Digital transformation in tourism: key points

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The travel industry has always relied heavily on automation to provide good customer service. The digital transformation in travel began with the first efforts to automate flight bookings, which started shortly after World War II, with American Airlines’ Reservisor, which was superseded by the Sabre system, developed by IBM and launched in 1960. Sabre is still alive and kicking today, and is one of the largest global distribution systems (GDS) used by travel agencies to book flights, hotels, and car rentals for customers, as well as its competitors such as Galileo (Travelport) and Amadeus.

The long-term viability of GDS has been questioned because, while they provide the travel agent with a holistic view of the customer journey (in the literal sense), several service providers only see their own contribution to the total travel experience. This has resulted in many of the airlines developing their own reservation systems, which give them better access to chiropractor email list their customers and reduce the costs paid in GDS fees. However, as befits all companies that have been around for so long and have undergone many transformations, they are busy rethinking their business models and still have an important role in business travel.

The travel industry and the customer journey
The travel industry has many players, each with their own challenges, from airlines and hotels to online travel aggregators (OTAs), which are digital disruptors in their own right. In their analysis of digital disruption in the travel industry, the World Economic Forum (WEF) and Accenture have outlined many of those involved when a customer takes a trip.

Travel and tourism ecosystem

While this is a good representation of aviation travel, it leaves out rail travel and cruises entirely. Because time and space are limited, we’ll follow their lead. This doesn’t mean they don’t have their own challenges; rail travel – both urban commuting and long-distance travel – is undergoing a transformation. Considering that France and Britain clock up more than 150 billion passenger miles per year, this is no small sector of the travel and mobility market. Cruise lines also recognise that they need to transform. Royal Caribbean is using artificial intelligence to improve the customer experience.

Familiarize yourself with the needs of the traveler
There is an important evolution in the travel industry: understanding the customer perspective. Some companies, like Southwest Airlines , got the message a long time ago, giving them an edge in building customer relationships. Most service providers were limited to their part of the value chain missing many opportunities along the way. One contribution to this way of thinking was the use of GDS by travel agencies, creating silos where service providers only got a limited view of the overall ecosystem and were unaware of other service providers in the process. New insights from industry participants recognize that the customer journey begins long before they get on a plane or check into a hotel.

The power of social media to tell the tale of a bad customer experience is also a factor no company can afford to ignore, although some companies don’t seem to learn this lesson.

The WEF predicts an evolution in customer-centric maturity over the next 5 to 10 years. The short-term goal will be to focus on customer needs. Only after this has been achieved will organizations be able to address “seamless journeys” and then move on to intensely personal experiences.

The most important channel to achieve this ideal travel scenario is the acquisition, accumulation and interpretation of customer data. Currently, industry incumbents obtain data related to their products and services and jealously guard it from competitors and allies in the value chain. This will have to change. The ability of customers to explore their travel options through OTAs, ranging from hotel reviews by other travelers on Tripadvisor to bookings through Expedia ’s online booking software , disrupts traditional travel agency offerings and renders service provider websites irrelevant. Moreover, these offers can be viewed through a mobile app downloaded to the customer’s smartphone.

Does this mean the travel agent is an endangered species? Hardly, according to McKinsey. As with most digital disruptions, humans are still needed to interpret and act on AI-derived data. McKinsey senior partner Harry Bowcott explains that websites that display hundreds of hotel options when a customer wants to make a booking may actually drive the customer back to their brick-and-mortar travel agent. Bowcott mentions that the smart online approach is to display only 3-4 suitable hotels for the busy customer to choose from. This, of course, requires good data personalization to display the right selection.

Transforming into a data-driven company requires a major cultural shift and a renewed appreciation for loyal employees. For example, Bowcott notes that one airline analyzed its fault diagnostics and found that 80% of technical problems required the replacement of 1-3 parts, and it only made sure that each plane carried a set of the 3 spare parts. What they had neglected to take into account was their engineers’ pride in their work. There was a tremendous lack of buy-in, with eventual grudging acceptance.

All employees must be kept informed about the upcoming changes. They must remain motivated and enthusiastic, especially if they are in direct contact with customers. Specialists may be needed on a short-term basis when dealing with technological challenges. Itransition 's custom software development specialists can transfer skills such as data analysis to permanent employees to accelerate the transformation.