Considering the growing might of Asia-Pacific in the travel tech innovation, global GDS major Amadeus late last year initiated a dedicated programme to support tech start-ups in the region. In an exclusive conversation with TourismFirst on the sidelines of PhocusWright Conference recently, Simon Akeroyd, VP (Asia-Pacific), Corporate Strategy shared the details of this ambitious programme which has a specific community approach also involving big corporations. Edited excerpts of this conversation:
To begin with, let me get a sense of this Amadeus Next programme? Have you initiated it in a full-fledged manner and how would you explain the primary objectives of this programme?
First, let me explain the over-riding principles which is linked to my role. In my present association with Amadeus as VP, Corporate Strategy & Business Development for Asia Pacific, a large part of my role is to connect and work with external companies. Companies that are doing something innovative or have a new business model or adopted a new technological platform, etc. My job is to connect with these players and create something which is valuable for both of us. We have different levels of programme. Last year at the beginning of 2015, we began turning our focus on start-ups. These companies are innovative, creative and are going to be part of future of the travel business. And our ambition is to contribute in shaping the future of the travel. So we need to work closely with them and may be change some of our processes to make us more accessible to them. We started by identifying the kind of start-ups we need to be associated with. We have our own methodology to deal with start-ups which is called the lean methodology wherein we ask them what kind of support they need. One of the big surprises we had was that contrary to our expectations, the start-ups were not asking for financial support. Instead, they were asking for technology, access to customers, while they were willing to raise money from other quarters. After understanding their basic requirements, we launched Amadeus Next in November, 2015. And it is eventually shaping as a community. So Amadeus Next is about start-ups in travel tech sphere and around that we bring in other entities to help them grow. So we have government organisations, big corporates like Microsoft, some noted funding companies, universities and educational institutions, etc which are part of this community with all of them sharing this common objective of contributing in driving the travel tech business in Asia-Pacific. And since November, it has been a fantastic journey for us. It has not only been well received by the start-ups but also large corporations who want to participate in the travel tech space but haven’t done something significant in the past on this front.
So you are also involving corporates which do not have travel as the important vertical of their business?
A good example here is Microsoft. They have a programme called Microsoft BizSpark which is meant for start-ups. But they told us since you are doing something to promote start-ups in travel tech space, we will participate in the programme. That kind of support from peripheral travel tech corporation has been a surprise.
Any specific corporation from India which has joined your programme?
Not as yet but we will be looking forward to their participation. We have some Indian start-ups which have already become part of this programme. Triphobo is one of the earliest Indian entrant in our community. And then some other players have joined too – Tripoto, Travelibro, and Orahi, an upcoming car pooling company. So India is well represented.
How many start-ups are in your loop today, not just from India, but the entire Asia-Pacific region?
There are 15 start-ups who have become part of our programme. And there are many more who are waiting to join. We follow a process of identifying the possible new members. We have extensive dialogues with them trying to understand what do they want to achieve.
So what is the primary criterion to select a new member? Apart from representing a bright idea, what else the willing start-ups need to bring on the table to become the members of your Amadeus Next programme?
We have to look into a lot of things. One key trend with many start-ups is that they end up being different from what they had started to achieve. So it is not just the idea, you have to look at their team and the space they are trying to get into, the issues they are facing, the methodologies they are using, etc. We examine all these aspects and then try to analyse whether there is a match between what we tend to achieve and their primary objectives. An important element of our strategy is: we don’t put up money in start-ups at the initial stage though we can introduce them to the funding agencies. They join our programme voluntarily and there is no obligation on them. We are eventually looking for more compatibility and usually we find it.
Potentially, how big this programme can become in the next two years given the fact that Asia-Pacific has become the new hub of global innovation in the travel space?
At the moment, we are struggling to ramp up speed. It has been much more successful than we had imagined. Two years is quite difficult to know. The programme would obviously change depending on how the start-ups who are our members evolve. So at some point, we will have to change our gears from nurturing ideas to scaling ideas.
Since you also have funding agencies as the members of this programme, is there any possibility of creating a dedicated corpus sometime in the future to financially help the start-ups in your loop?
In the next community, we can introduce this funding option. We have VCs, angle investors and PEs who could put money in start-ups as they grow. Amadeus itself has a venture fund that picks up stakes in the promising companies. We have already made six investments under this programme, though they are in varied areas. There we are looking at trends which will be huge. Internet of things (IoT), for instance, fall under this category. The last investment we had made was in a company called Bluesmart. So if the companies come and grow with Amadeus Next and there is interest for us, we will invest.
This Amadeus Next programme- is it specifically tailor made for Asia-Pacific or you have done something similar in other parts of the world as well?
No. This is the first time we are doing something of this nature. For us, it is about proving a concept. We think that Asia is more of an early adopter than any other region in the world today. About 55 percent of the fresh funding which is happening in the global travel tech space is coming to start-ups in Asia -Pacific. With its innovative edge, creativity and the rising local demand, this is the perfect market for such a programme.
It is the innovation in the alternative accommodation sector which seems to be the flavour of the season in this part of world. Would you be showing more preference for players in this segment in terms of supporting them and help them grow to the next level?
There is no such bias from our side. We are open to all ideas. From Amdeus Next standpoint, it is one of the big trends we need to support but it does not mean we will keep ourselves restricted to this. The two big tips I have on trends which are going to significantly change the travel business include huge alternative accommodation space but at the same time, there are segments like cars sharing which will also grow big. On the other side, we have internet of things (IoT) though we are not precisely sure how it will impact the travel trends in the precise terms. But one thing is there: it may help in doing away with disruptions or will help in the recovery from disruptions.
There is an interesting thing happening in the market today here in India. Almost from nowhere, some start-ups have emerged with a bang on the horizon with unique product differentiation. They have attained scales and are also getting support from the usual funding quarters. But according to the established players, these new companies have attained scale by offering deep discounts. And, therefore, their business model can’t be sustained for too long. How would you respond to this trend?
When you are deep discounting, you are not a start-up any more. To be a major disrupter is a positive thing, this is how the world evolves. Disruptions can happen in the marketplace and we actually encourage it. The way to succeed is to harness it yourself. Amadeus wants to harness that kind of disruption in an early stage. We invest a lot in innovations to do that, to keep up with the trends and when disrupters come in, we have the technology ready. To label as a disrupter is good for a start-up through not all of them are really disrupters.