The travel & hospitality industry is an old and robust industry with a value of $1.6 trillion in 2017 (Landford & Weissenberg, n.d.). Key fundamentals of this industry are leisure demand and the global economy. The industry is growing steadily. Important sub-industries are the restaurant, hotel, airline, car rental, and cruise industry (De Bont & Mijinke, n.d.). The travel & hospitality industry is seen as one of the least digitalized industries (Gandhi et al., 2016). Of course, there are some examples of disruptive and incremental digital innovation. Airbnb revolutionized the industry by giving consumers the ability to sublet their apartment on a large scale, however, the disruptive nature of the innovation is debatable (Guttentag & Smith, 2017).
Opportunities for digital innovation
Several digital innovations could change or even disrupt the industry. Artificial Intelligence is can be used to optimize customer experience. Think about chatbots on travel websites (Eaton-Cardone, 2020). However, it can also be used to smoothen internal processes, such as changing flight plans to weather conditions and flight delays (BCG, n.d.). However, much needs to be done before AI is common in this industry (Weissenberg & Landford, n.d.).
IoT helps in improving customer experience. An example is using RFID technology as a digital pass. Disney Theme Parks are using this technology to improve customer experience. Guests with this service own a RFID bracelet, which can open hotel room doors, helps you enter theme parks, and can be used to purchase food and merchandise (Disneyworld, n.d.). Another example is the use of sensors, airline companies can easier detect anxiety. This technology is still costly and has some risk, such as cybersecurity (Weissenberg & Landford, n.d.).
Blockchain technology can be used to make loyalty programs more efficiently. Loyalty programs are growing, but highly inefficient. Many people have a connection with a lot of different loyalty programs across different industries: airline, hotel, car rental, e-commerce (Amazon Prime), and suchlike. These loyalty accounts are usually inactive because of their seasonal usage. Therefore, these loyalty programs could be combined in a platform, secured with blockchain technology (Deloitte, n.d.).
Current innovation
In the previous paragraph, there have been mentioned three different technologies that are uncommonly used right now and have the opportunity to be commonly used in the future. However, there is one technological innovation that is used right now. Facial recognition is used in the travel & hospitality industry on a larger scale. Many airports and airlines use this software for check-in procedures (Street, 2019). Marriott Hotels are enrolling facial recognition for check-in at their Chinese hotels (Marriott, 2018). Moreover, cruise companies are using the same technology to fasten boarding procedures (Marr, 2019).
References
BCG, n.d. Optimizing and Digitizing Airline Operations with Artificial Intelligence. [online] Available at: <https://www.bcg.com/industries/transportation-travel-tourism/optimizing-digitizing-airline-operations> [Accessed 30 September 2020].
De Bont, F. & Mijinke, F., n.d. 2019 travel and hospitality industry outlook. [online] Available at: <https://www2.deloitte.com/content/dam/Deloitte/nl/Documents/consumer-business/deloitte-cip-ths-travel-hospitality-outlook-2019.pdf> [Accessed 30 September 2020].
Deloitte, n.d. Making blockchain real for customer loyalty rewards programs. [online] Available at <https://www2.deloitte.com/content/dam/Deloitte/us/Documents/financial-services/us-fsi-making-blockchain-real-for-loyalty-rewards-programs.pdf> [Accessed 30 September 2020].
Disneyworld, n.d. Unlock the Magic with Your MagicBand or Card [online] Available at <disneyworld.eu/plan/my-disney-experience/bands-cards/> [Accessed 30 September 2020].
Eaton-Cardone, M., 2020. Can Artificial Intelligence Help Alleviate Travel Industry Woes? [online] Available at <https://www.forbes.com/sites/forbestechcouncil/2020/04/20/can-artificial-intelligence-help-alleviate-travel-industry-woes/#206b952d2fda> [Accessed 30 September 2020].
Gandhi, P. & Khanna, S. & Ramaswamy, S., 2016. Which Industries Are the Most Digital (and Why)? [online] Available at: <https://hbr.org/2016/04/a-chart-that-shows-which-industries-are-the-most-digital-and-why> [Accessed 30 September 2020].
