As the global travel and tourism sector continues to recover from the Covid-19 pandemic, company and industry focuses are moving elsewhere.
Major themes like Covid-19 itself (from the perspective of recovery) and sustainability are naturally among those that are front of mind for the sector, but other themes too are attracting attention – and, indeed, some require attention in order for businesses to remain competitive.
Speaking to Hotel Management Network ahead of the Key Themes in Travel & Tourism for 2024 webinar on 20 March, for which registration is now open, GlobalData analyst Monia Borawi discuss the recent growth of cybersecurity as a critical area of focus, the continuing impact of geopolitics on the sector and the importance for businesses of investing in emerging technologies like artificial intelligence (AI).
What have been the most significant key themes in travel and tourism over recent years?
Borawi: One significant theme for the travel and tourism space in recent years has been cybersecurity. The travel industry holds hugely valuable and sensitive data on every traveller. If these data points are not well protected, there are significant risks for customers, who could have their data stolen. Such breaches can damage a company's reputation. Several high-profile companies within the sector have made negative headlines due to poor cybersecurity measures. Cybercriminals exploit vulnerabilities within a cybersecurity strategy, so a rigorous approach is central to effective risk management. To tackle cyber threats, a company’s cybersecurity strategy must involve contingency planning, outlining immediate actions, post-breach responses, and an understanding of the company’s current cyber risks. The travel and tourism sector is one of the most susceptible to cyberattacks, ranking third in incidents according to the 2020 Trustwave Global Security Report. With attacks becoming more common and increasingly sophisticated, the risk and impact of cyber-ignorance are escalating.
Travel and tourism is one of the most important sectors for the experience economy. Instead of consumers traditionally focusing on material possessions when making purchasing decisions, many are now more interested in making memories through the creation of experiences, and, because of this, the experience economy has been able to thrive. By naturally being able to offer something above and beyond material objects, travel and tourism companies are in one of the best positions to benefit from this theme. Airlines and accommodation providers can offer added value to their customers through ancillary offerings and personalized services. Cruise and tour operators are other important players as they are not only taking tourists from place to place – they provide a multifaceted experience. Additionally, companies that operate events such as festivals and sports tournaments are also important to this theme as the success of their offering completely relies on experience.
Every global conflict, leadership clash and global issue connects to one common strand – travel. This affects the freedom of movement that lies at the centre of every geopolitical crisis. Pandemics, trade wars, nuclear weapons, land disputes, cyber-attacks, military tensions, domestic disputes and migration are all trends that contribute to a geopolitical crisis, jeopardizing the travel and tourism sector along the way. Travel is often immediately impacted following a geopolitical incident and some locations are impacted more than others. Destinations have virtually zero control over the likelihood a geopolitical incident will occur. All travel and tourism players could be impacted by this theme. Often it is the destination that is the first to feel the impact, so it is important to recognize that inside the destination there are businesses/service providers related to travel and tourism that will be affected. Airlines, airports, lodging providers, transportation services and other players are among the sub-sectors that will be impacted by a decline in visitation due to a rise in geopolitical conflict.
What will be the most significant themes during 2024 and why?
AI has seen a large rise in relevance for the travel and tourism industry. AI is not a new theme but has been incorporated into devices, business applications and productivity tools for some time. The advent of ChatGPT, the language model launched in November 2022 by OpenAI, paved the way for the current hype surrounding this technology. Companies are keen to take advantage of these new capabilities, particularly in areas such as sales, marketing and customer support. Airlines, airports and travel intermediaries would benefit from investing in the human-AI interaction layer to improve operational efficiency. The lodging and cruises sectors would benefit from computer vision technologies for check-in and boarding processes, while attraction operators could use them for occupancy monitoring. Pattern recognition, planning and forecasting capabilities are extremely useful across all travel industry segments.
Travel executives have increasingly realized that building more relevant and personalized customer experiences is critical because it helps differentiate their brands in an increasingly competitive market. From hotels to booking sites to social media, executives and CEOs are thinking about the ways personalization can help them reach and sell to customers more effectively. With more choices open to consumers, travel brands face significant pressure to attract and retain customers. This means even more importance is placed on driving success from the company’s website and marketing channels. The customer experience is becoming more personalized and the only way to do it is to know enough about each customer. The road to personalization is paved with data. Customer knowledge comes from the collection and analysis of customer data, which is why data is so important to personalization. The data collected enables companies to better understand their customers' needs and expectations, make faster and more informed decisions and provide customers with the personalized experiences they crave.
Environmental, social and governance – or ESG – is moving into a different era, which we call ESG 2.0. In this second phase, there will be a greater focus on the ‘E’ component, with a shift from a voluntary regime to a mandatory one, driven by government mandates rather than consumer pressure. A host of new environmental laws are in the pipeline, relating to mandatory reporting, carbon pricing and carbon import tariffs, as well as more state support and investment in clean energy technologies. Companies unprepared for ESG 2.0 face higher costs and lost sales. Corporate interest in ESG issues began to gain momentum in the years following the 2015 adoption of the Paris Agreement, an international treaty on climate change mitigation, adaptation and finance. ESG 2.0 will be driven primarily by government policy rather than voluntary corporate action. Major regions are taking different approaches to the implementation of ESG-related policy.
