Trends in Travel: Where Is The Industry Headed As You Read This

When looking at the travel and hospitality industry, many of the megatrends we see emerging are like those in other adjacent industries. Companies are seeing value in producing more tailored and personalized experiences for customers, while simultaneously improving the way in which they deliver products and leverage efficiencies. Travelers are also being influenced by the way companies are growing more responsive to their needs, which in turn is driving demand for greater and greater levels of customization and personalization. 

Here are five major trends we see for 2019

• New Frontiers: Advances in technology will put space-travel and deep-sea tourism within reach for travelers like never before.
  
• Social Consciousness: Activities and events that promote social awareness and cultural diversity will grow in number. 
  
• Environmental Sustainability: Sustainable travel experiences that have low impact on the environment will become more popular.   
  
• Medical Tourism: People will be more willing to travel for low-cost, high-quality medical care in other countries. 
  
• Instagrammable Solo Travel: More and more people will travel solo or as part of travel groups, while promoting their adventures on social media. 

These are the main trends that we see. But let's go bigger:

Travel mega trends that are here to stay

Four key mega trends will continue to shift and shape the travel space. 

Personalization

Personalization has become incredibly important to travel and hospitality businesses in recent years. Today, lots of data exists, but it’s collecting dust. Many of the startups we see are looking for ways to bridge the gap to provide greater personalization for travelers while simultaneously providing data to help companies better understand their customers.

It’s no longer acceptable to market the same offers to two different customers when their travel patterns are completely different. Online Travel Agencies (OTAs) have started leveraging technology to allow for more personalization, while many hospitality brands and airlines are lagging behind. 

New technologies being developed by startups and corporate innovation groups are now becoming more easily accessible and will start to change how suppliers interact with and personalize experiences for their customers. 

Ancillary Revenue

Ancillary revenue is any type of revenue that comes from a non-core part of the business. For airlines, this might include seat upgrades, in-flight meals, or baggage and in-destination services. For most large corporations, ancillary revenue is integral to profitable growth and competitive differentiation. 

Hospitality brands like Accor Hotels are focused on exploring opportunities outside of lodging and food & beverage that can complement their customers’ experiences while increasing wallet share. Because Accor knows when their guests are arriving and leaving, they can look at ways to add value in-between through delivering complementary experiences like dining, ticketing, and other services. A focus on Ancillary Revenue pushes the core business model since it often requires new partnerships, like JetBlue offering its flyers rental car services. 

NDC (New Distribution Capability)

In simple terms, NDC started as a set of technical standards, which gives airlines the ability and flexibility to distribute contents through third parties. With the backing of International Air Transport Association (IATA) since 2012, NDC has been gaining a lot of momentum and debated as a GDS killer for much more sophisticated airline retailing, including dynamic packaging, up-selling and cross-selling. 

With Sabre’s latest acquisition of Farelogix, a pioneer in NDC-enabled solutions, innovation in the distribution business is expected to be a leading trend for the airline industry in 2019, pushing airline retailing beyond selling seats and baggage services.    

Greater Efficiency & Better Customer Experience

Companies that can operate with greater efficiency while simultaneously offering an improved customer experience will leap ahead in building robust business models that drive revenue growth. But aren’t these two things at odds? New technologies will allow companies to process more information in less time, while simultaneously giving travelers a more seamless experience. 

For example, Artificial Intelligence (AI) and machine learning will increasingly be used for both customer-facing services (i.e. talking to a concierge, housekeeping, or room service chatbot), and internal services (i.e. to support customer service reps, baggage handlers, etc.). 

How's Technology Fueling Innovation in Travel

At Plug and Play, while our corporate innovation platform strictly focuses on B2B initiatives, we recognize the risk of becoming enamored by technology. Technology is simply a tool to help serve customers better and improve business efficiencies. This requires looking at technology with a holistic perspective to determine what the best tool in the toolbox is to solve the business problem at a specific moment in time. 

