Blog post

Digital Transformation in the Travel Industry: Insights & Trends

We examine the possibilities presented by digitalization within the travel sector and evaluate the prominent patterns and challenges encountered by the industry

Updated: March 04, 2024 8 mins read Published: September 04, 2023

You may remember a recent holiday season when a major air carrier had to cancel thousands of flights. Unfortunately, it couldn’t blame the inclement weather covering much of the US. As the storm receded and other airlines were back to business, this carrier’s passengers were still stuck. But why? If you guessed it has something to do with (a lack of) digital transformation, you’re on the right track.

Digital transformation in the travel industry has been taking place over the last decade, but this airline was holding out. The president of its pilots’ association shared, “It’s a function…of infrastructure and IT, but it’s also processes. We’re still using not only IT from the ’90s, but also processes when our airline was a tenth of the size. And it’s really just not scaled for an operation that we have today.”

This quote sums up what digital transformation is: updating people’s skills, streamlining processes, and digitizing technology to help your organization scale on demand.

This was an extreme case, but even the travel companies that have started digital transformation efforts still have work to do. A 2023 AWS and Skift survey found that despite 95% of travel executives responding that digital transformation is “very important” or “somewhat important” to their business’s overall strategy and success, their top priority is still the maintenance and upkeep of legacy systems.

Read on to learn about trends in digital transformation in travel and tourism and how you can get started.

What is digital transformation in the travel and tourism sectors?

Digital transformation is the integration of digital technologies such as cloud platforms, mobile, artificial intelligence (AI) and machine learning (ML) into all aspects of a business. The goal of digitalization in the travel industry is to future-proof the organization, which means fundamentally changing how it operates and delivers value to customers. Accordingly, it also heavily impacts people and processes, which requires an organization-wide culture change.

Travel companies can become more responsive and adapt to sudden market shifts and stiff competition through automation, real-time data, and agile, streamlined processes. Through these same digital transformation mainstays, marketing teams can create frictionless, omnichannel, and hyper-personalized customer journeys that enhance customer experiences. The result? Digitally enabled growth in the travel and tourism industry.

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The impact of digitalization in the travel industry

Digital technologies have revolutionized the tourism cycle, from the online travel agencies travelers use to book their adventures to the social media platforms where they share their reviews and holiday pictures.

In addition to increasing customer convenience, digital technology can also translate into more business opportunities. For example, New Distribution Capability (NDC) provides a better shopping experience for customers and maximizes profits at the same time by letting airlines make more dynamic, personalized offers while they optimize pricing and inventory in real time.

Six digitalization trends in travel and tourism

Digital Transformation in the Travel Industry: Insights & Trends

Transformation today is an ongoing process. Digital technologies constantly evolve and staying competitive means staying on top of the latest digitalization trends. Even digital-first businesses that started with cloud-based information and communication technology must adapt quickly and keep up as new trends emerge.

It’s important to keep in mind that a move to the cloud (the first step in digital transformation) is essential for taking advantage of these trends.

Cloud adoption

Cloud infrastructure is the foundation of digital transformation. Moving most or all systems and workloads to the cloud gives organizations the flexibility, scalability, and operational efficiencies they’ll need for growth in the next decade and beyond. And companies that want to use artificial intelligence and other future technologies also need the computing power the cloud brings.

Though the travel industry has started its journey to the cloud, cloud adoption remains a trend. A recent Accenture survey of travel executives found that only 30% of companies have implemented cloud at scale. David Linthicum, Deloitte’s chief cloud strategy officer, says, “In many instances, [travel companies] are playing catch-up…They are not spending as much money as their relative peers in other industries. And they need to; there is much to be automated. They need those systems to drive better customer experiences.”

Machine learning & AI

Artificial intelligence uses computers to imitate human thinking and problem-solving and has already significantly impacted the travel industry. From customer service to flight security, AI is quickly becoming integral to how passengers get from point A to point B.

AI chatbots like Sofia from TAP Portugal Airlines and Julie from Amtrak provide quick and efficient customer service. They can answer common questions and help with reservation issues 24×7 without any wait time for customers.

Hotels are also beginning to use artificial intelligence, using data collected about travelers through loyalty programs and the like to create personalized recommendations that match each customer’s preferences. For example, AI can suggest restaurants based on the guest’s preferred cuisine, recommend activities based on local weather conditions, or even remember details like favorite pillows.

And no talk of AI would be complete without a mention of the newly ubiquitous generative AI. Expedia is already set to incorporate it into its platform. Interestingly, despite always offering its services online, Expedia is not a digital native company in that they weren’t built on cloud infrastructure from the start. However, it began its multi-phase digital transformation initiative started in 2017 with moving workloads to AWS.

Internet of Things (IoT)

The Internet of Things (IoT) is transforming the travel industry by connecting vehicles, transportation hubs, hotels, cruise ships and more to the internet and each other. Travel companies can monitor and track assets in real time by integrating sensors and connectivity into planes, trains, automobiles, lodging, and luggage. Examples of IoT in action include:

  • Beacon technology can track customers’ locations in airports and send relevant information to their mobile devices — a great example of data monetization.
  • Sensors in hotels or airports can monitor the flow of passengers and adjust staffing needs accordingly.
  • IoT-enabled smart metering and automation of lighting, HVAC, and appliances in hotels and transportation hubs can conserve energy and reduce environmental impact.

