The travel and hospitality industries have been at the forefront of digital innovation and continue to be transformed by brand-new technologies across practically every aspect of the operation.
According to the World Economic Forum's Digital Transformation Initiative (DTI), digitization processes in sectors such as travel, tourism, and aviation will create up to $305 billion of value between 2016 and 2025. The report estimates that digital transformation will generate benefits valued at $700 billion for both the customers and society as a whole. Interestingly, this process is also expected to migrate c. $100 billion of value from traditional companies to their new digital-native competitors.
That's why organizations in the travel industry have no other choice than to invest in their digital transformation. Technology now permeates every area of tourism and needs to be given the highest priority by companies in this field. However, many of them are still lagging behind in implementing Business Intelligence strategies and data analytics tools to deliver better service to customers, increase their loyalty, and boost the bottom line.
Read on to find out the impact of digital transformation on the travel industry and see how to get started with such initiatives.
6 digital transformation trends in the travel industry
Personalization for better customer experience
By personalizing offers and packages on the basis of well-defined customer segmentation, companies can reach their business objectives and increase their bottom lines. But how can they study their customer base in such detail? Innovative technologies such as data analytics and cloud computing come to the rescue.
By targeting customers at the microlevel, travel and hospitality businesses can create accurately personalized experiences. Data analytics solutions allow companies to understand their customers in many different aspects — from favorite destinations to airline preferences.
Moreover, by building a mobile application, companies can engage travelers on a personal level thanks to push notifications, keep them informed about the latest updates, and deliver crucial insights in real time.
Smart conversational interfaces are the future of many industries — and travel is no exception. Chatbots are going to grow bigger this year and keep on growing in the next few years thanks to the strides made in the field of artificial intelligence.
Chatbots are on their way to transforming how customers interact with brands and offers online. The more data they can collect, the more accurate they will be providing feedback and answering customer questions.
Companies like Booking.com, KLM, or Expedia are already using this type of AI to streamline the process of booking accommodation.
Travel companies can use chatbots in many different ways to assist customers at every step of their journey. For example, by connecting analytics to the chatbot, you will be able to tell when a customer is stuck during the booking process and then send a quick message with helpful tips and contact information.
According to the Travel Flash Report by Criteo, more than one-third of the world's population uses mobile devices to book hotel rooms. That's why mobile connectivity is such an important feature for many users. Most hotels, restaurants, and airports offer Wi-Fi connections today.
However, some chains are already taking the next step and offering their clients special mobile devices to use during their stay. For example, the Casual Hoteles chain offers a Mobile Pack service that includes a device with a Wi-Fi connection, a portable battery, as well as a selfie stick. The set is free for customers who book directly on the hotel's website.
This type of mobile connectivity can take the customer experience to the next level, allowing travelers to share their experiences with others through social media easily. Mobility is relevant not only during the trip itself but also in the earlier phases like planning, or even later one – for example, post-travel special offer delivery.
Internet of Things (IoT)
Since the number of devices connected to the Internet of Things is constantly growing, it only makes sense that the travel sector starts to take advantage of this trend to boost the customer experience.
The value of IoT boils down to the knowledge about the customers. The more you know about your guests, the better you can satisfy their needs.
IoT can play a crucial role in this. For example, let's say that a device connected to an IoT system reports that the customer visited a resort twice a year during the last two years. Data pulled from your systems showed that the customer used Booking.com to book two stays, and two other stays were booked by telephone.
By registering the guest's presence on your hotel premises, you not only know when the guest stayed in one of your hotel rooms but also what other areas they have visited – for example, the spa. You can automatically send a message to them and proactively ask the guest whether they would like to make another booking this year – and offer a free spa treatment as an incentive.
Reaching out with such a personalized offer would be impossible without the wealth of data coming from IoT sensors and devices located all over your premises.
Business Intelligence (BI)
Most all the innovations mentioned so far are closely related to a company's capability to capture, store, and process data. Travel companies collect massive amounts of data about their customers during every single step of the journey: actions, flight paths, bookings, preferences, even movements inside buildings.
By collecting such data, businesses can understand their customers better, segment them effectively, and then make more informed decisions about the outreach strategies, shaping the customer experience to meet their expectations.
To maximize their financial results, businesses such as hotels or airlines need to know how to sell the right product to the right customer at the right time. For hotels, data about room revenue, current bookings, and current occupancy rates can be combined with external data such as information about local events or school holidays to more accurately predict and anticipate demand. That way, hotels shape their pricing in accordance with updated forecasts.