How will the current key themes shape the industry today and in the future?
The integration of AI into the travel and tourism industry is revolutionizing various aspects, from customer service to predictive analytics. AI-powered chatbots and virtual assistants streamline customer interactions, providing personalized recommendations and assistance 24/7. Moreover, AI algorithms analyse vast amounts of data to forecast travel trends, optimize pricing strategies and enhance operational efficiency. As AI continues to advance, its role in automating routine tasks and personalizing experiences will be pivotal in shaping the industry's future, driving greater convenience and satisfaction for travellers while optimizing resources for businesses.
Personalization has become a cornerstone of the travel and tourism industry, as travellers increasingly expect tailored experiences that cater to their preferences and interests. From personalized recommendations based on past behaviours to curated travel itineraries, companies are leveraging data and technology to create bespoke experiences at every touchpoint of the customer journey. As advancements in AI and machine learning enable deeper insights into consumer behaviour and preferences, personalized marketing campaigns, dynamic pricing strategies and hyper-targeted offerings will become more sophisticated, enhancing customer satisfaction and loyalty. Furthermore, personalization fosters a deeper emotional connection with travellers, leading to enhanced brand loyalty and advocacy in an increasingly competitive landscape.
ESG 2.0 considerations are becoming integral to the travel and tourism industry as stakeholders prioritize sustainability and responsible practices. Travelers are increasingly conscious of the environmental and social impacts of their journeys, leading to growing demand for eco-friendly accommodations, carbon-neutral transportation options and ethical tourism experiences. In response, industry players are implementing sustainable initiatives, such as reducing single-use plastics, supporting local communities and investing in renewable energy solutions. Moreover, investors and regulators are placing greater emphasis on ESG criteria, driving companies to integrate sustainability into their business strategies to mitigate risks and seize opportunities in an evolving landscape. As ESG considerations continue to gain prominence, they will not only shape consumer preferences but also influence industry regulations and corporate strategies, ultimately reshaping the future of travel and tourism towards a more sustainable and responsible paradigm.
How are companies innovating and investing in current key themes?
Companies are investing in AI-powered technologies to enhance customer experiences and operational efficiency. This includes the development of intelligent chatbots and virtual assistants for personalized customer service, predictive analytics for demand forecasting and pricing optimization and AI-driven recommendation engines to tailor offerings to individual preferences. Major players are also exploring AI applications in robotics for tasks such as luggage handling and cleaning, improving overall service quality and reducing labour costs.
Companies are investing in data analytics and machine learning capabilities to deliver personalized experiences at every stage of the customer journey. This includes leveraging customer data to offer customized recommendations for accommodations, activities and dining options, as well as creating tailored marketing campaigns based on individual preferences and behaviours. Some companies are also implementing dynamic pricing models that adjust rates in real-time based on demand and customer profiles, maximizing revenue while ensuring competitive pricing.
Companies are increasingly incorporating ESG considerations into their business strategies and operations. This includes adopting environmentally friendly practices such as reducing energy consumption, implementing waste reduction measures and sourcing sustainable materials. Many companies are also investing in community development projects, supporting local economies and promoting cultural preservation in destinations. Additionally, companies are disclosing ESG metrics and performance to investors and stakeholders, demonstrating their commitment to sustainability and responsible business practices.
How can travel and tourism companies harness key themes for success?
Companies should invest in AI-driven technologies to enhance customer experiences and operational efficiency. By leveraging AI-powered chatbots, virtual assistants and predictive analytics, companies can provide personalized recommendations, streamline booking processes and optimize resource allocation. Embracing emerging technologies such as augmented reality (AR) and virtual reality (VR) can also create immersive and engaging experiences for travellers, setting companies apart from competitors.
Companies should prioritize personalization throughout the customer journey, from pre-booking to post-trip engagement. By leveraging data analytics and machine learning algorithms, companies can tailor offerings to individual preferences, anticipate customer needs and deliver targeted marketing campaigns. Personalized experiences not only enhance customer satisfaction and loyalty but also drive revenue growth through upselling and cross-selling opportunities.
Travel and tourism companies should integrate ESG considerations into their business strategies and operations. This includes implementing sustainable practices such as reducing carbon emissions, minimizing waste and supporting local communities. Companies can also engage in eco-friendly initiatives such as wildlife conservation projects, beach clean-ups and tree-planting campaigns to promote environmental stewardship. By demonstrating a commitment to sustainability and responsible practices, companies can attract socially conscious travellers, enhance brand reputation and contribute to positive societal impact.
Overall, by embracing the key themes of AI, personalization and ESG 2.0, travel and tourism companies can differentiate themselves in a competitive market, drive customer satisfaction and loyalty and position themselves for long-term success in an evolving industry landscape.
GlobalData’s Key Themes in Travel & Tourism for 2024 webinar on 20 March will examine the impact of several key themes on the travel and tourism sector in 2024, including AI, ESG and personalisation.
