to enter the $10 trillion market but to find where power within the industry is shifting and build irreplaceable value there. In the AI era, those who can capture users’ “travel memories” will become new centers of power.
This analysis explains the core logic of travel entrepreneurship in plain language, covering key aspects such as supply chain positioning, money flow, giant contradictions, B-side opportunities, and AI impacts, making it accessible to non-experts and highlighting the most important considerations for entrepreneurs.