How digital transformation can set the travel industry up for success
One silver lining for the beleaguered travel industry is that it has already adopted the kind of digital tech that should prepare it well for life after the pandemic
Few industries have suffered more at the hands of Covid-19 than international travel, which ground to a halt in early 2020 as borders closed and millions of people were ordered to stay at home. Last year saw the sharpest annual decline in air traffic on record: passenger demand was down 65.9% on 2019’s total, according to the International Air Transport Association. The UN World Tourism Organization estimates that the economic impact on the industry in 2020 alone was $1tn (£710bn) – a loss that put about 120 million jobs at risk.
Even as economies have started to reopen in recent months, travel remains one of the last sectors to benefit from the easing of restrictions. Early in June 2021, operators were dismayed when the UK government downgraded Portugal to its so-called amber list at short notice (meaning that people returning from the country would need to quarantine at home for 10 days). The move forced thousands of British tourists who’d booked holidays in Portugal while it was on the green list to cut short their trips before the restrictions kicked in.
Although the travel industry might have sustained the biggest blow, it may be better equipped than most to recover from it. While businesses in several sectors have been obliged to spend millions of pounds on converting themselves quickly into ecommerce operations, at least travel hasn’t had that problem. The industry was undergoing its own digital transformation for several years before the pandemic.
Swapping bricks and mortar for online booking tools
For proof of its transformation, consider the decline of the high-street travel agent. According to a survey conducted in 2019 by online travel agency Kayak, 47% of British adults hadn’t set foot inside a travel agency for a decade. One-fifth of respondents had never used one at all – a figure that grew to one-third for under-35s. Instead, travellers have hundreds of online booking tools (OBTs) at their disposal.
Enabling consumers to arrange transport, accommodation and activities for themselves, often all in a one-stop shop, OBTs have developed to deliver greater convenience and choice at a lower cost. As a result, they’ve almost eradicated bricks-and-mortar travel agencies. Three-quarters of Brits booked their most recent trip online.
“The great shift to digital that occurred over the past decade has transformed the competitive landscape in travel, leisure and hospitality,” says Tim Davis, MD of Pace Dimensions, a management consultancy specialising in those sectors.
This transformation has since extended far beyond booking and payment, he adds. Almost all big airlines now offer a mobile check-in service, for instance, while many hotel chains have adopted keyless entry systems. Davis also points to the growth of loyalty schemes, which have in most cases been combined with mobile apps to give users access to enhanced services.
Singapore Changi Airport has automated so many processes for users that it is “well on the way to making the passenger’s journey from check-in to boarding frictionless”, observes Gary Bowerman, director of research firm Check-in Asia.
“This has been driven by two factors,” he says. “First, using technology eliminates human error and improves the customer experience. Second, it enhances the airport’s handling capacity, which will help it to manage the significant anticipated growth in passenger numbers. Other Asian airports and primary global hubs, such as Hamad International in Doha and Dubai International, have also been taking this path.”
Newer players in particular are using the convenience that digital tech can offer as a selling point. At Edinburgh hotel House of Gods, which opened in 2019, guests can use the ubiquitous WhatsApp mobile messaging service to book their accommodation, check in and out, order room service and submit queries to its staff.
“Using WhatsApp makes everything as simple as possible,” explains the hotel’s general manager, Ian Stokes. “Our typical guests are heavy users of technology, so we can communicate with them in a way that they respond to positively.”
Digital check-ins and keyless entry systems are part of the tech offering at apart-hotel company Sonder. Its vice-president for EMEA, Harsh Mehta, says: “These are essential hallmarks of a desirable stay as a result of the pandemic, where separation has become synonymous with health and safety.”
Using digital transformation to aid the post-pandemic recovery
The travel sector’s early adoption of digital tech means that it’s relatively well placed to provide the type of contactless, socially distanced experience that many travellers will require, says Martin Alcock, director of Travel Trade Consultancy.
“Technology has a key role to play in getting people travelling again,” he says. “When it comes to providing reassurance, through aspects such as digital vaccine passports; passenger locator forms; a contactless airport experience; and regular notifications and updates, tech will be vital in enabling hotels and resorts to deliver services in a legally compliant way.”
Decius Valmorbida, president of travel at Amadeus, a provider of technology to the travel sector, agrees. He believes that digital tech will not only aid the industry’s recovery; it will also provide “an opportunity to rebuild a better industry”.
One of the key lessons the industry can offer sectors that have been slower to adopt digital tech, but will need to step up their efforts if they’re to meet demand after the pandemic, is the importance of collaboration. Valmorbida cites digital ID systems as one example of where even rival players in the travel industry have recognised the benefits of working together.
“The ability to automatically identify individuals using their biometric data at each stage of the trip means that travellers can check in at their hotel or hire a car, say, without the help of agents,” he says. “Having realised its interconnected nature many years ago, the industry has embarked on a ‘collaborative digital transformation’, where companies that compete with each another also cooperate to improve the infrastructure on which they all rely.”
It’s the kind of collaboration that could significantly accelerate their collective recovery from the trials and tribulations they have all suffered over the past 18 months.