Guttentag, D.A. & Smith, S.L.J., 2017. Assessing Airbnb as a disruptive innovation relative to hotels: Substitution and comparative performance expectations. International Journal of Hospitality Management, 64, pp. 1 – 10.
Langford, G., & Weissenberg, A., n.d. 2018 travel and hospitality industry outlook. [online] Available at: <https://www2.deloitte.com/content/dam/Deloitte/us/Documents/consumer-business/us-cb-2018-travel-hospitality-industry-outlook.pdf> [Accessed 30 September 2020].
Marriott, 2018. Joint Venture of Alibaba Group and Marriott International Trials Facial Recognition Check-In Technology. [online] Available at <https://news.marriott.com/news/2018/07/11/joint-venture-of-alibaba-group-and-marriott-international-trials-facial-recognition-check-in-technology> [Accessed 30 September 2020].
Marr, B., 2019. AI On Cruise Ships: The Fascinating Ways Royal Caribbean Uses Facial Recognition And Machine Vision. [online] Available at <https://www.forbes.com/sites/bernardmarr/2019/05/10/the-fascinating-ways-royal-caribbean-uses-facial-recognition-and-machine-vision/#4174eec11524> [Accessed 30 September 2020].
Street, F. 2019. How facial recognition is taking over airports. [online] Available at <https://edition.cnn.com/travel/article/airports-facial-recognition/index.html> [Accessed 30 September 2020].
Weed, J., 2019. Cruise Lines Use Technology to Add the Personal Touch. [online] Available at ,https://www.nytimes.com/2019/02/01/travel/cruise-lines-use-technology-to-add-the-personal-touch.html> [Accessed 30 September 2020].
Weissenberg, A., & Langford, G., n.d. 2018 travel and hospitality industry outlook. [online] Available at <https://www2.deloitte.com/content/dam/Deloitte/bg/Documents/consumer-business/deloitte-wttc-moving-global-travel-industry-forward.pdf> [Accessed 30 September 2020].
Thanks Jesse, for writing this blog. I think it is an really interesting summary of all new opportunities for digital innovation. I definitely agree with you that these introduced technologies can help to revolutionize the industry even more. Artificial intelligence can next to optimizing experiences also really help with exploring customer interest or for example finding new possible locations on the world that are not discovered by tourists yet. It would also be really cool if AI can create personal schedules for you, optimized according to your personal data.
But I think there one thing that is often forgotten in this case, that if the industry eventually will evolve more around those upcoming digital innovations, most of the time the biggest companies take a monopolist power of the industry. The companies with the best data can offer the best predictions. The tourism industry is important on the aspect that many small groups of people offer experiences to tourists, whole economies are driven by taxies, hotels, smaller boat rentals or for example diving centers. When big international companies take over the tourism industry, margins will be getting smaller for ordinary people living in the touristic countries. Countries like Vietnam or Thailand, that heavily depend on the tourism sector can be hurt very badly.
I think it is also from the consumer sight really important to focus on the human aspect. I believe you learn more about a country and the culture if you are dealing with local tourists guides and services instead of for example companies like Expedia or Google.
Hi Jesse! First of all, interesting article and indeed a very relevant topic/issue that you’re raising; especially in times of Covid era which is really even highlighting more the need of digital innovation in this sector. Although I do agree that the travel industry overall needs some digital innovation, I would also argue that the industry is a highly fragmented one and maybe it’s unrealistic to observe this change from the perspective of the entire industry. If I look at the airline industry, there has been a huge disruption in the last century where consumers can compare flight dynamic prices on separate travel websites rather than going to a physical travel agent. This would be unthought of decades ago. Also I do think the sharing economy is something that the travel industry has leveraged nicely – e.g. Airbnb, Uber, Limebikes, ToursByLocals etc. Still, I think your article raises some interesting points and indeed there are still many more opportunities to be exploited by the industry.
Thank you Jesse for this article!
Reading this made my think about something. During the pandemic, some museums in order to survive offered online packaging where, for a certain price, you could for a couple of days benefit from online exhibitions and museums visits. This was actually popular specially in families to educate their children. If this does happen to expend, it could also change a huge part of touristic activities, where people could stay at home and still visit other cities! This will of course never be as good as real life experience but could be an alternative for a lot of people.