Digital innovation, strong economies, and rising global consumer purchasing power have fueled augmented growth in the travel and hospitality industry.
FREMONT, CA: Earlier, travelers browsed through magazines and newspapers for vacation rentals, people hailed taxis by hand, and a few luxury hotels attempted to give guests a personalized experience. What does one infer from the above instances? It plainly implies that the degree to which technology is shaping the travel and hospitality industry is unsteady and is continually accelerating. Today, one can book a hotel and an air ticket without moving from the couch, while still having all essential information at the fingertips.
In the last ten years, the travel and hospitality industry has seen massive transformations. Alterations seen by organizations were in the form of surge from the recovery of the economic recession coupled with a fiscal turning point in global emerging markets. As an inherent love for travel grew among the tourists, the hotel, airline, cruise, and transportation sectors saw a considerable gush and gained benefits like never before. Also, international travel demand thrived, and many companies started leaning on the travel business to help businesses connect and grow. The growth not only was limited to conventional players but also the emerging ones. With the booming market and development, travel technology also has been on a remarkable progression. The digital innovation helped form a lattice for completely new segments to not only enter the marketplace but prosper. Some private accommodation and carpooling brands that once emerged new to the market already hold a place beside the industry giants.
However, exceptional growth and digital innovation come with strings attached. Although market conditions are generally probable to remain healthy, distinctive challenges can bring down the travel industry’s growth curve to a new low. In the year and beyond, travel and hospitality could see significant changes in:
• Increased competition in the global travel segment, with popular destinations attracting a lot of tourists.
• An increasing need for infrastructure investment, with rail, airports, parks and recreation, ports, roads, and transportation needing some significant improvements.
• The industry will see increased weight to advance security, chiefly at airports, while absorbing rising travel demand and creating a more seamless experience.
• Profit margins vulnerable to expenses such as increasing operating costs—labor, fuel, and real estate put travel brands under immense pressure
• Shortage in labor due to rapid industrial development and an evolving workforce.
• The possibility of soft market demand if there is a broader monetary slowdown.
Below are some trends and challenges that can play out in a variety of ways in different segments:
Over the past decade, the hospitality industry has seen extensive growth in the business market. Traditionally, the period of expansion in the hotel sector ran for half a decade before the field experienced a soft demand. Today, regardless of when or if a recession becomes visible, hospitality leaders can be benefitted from early planning. In the course of reduction in the market, revenue managers will be under pressure to preserve the rates as the pricing shifts to consumer.
On the whole, hoteliers need to plan and work it out in the long term. It is also evident from the past findings that recession is usually short-lived. In the meantime, as hotel owners look to cut the costs inevitably, they face a clash with the operators who seek to keep up the service levels. However, the organizations able to withstand the impending storm without sweeping changes in the service quality and rates will be better suited for profitability upon the return of the bull market.
The airline industry has seen a significant transformation for a few years. The early success of the first low-cost carriers brought in an industry-wide chain reaction. The conventional carriers raced to unbundle services and products to depict base fares and contend for budget-minded flyers. In the present day, technology and techniques are developing quickly—with some travel suppliers already leveraging the latest pricing engines to update menus as often as every 15-20 seconds. For all its potential, conversely, dynamic pricing is not an easy plug-and-play solution. For most carriers, reaching the level of sophistication will need a structural change in data management procedures and integration with siloed operating functions.
Disruptive business models and technologies have affected most industries, but a few have felt the influence as much as ground transportation. As the current ground transportation providers look to swell the multimodal solutions, data integration will be the prime challenge for them. So, the industry can get ready for new data processing rules required for integrated transportation platforms. Some enterprises may be required to overhaul data management processes entirely. Additionally, the launch of a monthly ride-hailing subscription service recommends that business models in ground transportation are poised to change considerably in the forthcoming years.
The development trajectory for the cruise industry is as similar to the hotel business. Cruises offer a dedicated experience, so many travelers stick to more traditional vacations. While the core cruise product already captures a steadfast audience, drawing new customers may necessitate suppliers to connect with them through their interest and passions. Since cruises cover vast distances, multiple locations, and connect communities onboard, they proffer a level of engagement that other sectors of the travel industry cannot present.
As businesses settle in and prepare for the coming years, organizations will attend to several factors that play a crucial role. Companies can explore novel ways to leverage cognitive technologies that hold significant potential for the travel and hospitality sector. The sector’s exclusive mix of people-to-people communication, recurring tasks, and unpredictability due to variables like weather disruptions create opportunities for different aspects of cognitive technology. Besides, the tools will make use of automation, insight, and engagement to make an impact in the field.
Lastly, travel and hospitality companies can look to redefine customer relationships by providing more rewarding and personalized experiences. Some hotel brands have already started taking steps to make the personalization more enhanced. The measures comprise matching the temperature of a room, entertainment settings, lighting, and serving a complimentary drink to the guest’s preferences even before they set their foot on the property. At present and in the future, the focus on personalized experiences will continue while giving brands the competitive edge required to deliver results in accordance with customer expectations.