Digital Transformation in Travel Industry: How Does It Shape the Future of Tourism?

You take your smartphone, effortlessly proceed to unlock it, tap on your preferred travel application icon and then easily proceed to secure your flight reservations for the upcoming summer holiday. Everything looks nice and easy. But it wasn’t always like this. The digital revolution that swept through the travel sector from the early 2000s onwards has made online booking generally available. Now anyone can arrange travels and lodgings in just a few mobile screen taps.

The digital transformation in travel and tourism has fundamentally altered the landscape for both travelers and businesses within the industry: travelers can now swiftly orchestrate their journeys, while businesses gain the agility to monitor consumer preferences and tailor propositions for ensuring superior experiences.

So what does the future has in store for the growing travel industry?

Within this article we’ll navigate through the known territories of digital transformation in the travel and tourism industry, charting key data points, current and prospective outlooks, as well as the emergent travel trends poised to define the upcoming future. Let us proceed!

What does digital transformation in travel actually mean?

The digital transformation in travel and hospitality includes integration of technological enhancements used to renovate and reshape the operational and customer engagement frameworks of travel companies.

Consider, for instance, the mobile applications for check-in streamlining flyer boarding process, or the deployment of AI-powered conversational agents, programmed to autonomously resolve traveler querries.

Nowadays, a vast array of great travel deals is at your fingertips, accessible in a few clicks. Technology has come to revolutionize every aspect of travel — from communication and marketing to travel experiences and operational aspects, — while continuously redefining the global mobility.

Digital transformation in tourism in numbers

This century the rise of digital technology has ushered in an era of remarkable expansion for the travel and tourism sector. Despite the temporary setback posed by COVID-19, the current climate is extremely favorable for both travelers and travel companies.

Surveys reveal that an overwhelming majority – over 70% of travelers – are highly enthusiastic about new journeys.

At the same time, recent reports highlight the ongoing digital evolution within the travel sector:

• The global online travel industry is currently valued at €474 billion.
• Online sales channels increased to account for 69% of the global travel market turnover by the end of 2023.
• In 2022, the UK led selected countries in digital advertising expenditure for the travel and leisure sector, with a 12% share, while the US followed with 7%.
• More than half of travelers plan to use comprehensive travel mobile apps for trip planning in 2024.

Digital transformation and its impact on the travel industry

Consider the technological advancements over the past two decades. Your phone has evolved from a simple calling device to a gateway for thousands of travel opportunities at your fingertips. Paper maps have been replaced by digital navigation, and travel agents’ exclusive knowledge is now available to everyone online. The holiday planning process, once an adventure akin to a fiction movie, is now a seamless digital experience, with technology continually revolutionizing the way we explore the world.

In today’s digital era, a myriad of travel opportunities are at our disposal, accessible through a simple interaction with your online devices. The realm of travel has been transformed by technology, influencing everything from how we communicate and market to the very essence of our travel experiences and operational processes. As travel technology continues to evolve, it keeps redefining our global explorations, making every journey a true testament to innovation.

Communication

• Mobile applications for handling bookings, reservations, real-time changes and updates.
• Advanced travel websites for streamlined planning and purchasing of tourism products.
• AI-powered chatbots for immediate customer support and profound recommendations with a personal touch.
• Social media involvment and instant messages to collect customer feedback, reviews and personalized help.

Marketing and personalization:

• Targeted campaigns to suggesting relevant travel services and deals based on preferences, expectations, location or behavioral patterns.
• Personalized loyalty, exclusive rewards for devoted travelers.

Travel experience:

• Smart appliances in airports and hotels enhancing efficiency.
• Digital travle guides with localized suggestions helping tourists obtain the most out of their travels.
• Contactless payment options enabling more convenient transactions and increased safety while travelling.

Operations and efficiency:

• Automatic check-in and self-service eliminating queues and reducing wait times.
• Advanced data analytics which optimize pricing, resource handling and demand forecasts.
• Predictive analytics to foresee travel demand, reshape routes and optimize resource allocation.

