Hi there,

Ready for some quick tech trivia to kick things off?

What does API stand for?

If you shouted "Application Programming Interface," you're not alone—but Amazon might disagree.

For them, API seems better defined as "Actual People in India."

The Information recently uncovered how Amazon's heavily praised "checkout-free" grocery stores, which were supposed to rely on computer vision to manage customers' checkout processes automatically, actually depended on thousands of remote workers in India.

These workers manually reviewed videos, checked shopping carts, and ensured receipts were correct.

In other words, what was touted as all AI techno-magic was essentially just labor cost arbitrage.

This example underscores the crucial need to maintain a skeptical perspective when assessing tech trends, especially with the AI hype machine in full swing.

Hence, in today's newsletter, we dive into a quick data-driven analysis of Artificial Intelligence in the Travel and Mobility Tech sectors.

Enjoy.

Your Lufthansa Innovation Hub Team

Research

AI Investment Trends in Travel and Mobility Tech

Given the ongoing AI boom, we aimed to delve deeper into how Artificial Intelligence is influencing Travel and Mobility Tech.

To accomplish this, we examined the investment strategies of 60 leading corporations (including their VC arms and investing subsidiaries) within our sector, spanning aviation (including airlines and airports), online travel agencies, hospitality providers, and mobility services.

We analyzed their company investments from 2018 onwards, which included startup investments, mergers and acquisitions, and other forms of engagement like joint ventures.

Our goal?

To decode the investment landscape within Travel and Mobility Tech, which offers valuable insights into the priorities of leading industry stakeholders and their respective focus fields in preparation for the future.

In particular, we focused on companies' technology investment strategies to answer a critical question:

Are the AI investments by Travel and Mobility Tech corporations aligning with the broader tech industry's enthusiasm for this technology?

Travel and Mobility Tech's AI Investment Landscape

To begin our analysis, we gathered all investment data related to the 60 most relevant corporations in Travel and Mobility Tech.

We then filtered out all invested companies that were not based on any specific key technology. For those that were, we categorized each investment by the respective key underlying tech capability.

As the chart illustrates, AI (including Machine Learning) is indeed the most represented tech area, attracting two-thirds of all investments by travel and mobility corporations.

This significant focus on AI-powered companies spans several key applications:

Autonomous Driving: Investments are frequently directed towards companies specializing in computer vision and LIDAR systems, which are crucial for developing self-driving vehicles.
Robotics and Drones: This includes firms focused on autonomous manufacturing processes and delivery systems.
Predictive Analytics: Investments are targeted at companies enhancing process optimization using AI and ML algorithms.
Customer Support: Enhanced by natural language processing capabilities, including large language models (LLMs), these investments aim to revolutionize customer interaction platforms.

This broad distribution of investments across various AI applications signals our sector's commitment to integrating AI technologies into today's product and service offerings.

The Longevity of AI Investments in Travel

In light of the evident prioritization of AI within our industry, a second crucial question emerged:

Is this focus on AI a fleeting result of the recent surge in Generative AI popularity, or does it represent a deeper, more enduring trend?

To determine this, we analyzed the distribution of technology investments over the years.

Our findings reveal that the focus on AI seems far from being a recent phenomenon.

AI investments have consistently represented the majority of technology investments, accounting for 60 to 70% annually over the last six years.
This finding indicates our sector's long-standing commitment to AI as a pivotal technological pillar across various subsectors of Travel and Mobility Tech.

In fact, such sustained investment levels suggest that our industry recognizes AI's transformative potential not just as a tool for incremental improvements but as a fundamental driver of future growth and innovation.

Leveraging Gen AI: From Observers to Participants

With the rise of Generative AI (GenAI) causing a recent surge in AI interest, we explored whether travel and mobility corporations have merely observed this trend from the sidelines or actively engaged with it.

Our analysis indicates that only a minority of corporations in our sector have begun to explore the potential of GenAI, with a modest but notable flow of investments into GenAI-powered businesses.

To date, roughly a dozen notable investments have been made in this area, spread across four primary application fields. Customer support through Generative AI-powered chatbot interfaces is just one of these fields.
Other areas, while less customer-facing, are heavily oriented towards enhancing operational efficiency within companies.