Virtual Reality (VR) and Augmented Reality (AR)
These two technologies are on the cusp of becoming a truly powerful tech trend in the travel and hospitality industry. Whether it's a tourist destination or hotel property, it can allow guests to take a look at it without leaving their homes. The idea is to offer guests a realistic preview of their experience.
Some major operators are already offering guests the chance to experience at least a bit of their travel experience by offering such VR or AR options. This is particularly attractive for travelers who are planning to visit faraway destinations.
For example, one company has created a travel booking tool that allows potential travelers to visit the destination, select the airplane seat, examine rental cars, and even pay for the entire trip all within the virtual reality space.
How to build a digital transformation strategy for the travel industry
If you're considering taking the first steps towards digital transformation of your travel business — be it a tourist destination, hotel, or airline — here are three key pillars that you should focus on when crafting your strategy for growth.
Every digital transformation process needs to begin with the focus on the customer — their needs, preferences, pain points, and goals. That's why you need to identify your personas and map out their characteristics and desires. Then track your customer journey in detail to identify potential spots for innovating the user experience.
One way to assess customer satisfaction is by using an emotion map. Digital solutions allow customer likes and dislikes to be assessed without even asking them about the experience. Understanding the customer is an absolutely essential step for building a successful digital strategy today.
Culture and employees
One of the setbacks companies across all industries encounter in their pursuit of digital transformation is resistance from people who are involved in the processes. Siloed, bureaucratic organizations will find it very hard to digitally transform.
That's why you need to address this resistance if necessary and make sure that digital transformation is an initiative that derives from the inside out:
- Encourage managers and employees to embrace digital tools, create a digital culture for your company, and build a new mindset that closely aligns with your new digital strategy.
- Show how digital transformation will make everyone's work easier and help people drive greater satisfaction from their work.
- Map out your values and identify leaders who will be responsible for driving the new digital model.
Technologies and processes
Digital transformation requires companies to produce sophisticated IT solutions that can capture, store, and analyze data. But this is just the tip of the iceberg.
Real digital transformation means automation of processes, simplification of procedures, and capturing new opportunities.
To accomplish that, companies need the expertise of skilled professionals who know how to build tools for successful digital transformation. One way to get such experts on board is by hiring them as full-time employees. But building an in-house development team is expensive and time-consuming. In some regions, it might be even impossible. That's why partnering with a software development agency that delivers digital transformation consulting services can be such a cost-effective and fruitful alternative.
If you're wondering how such a technology partnership looks like in practice, here are two case studies that show the value a software consultancy can bring to travel industry organizations.
Case study: Supporting Probooking in backend development
Probooking offers an innovative service that connects fitness providers to their customers efficiently without having to rely on manual communication like texting, emailing, or phone calls.
Our client's application was preventing employees from being 100% productive because it was unstable and full of bugs. That's why Probooking decided to hire our experts to help them proceed and improve their application. We took over an ongoing project where the existing code base was poorly written and had never been tested before.
Since the company had no backend development team at the time and hired only partially available mobile developers, we set up an experienced team of backend experts that introduced improvements to the solution and helped the client launch the app.
Thanks to our work, the overall stability and performance of the backend application increased dramatically, and the client's employees no longer have to struggle with the application performance.
Case study: Long-term technology partnership with Leonardo Hotels
We are an IT partner of Leonardo Hotels, a brand owned by a global hospitality business leader. As their business digitalization partner, we identify and remove any of the business growth liabilities, and provide the company with custom digital tools, optimizing the digital booking process and boasting the official company website.
To support our long-term operation, we set up a dedicated development center that comprises hospitality industry business experts, senior software developers, and talented junior developers. In the course of our business relationship, the development center has been flexible. It scaled down to a minimum to meet maintenance needs and scaled up when building brand-new custom digital solutions.
Leonardo Hotels enjoys access to top specialists in the field without wasting time on recruitment and supporting an in-house team of full-time developers.
There is no denying digital transformation is on its way to creating a massive disruption in the travel industry. This will become even more apparent in 2020. Companies that want to stay ahead and offer customers the best personalized experiences will have to embrace digital tools and approaches.
If you're looking for more advice about how to launch a digital transformation initiative at your company, reach out to us. We have years of experience in supporting businesses in the travel industry with tailored expertise, from custom software development to solution optimization.