Overall, a more connected travel experience through IoT can improve safety, sustainability, and travel enjoyment.

Digital Twins

Digital twin technology – creating digital replicas of physical processes, places, and products – is marching into the travel and hospitality domain providing travelers with more interactive and hyper-realistic simulations of actual experiences, rather than using just video or static 2D images.

By combining data from platforms, sensors, images, etc., and turning it into 3D models to simulate destination, physical environment, specific conditions, or even weather, digital twin technology is lifting smart tourism to new levels of customer satisfaction.

On top of providing travelers with an immersive personalized approach, digital twins also offer the benefit of real-time updates on the destination safety, itinerary, or local specifics allowing travelers hassle-free trip planning and memorable experience as a result.

VR/AR

Virtual reality application for travel industry

Virtual reality (VR) and augmented reality (AR) provide an unprecedented opportunity for hotels, travel agents, destinations, and many other branches of the travel and tourism sector.

Giving people realistic simulations not only entices travelers to choose a particular hotel, airline, or tourist site but provides powerful training experiences for hospitality professionals. For example, the Best Western hotel chain trained front desk staff using VR and subsequently saw a 20-point increase in customer satisfaction scores and a 71% decrease in customer complaints.

AR is also being put to good use. Typically experienced through a mobile application on a smartphone or tablet, airports, museums, and other tourist destinations are using AR to enhance the visitor experience. The Smithsonian Institution in Washington D.C., for example, has an AR app called ‘Skin and Bones’ for its Bone Hall of 300-century-old vertebrates. Visitors can point their phones at one of the participating skeletons to see what the animal looked like, how it moved and sounded, and more. Just like VR, this translates to positive results. Visitors stop more often and stay longer when they use this AR app and say they have better experiences.

Recognition technology (Biometrics)

The last trend we’ll discuss is that of biometrics for easier, more secure travel. Recognition technology using fingerprints or facial scans has been around for a while. You may unlock your iPhone with your face (facial recognition), or perhaps you’ve heard that Miami International Airport will be offering biometric boarding for all international flights starting this year (2023). Car rental companies are also experimenting with biometrics for customers to access their reserved rental vehicles instead of keys. While still somewhat controversial due to privacy concerns, recognition technology has the potential to make travel a truly seamless experience.

The future of travel

Integrated platforms for smart travels of the future

So what could travel look like 10 years from now based on some of this digital transformation in the tourism sector? Let’s imagine it from the traveler’s perspective.

As I arrive at the airport, facial recognition technology scans my face, instantly checking me in and printing my bag tags. My smart suitcase rolls autonomously behind me as I breeze through security, with no need to show documents.

Once at the gate, I’m delivered a refreshing pre-flight cocktail curated just for me based on my flavor preferences and past orders. As I sip, I slip on a VR headset to preview my upcoming hotel stay. I virtually tour the property, view my customized room, and preview planned excursions around the area.

After a quick electric tram ride to the plane, I settle into my ergonomic seat equipped with biometric sensors that monitor preferences like temperature and lumbar support. The in-flight meal that follows is delicious and tailored to my dietary needs.

Upon arrival, my smart luggage has already been transported to the hotel. A robotic bellhop meets and escorts me to my room; it requires no front-desk check-in or wait. Over the next few days, an AI concierge provides suggestions for activities and restaurants based on my profile, booking everything through a unified travel app. Moving between destinations is simple with integrated mobility platforms and silent electric vehicles.

The trip feels incredibly streamlined, personalized, sustainable, and RELAXING. I finally take a vacation where I don’t return feeling like I need a few more days to unwind.

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Let’s make that future a reality

The digital era is well underway, but it is never too late to start your digital transformation journey. Intellias has been accelerating the pace of sustainable digitalization for top-tier organizations for two decades. With expertise in AI/ML, blockchain, data & analytics, IoT and more, we’re ready to help you wherever you are in your journey. Contact our team today to discuss your unique needs.

FAQ

A versatile software engineering company like Intellias can help a travel company see a digital transformation project through to completion by providing expertise on the latest digital technologies, developing a customized digital transformation strategy, and offering employee training and support.
The key benefits of working with a professional software engineering company for digital transformation include reduced costs, improved efficiency, and considerably enhanced customer experiences.
The most important aspects of developing a digital transformation strategy include aligning the strategy with the company's goals, prioritizing areas for improvement, and ensuring scalability and flexibility are in place for future growth.
The most surefire way of implementing reliable, high-performance system-to-system integrations is by working with a vendor that has expertise in legacy system migration and integration, conducting thorough testing and quality assurance, and providing ongoing maintenance and support.
This can be done by establishing clear metrics and key performance indicators, conducting regular assessments and reporting, as well as making data-driven decisions to optimize system performance.
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