Operational Excellence in Aviation

In the last part of our mini-analysis, we looked beyond AI to understand the specific investment activities of some of the subsectors in Travel and Mobility Tech.

We were particularly interested in what airlines invested in.

So, we turned our attention to the aviation sector's investment strategy.

It's evident that companies in this space—ranging from airlines and airports to aircraft manufacturers—have been particularly keen on enhancing their operational efficiency, whether through the help of AI or other means.

Our analysis of investments made by the aviation industry reveals a compelling trend: over half of all investments have targeted companies that bolster core business functions.

These investments have focused on improving ground operations, workforce management, flight operations, and maintenance, repair, and overhaul (MRO) activities.

This strategic allocation of capital indicates a clear commitment from aviation players to not only recognize the critical need for robust operational capabilities but to invest in solutions that can optimize these areas actively.

By partnering with innovative startups, aviation stakeholders are leveraging external expertise to address some of their most pressing operational challenges.

This not only helps in refining their day-to-day operations but also positions them to meet the evolving demands of the industry going forward.

There Is More To Come

Interested to learn more?

These findings are just the beginning of our deep dive into the comprehensive investment landscape of Travel and Mobility Tech.

Stay tuned for more detailed insights in the upcoming weeks.

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AI TRAVEL SEARCH – Google announced that it is adding several new tools meant to help travelers plan trips and explore destinations. Most notably, they include the ability for Google Search to create itineraries based on prompts from users, as well as enhanced information in Maps about certain cities and places to visit.
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ALL YOU CAN FLY – Are flight subscriptions starting to take off? AirAsia recently unveiled a revamped version of its popular travel subscription plan, now offering unlimited flights among the 10 ASEAN countries. Alaska Airlines, which already offers an annual flight subscription program, also announced the launch of a club-style program that offers additional benefits for a monthly fee.
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ZERO INTEREST—Uplift, the "Buy Now Pay Later" solution for the world's travel brands, has announced the expansion of its partnership with Southwest Airlines. As a result of this collaboration, Southwest Airlines has launched interest-free financing on select flights going forward.

Most Recent Investment Deals

– VC –

HysetCo - The French hydrogen mobility provider raised $217M of funding led by Hy24, who, through the deal, has become the company's majority shareholder. The funds will be used to expand its offerings across France and Europe.

Guesty - The Israel-based property management software company raised $130M in a Series F round led by KKR, with participation from Inovia Capital, Sixth Street, and others. The funds will facilitate growth, both organic and via acquisitions, while expanding its offer beyond short-term rentals into corporate housing, fully serviced stays, and medium-term rentals. The company's geographic focus will center around the U.S. and a few major European markets.

Skyports - The London-based developer of vertiport infrastructure for electric drones raised $110M of Series C funding led by ACS Group, making the latter the majority stakeholder. The funding will support the construction of vertiports in Dubai as well as its services business, which includes services such as medical deliveries and linear asset inspections, among other things.

Waymap - The UK-based navigation startup raised $8.8M of funding led by TELUS Pollinator Fund for Good. The money will support international expansion into Asia Pacific and the Middle East.

CharitableBookings.com - The online travel booking platform, which helps raise money for charities through each booking, raised $6.2M of funding from a group of angel investors. The money primarily supported the launch of the online platform with a premium offering.

Exoticca - The Barcelona-based OTA specialized in multi-day package tours raised $4.3M of funding from BBVA Spark, which will be used for expansion in Latin America.

HyLight - The Paris-based hydrogen-powered airship drone developer raised $4M of venture funding led by Collaborative Fund, Kima Ventures, and Mergus Ventures, with participation from Y Combinator, Ring Capital, and individual angels. The funds will support large-scale deployment of the company's drones, as well as recruiting and product development.

Triply - The Kenyan travel tech startup raised $500K in funding from Y Combinator, which will be used to facilitate growth in Kenya.

– M&A –

Pkfare - The Shenzhen-based travel distribution tech company was acquired by Shanghai-based hotel distribution tech company DerbySoft as a way to expand into the airline industry. The companies will continue independent operations, but each customer will be able to access the other's services through planned tech integrations.