Here are six major technologies that are currently changing the face of travel:

Blockchain for Payments & Improved Customer Service

The travel and hospitality sector is notoriously segmented, meaning that data is often incredibly difficult to share effectively between different suppliers, customers and end users. In a world that is becoming more digitally interconnected than ever before, safety, security, and the seamless flow of information between parties is becoming paramount. 

That is why blockchain is expected to become a key technology for companies looking to shift the travel and hospitality sector. 

Blockchain as a technology can be invaluable in business models in which many stakeholders need to trust data provided from other users. This makes it perfect for the travel sector, where it is already being used by several travel startups to disrupt entrenched players such like OTAs and to ease partnership and program integration throughout the entire travel ecosystem.

One prime example is the startup Arise, which offers a blockchain-based distributed network that enables hotels to work with anyone that wants to sell hotels rooms with confidence. Hotels get to set commission rates and whoever sell those rooms will earn the set commission amount and receive commission payouts automatically based on smart contracts. 

Loyyal is also upending the way in which loyalty points are earned and redeemed, empowering travel companies to extend their partner networks more securely and effortlessly. As a universal loyalty and rewards platform built with blockchain technologies, Loyyal is designed to extend and enhance legacy loyalty management systems without necessitating a wholesale change.  

Artificial Intelligence

Researchers began exploring Artificial Intelligence (AI) in 1956. Today we are at a point where technological advances and the lowered cost of computing power have allowed for AI to enter the mainstream. 

Platforms like IBM’s Watson and TensorFlow, Google’s artificial intelligence engine, are making developing AI tools inexpensive and more manageable than ever before. Because of this push towards open source, the growth of AI is set to change the way travelers and employees working within the travel and hospitality sector interact and engage with one another, especially when it comes to deciding how to optimize a specific travel experience. The value of AI has been seen by organizations and by travelers. 

For example, according to Google’s Vice President of Engineering for Travel and Shopping, Oliver Heckmann, nearly 60% of consumers say they believe the Google travel experience should deploy AI and base search results on past behavior and personal preferences of shoppers. Many of the conversations we had with startup founders and innovation experts highlighted the importance of this technology in enabling deeper communication and relationship building between travelers and travel companies.

NLP (Natural Language Processing)

The ability for computer systems and platforms to understand natural human language and to then use that information to drive decision making and recommendations is rapidly changing the way that travelers shop for everything from airfare to in-country experiences. Natural language processing is the technology which allows a software program to understand what is being said by a human and then to translate that into insights and recommendations. At a high level, natural language processing, or NLP, is part of the artificial intelligence suite of tools. The pieces that make up NLP include speech recognition, natural language understanding, and natural language generation. 

According to Booking.com CEO Gillian Tans speaking at Web Summit in November 2017, “Today, a lot of interfaces for booking require a lot of clicking and typing.” She went on to say that natural language search and chatbots powered by AI would make those booking interfaces easier to use. The ability for NLP to make technology easier to interact with and more seamless for travelers to use is driving adoption of the technology across the board.

Augmented Reality and Virtual Reality

Augmented Reality (AR) and Virtual Reality (VR) are two technologies which have yet to fully come into their own in the travel sector, but there are indications that they represent a massive opportunity for the sector. 

AR, an interactive experience whereby objects are augmented by virtual programs, shows definite potential for use in the travel and hospitality space. 

One of the most popular examples of augmented reality to come out in the last few years has been Pokémon Go, which allowed users to chase and capture Pokémon in the real world while using their smartphones. Now, companies in the travel and hospitality sector are starting to look for ways to leverage the technology to enable travelers to get more out of their vacations or trips. 

One company making waves in this space is LocusLabs which builds customized digital location experiences for making buildings and campuses more accessible and efficient. They worked with American Airlines at DFW (Dallas/Fort Worth) Airport to demonstrate why Augmented Reality could be a game changer for digital indoor wayfinding. Their app allows for AR functionality that superimposes data onto the screen of the smartphone to indicate nearby points of interest like shops and restaurants, as well as relevant directions, all while using the camera view within the smartphone. 

