There was little talk about geopolitical issues or economic uncertainty at Phocuswright Europe, where the focus remained on how technology—particularly AI—will reshape the industry to an unimaginable level. But while the consensus was that AI will somehow touch and transform every aspect of the travel experience, there was still the question: “How?” Supported by the conference theme, “The New Age(nts),” there was much speculation and prognostication, but most admitted they’re still at the early stage of experimentation. For that reason, the “how” is less important than the “when,” as the industry awaits AI’s impact on their businesses, their customers and the competitive landscape

So far, no travel company can claim a clear competitive advantage with AI, but there are no failures yet either—it’s still too soon. Perhaps the biggest unanswered question is who wins and who loses in a future where consumers rely on AI agents (as compared to clicks) to search, shop and buy travel. Will consumers use more Google or less Google? Will new players like ChatGPT and Perplexity become new travel intermediaries? Will Agentic AI be a boon for the supplier-direct channel? Or will the giant OTAs like Expedia and Booking get bigger and better? No one really knows. But that hasn’t stopped some of the industry’s best and brightest from placing their bets.

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“Distribution Will Change”

Many wise words were said from industry sages and pioneers, including Gillian Tans (former CEO, Booking.com) and Mauricio Prieto (co-founder, eDreams). According to Prieto, intermediaries are going to become plumbing. Who wins, said Tans, “depends on how they execute.” But everyone agreed that distribution will change.

Tans, who was employee number five at Booking.com in 2002, noted that much has changed but much has also stayed the same. “Consumers are still looking for trust, they're still looking for seamless experiences, they still look for the best experiences to create memories of a lifetime,” she said, adding that if the future includes making end-to-end travel “even more frictionless…it’s going to be fantastic.”

Slow Money Flow

How much money is flowing to support travel startups was up for debate. According to Phocuswright research presented by Mike Coletta, Senior Manager, Research and Innovation, it's been a very weak start to the year and “unless funding picks up a lot later this year, it's looking like it could end up under $5 billion by the end of the year.”

Most concerning for earlier stage companies is that the number of funding rounds being completed is down as well. Coletta speculated that most investors are investing in non-vertical AI businesses, vs. travel-specific ones. But some bridge rounds that are under the radar might be uncounted.

Amadeus Ventures is seeing “deal flow,” according to Susanna Chiu, Head of Amadeus Ventures, with 100% of the companies sporting some sort of AI technology. She added that business travel, payments, insurance and end-to-end journeys are among the most interesting sectors. With AI, “we're finally going to be able to get super long tail content in at scale.”

Europe has become a hotbed for startup travel funding, having grown its share to 67% of total dollars raised as of May. But much of that was at the expense of lower investments in the U.S. and Asia. And Toni Raurich-Marcet, General Partner of Traveltech 2, pointed out that much of the money flowing to European startups emanates from the U.S. anyway, making it tough to distinguish between markets.

What About China?

The China market is hot again. “Everybody's talking about it right now because its long-awaited outbound recovery is boosting travel across Asia,” said Siew Hoon Yeoh, Founder, WIT and Editorial Director, Northstar Travel Group Asia. China inbound is also seeing “phenomenal growth” from travelers from Asia because of the easing of visa restrictions.

A strong inbound market to South Korea is driven in large part by medical tourism, and outbound is strong as well. There are also record levels of inbound travel to Japan, making tourism the country’s second largest industry after automobiles.

A vibrant travel market in Asia has been a boon to the Trip.com Group, which reported 100% growth in its inbound business in 1Q25, Yeoh added.

Assumptions vs. Reality

With so much (too much?) talk about AI, do we sometimes forget about the customer? We think they want to do everything online, but Alicia Schmid, Phocuswright’s Director of Research, cited Phocuswright research that challenges that assumption. Although 47% of U.S. travelers prefer digital interaction versus human for things such as checking in, making reservations or getting directions, that is the highest share for any phase of the travel journey. And three out of four want human assistance during a travel disruption.

Dr. Olaf Backofen, Head of Retail Partnerships at Lufthansa Group, shared research findings from A/B testing for conversational booking using ChatGPT, whereby half booked the usual way and the other half through voice bots. The results: “64% prefer the traditional way of booking,” he said. But Backofen warned that resisters tend to be older. “If you ask Gen Z, it was already the opposite,” he noted.

The bottom line is that “now” is the time to test and learn. There is little doubt that AI shines in the inspiration phase as opposed to booking, which is still developing. Tripadvisor CEO Matt Goldberg believes there is a better opportunity for conversion in the AI path, but that requires experimentation. “Consumers who are coming in through AI discovery are often higher intent,” Goldberg said. “And so it's up to us to think about how to engage them and bring them to a natural conversion point.”

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A Consensus

There was mostly consensus among the speakers that AI can only help (not hurt) the travel industry, and that travel companies testing this early in the game have little to lose. An interesting perspective came from mega-travel investor Greg O'Hara, Founder and Senior Managing Director, Certares, who said AI can make us more efficient, giving us more time to travel. “So, … AI is probably something that's going to benefit the travel industry because you can't AI me out of my hotel, right?” he said. “I got to stay in a hotel.”

Phocuswright Europe was a wonderful three days of connection and discovery for attendees, startups and presenters. Sessions tackled such important topics as digital identity, airline innovation, hospitality tech, corporate travel, fraud, short-term rentals, experiences, sustainability and more, and featured CEOs from Tripadvisor, Hostaway, Digitrips, RailEurope, ixigo, Wego and others.

There is still much excitement about how technology will transform every aspect of travel, from streamlining operations to elevating the guest experience. As Goldberg told the audience, “Anybody who thinks they have it figured out is nuts, and we're trying to get there in a way where we're just experimenting and learning.” AI still hasn’t made a big impact on bookings or been a competitive advantage since it’s so ubiquitous. But no one has reported any big wins (yet) either. As the stakes get higher, that too will change.

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