The change in the travel and tourism industry towards a 100% customer-centric model is now even more obvious than ever.

Digital trends steering the future of travel

Having explored the technological leaps in the travel industry, let’s navigate through the key trends that are charting its course.

Big Data for improved personalization

Whenever you visit a travel app or an online booking search engine, you obtain numerous special offers and recommendations structured according to your needs and preferences. Sometimes it way seem as if someone is able to read your mind. Yet how is it made possible in reality?

This is where Big Data solutions and in-depth analytics come into play. Travel companies aggregate and process large sets of data from a range of sources, including online booking stats and social media activity, in order to personalize your received search results. So whenever you repeat your visit to a particular booking website, you’ll be provided with deals that specifically appeal to your taste and travel habits.

AirBnB is one of the good examples of companies which mastered the art of big data analysis. Their data science team goes through over 11 petabytes of data and predicts host-guest matches to constantly improve the level of service. They note various behavioral aspects and sentiments to form customized search results and create top-notch client experience.

Internet of Things (IoT) for seamless travel

IoT is essentially a chain of interconnected devices with unique IDs which exchange data over an established network. Parts of it can be smart wallets, contactless payment gadgets or portable Wi-Fi spots. These devices engage in constant data exchange for achieving various goals: data collection and aggregation, predictive maintenance, tracking activities, different kinds of automation and so on.

Let us take smart luggage as an example of IoT implementation. It is a quickly spreading practice in the industry: the global smart luggage market is predicted to rise at a CAGR of 21.2% in between 2023 and 2028. Smart suitcases include batteries with long-lasting charges, built-in tracking tools and biometric locks, to name but a few elements. Then they combine for a wholesome infrastructure that tracks luggage in real-time via mobile applications or web interfaces, locks and unlocks it remotely.

Artificial intelligence (AI) bringing journey planning to another level

It’s no secrtet that AI is taking over lots of different industries, including travel and hospitality. As stated in a TIME article, increasingly more people prefer to trust their travel planning to a chatbot, with ChatGPT being the most popular one among them. Travelers can ask and get instant replies on any questions: which place is better to visit on holiday or what’s better to do in a particular destinations. What used to be handled via numerous Google searches has turned into convenient and exteremely detailed conversations with a single AI-powered point of contact.

Virtual reality (VR) for special immersive experiences

In contrast to the swift advancements in AI, Virtual Reality (VR) has been progressing at a moderate pace. The allure of AI has prompted major tech firms to redirect their investments, leading to a decline in significant VR initiatives within the travel sector.

Take, for example, Marriott Hotels’ ‘VRoom Service’ introduced in 2015. This venture stands out as one of the travel industry’s most triumphant VR introductions. It offered guests immersive 360-degree virtual tours of exotic locales such as the Andes and Beijing, enriching their stay with a blend of narrative-driven experiences and cutting-edge technology.

In the face of tepid enthusiasm and financial backing, the worldwide market for virtual reality (VR) and augmented reality (AR) within the tourism sector is poised to hit a valuation of $9.6 billion by 2025. Should the forecasts hold true, we’re on the brink of witnessing a surge in VR initiatives that will revolutionize the way we experience travel.

The debut of the Apple VisionPro, marking Apple’s foray into spatial computing, alongside Meta’s advanced VR and mixed reality device, the Quest 3, offers a sneak peek into the future’s potential.

In summary

The travel domain has experienced a significant transformation over the last twenty years, and the momentum continues. As we look forward, the key for leaders in the travel industry will be to adopt a culture of digital innovation and maintain flexibility to steer consciously through the upcoming era of change.

1. Digital transformation has made a revolution in travel by simplifying bookings and travel arrangements in a big way.
2. The travel industry has grown significantly and keeps expanding in volume thanks to digitalization. The size of global travel market is estimated at €474 billion.
3. Technology has drastically increased efficiency of communication, marketing, travel experiences and operations.
4. Customer-centricity is the priority for industry experts, with a focus on improved experience and marketing capabilities.
5. Key future trends are Big Data for personalization, IoT for seamless travel, and AI/VR for immersive experiences.