VR, an interactive experience taking place within a virtual environment, already has several use cases within the travel space. In 2018 alone, SkyLights, a San Francisco based startup, brought Cinematic VR Entertainment to JAL (Japan Airlines), Emirates, Etihad, and Alaska Airlines. Another European startup Inflight VR just had their virtual reality headset deployed at the Star Alliance airport lounges in Paris and Rome. 

Big Data Analytics

Big data analytics refers to anything that involves the aggregation of large amounts of information to help optimize certain business processes or procedures. Given the size of the travel and hospitality sector and the vast amount of data that is processed by travel companies, it is obvious that big data analytics will continue to grow in importance in the sector.

Airlines are some of the biggest aggregators of data in the sector, and because of this they have been looking closely at ways to better use and analyze the data they have at their disposal. 

One of the companies that we invest in, FLYR, is looking to support the industry by leveraging big data and providing analytics to help airlines make better decisions around how to price their tickets and dynamic packaging and pricing that are not possible via traditional GDS tools. 

Another one of the companies we’ve invested in HYP3R, is leveraging massive amounts of data by geofencing the world’s hotels and airports and then gathering information on individuals that visit those locations. 

In each instance, these companies are working with large airlines and hotel chains to help them to leverage big data in different ways to provide better insights and analytics. 

Predictive Analytics and Machine Learning

The power of technology to forecast everything from consumer demand for specific hotel rooms to potential travel delays at major airports is changing how businesses approach and measure demand in the travel sector. Computers are getting faster, cheaper, and better at predicting with relative certainty the likelihood that certain events will occur. Not only that, these systems can now more easily review and analyze massive amounts of data from the past to learn how to deal with certain issues in the future. Put together, predictive analytics and machine learning capabilities are changing how airlines and hotels do everything from schedule flights to price hotel rooms.

We have separated predictive analytics and machine learning from artificial intelligence because rather than being associated directly with interactions between a system and a consumer, they focus on the importance of prediction and continuous improvement. 

Predictive analytics and machine learning tools are being used in the travel and hospitality space across a wide range of categories. For instance, another startup that we have invested in, Lumo, leverages big data to predict with a high level of accuracy when flights will be delayed. This benefits not only the traveler, but the airline itself. When Lumo predicts that a delay might occur, this information can easily be shared with the traveler but also with the airline. The traveler is kept up-to-date on possible issues, and the carrier is able to use this information to figure out how to avoid the delay or provide a solution to the traveler such as rebooking a flight. 

Although predictive analytics and machine learning may sound similar to Artificial Intelligence, the reason that we flag these technologies separately is because they focus more on the usage of large amounts of data that is typically unseen by the traveler or unseen by a travel employee. Insights gathered through predictive analytics and machine learning often leverage big data and rely heavily on the unique algorithms developed to create recommendations based on this massive amount of information. 

A deeper look into these amazing startups

As one might expect from one of the world’s largest industries, there’s no shortage of entrepreneurial talent tapping into these disruptive technologies. Approximately 2,000 active travel and hospitality tech startups have been founded since 2008. Let's take a look at some of them:

Lumo

Lumo is a travel technology startup based in Boston. The company is made up of a group of data geeks, PhDs, and aviation specialists who are passionate about solving one of the biggest challenges in travel today – flight delays and disruptions. It is estimated that flight delays cost the global economy more than $60 billion annually in increased operating costs and lost productivity. 

 “For us the biggest feedback has been, ‘I didn’t know that this was possible but now that I know it’s possible, I’m going to expect it every time I travel" - Bala Chandran, Lumo.

Leveraging technology developed under Small Business Innovation Research (SBIR) grants from NASA, Lumo helps everyone from individual travelers to large organizations predict flight delays hours, days and weeks ahead of time. By predicting these delays, Lumo makes it easier for people to deal with disruptions and the costs associated with those delays caused by inconvenience and missed flights. “For us the biggest feedback has been, ‘I didn’t know that this was possible but now that I know it’s possible, I’m going to expect it every time I travel,’” said Bala Chandran, CEO and co-founder of Lumo.  

Go Moment

Go Moment has become the world’s largest artificial intelligence hotel concierge provider. Its platform, called Ivy, was launched out of necessity when founder Raj Singh saw inefficiencies in the way that guests were communicating with staff at his family’s hotel portfolio. "One thing we’ve learned by serving tens of millions of guests is that they don’t just want technology,” said Singh.

Using his background with UX and technology design, Singh partnered with IBM Watson in 2013 and brought an AI-powered chatbot onto the market that has since taken care of tens of millions of guests in real time at hotels around the country. Using Ivy, Caesar’s Entertainment improved their customer experience scores by 15%, all through applying artificial intelligence-driven communications with its guests. 

"For us, the biggest opportunity is to truly elevate customer service and guest experience.” - Raj Singh, Go Moment. 

The company’s results and market traction demonstrate how AI enabled technologies will drive higher engagement and consumer satisfaction. “Guests want a better experience. If technology is a tool that you can deploy to enable that better experience, that’s great. Overly complicated services or offers that require you to download a mobile app to get some perk… guests just don’t seem to care,” said Singh. “For us, the biggest opportunity is to truly elevate customer service and guest experience.”

HYP3R

HYP3R is a location-based marketing platform that helps businesses unlock geosocial data to acquire and engage high-value customers. The company holds multiple patents and uses geofencing technology and artificial intelligence to gather information on consumers locations to understand how best to target and deliver information to them when it is most relevant. 

"Today more than ever, building direct customer relationships is paramount.” - Carlos García, HYP3R

“The travel industry has been disrupted over the last decade,” said Carlos García, founder and CEO of HYP3R. “The macro problem is that even the largest players only know the customers who book directly with them. Today more than ever, building direct customer relationships is paramount.”

Together with their partners, HYP3R is building a platform that helps companies engage with customers more effectively and be more efficient with their marketing. Since consumers post 10 times more on social media when they travel, the company integrates geosocial data in combination with predictive analytics to help drive engagement across hotel properties. 

Marriott International, for example, uses HYP3R to sift through over 300,000 guests posts from its properties around the world, filtering results in ways that allow Marriott to directly with guests in personalized and meaningful ways. “The unknown guest is a multi-billion dollar problem in customer acquisition costs and marketing efficiency for the largest hospitality companies. We help the best marketers in the space acquire and engage high-value travelers in the context of location. This is why Fast Company named us one of the most innovative companies of 2018."

"Ultimately, our goal is to level the playing field in a disrupted landscape,” said García. “There’s a battle in the clouds over who owns the hospitality customer. But down on the ground, there are real people enjoying their travel experiences. The best marketers in hospitality use their locations to level the playing field with their disruptors and build a competitive advantage.”

FLYR Labs

FLYR Labs is a travel technology company that is attempting to fix revenue management in the airline industry through AI and machine learning. With the power of machine learning, FLYR pulls together data from various sources to gain insights and help drive revenue for airlines in ways they have never been able to do before. 

Their core solution, FusionRM, can programmatically extract and forecast user demand information well beyond what is currently available to revenue analysts. Not only can the system be used as an early warning to swiftly identify demand anomalies globally as they occur, FusionRM can also provide forecasts on future trends on a real-time basis. 

“With our system they’re able to gain control at a very granular level about the offers and make them much more individualized" - Jean Tripier, FLYR.

One of the trends that has propelled the success of the company has been the ever-decreasing cost of manipulating data, collecting it, storing it, and developing standardized access to it. By leveraging advances in machine learning and lowering costs, the company has managed to carve out a niche in the sector to allow for everyone from airlines to metasearch sites (including TripAdvisor) to lock in travel fares and optimize pricing to drive revenue. “With our system they’re able to gain control at a very granular level about the offers and make them much more individualized,” said Jean Tripier, co-founder and CEO of FLYR.

Innovation in travel is happening. Don’t be left behind.

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