17 January 2018
Travel Industry Transformation
Develop your vision and start now!
The Travel industry is in a clear path of transformation on the hand of new technologies as virtual reality (VR), augmented reality (AR), artificial intelligence (AI) and sensors, among others. Furthermore, the impact of new ways of doing businesses as Peer to Peer, or Business to Business, desintermediation platforms (P2P/B2B), crowdsourcing and gamification are certainly shaping an interesting future for the Travel industry.
According to CB Insights report called ‘The State Of Travel Tech: The Start-ups, Investors, And Trends Shaping The Future Of Travel’ , only in 2017, there have been 348 deals to invest a total of $5.3 billion US dollars on Start-ups using the technologies we mention around the World. US Start-ups have the most significant contribution regarding number of deals with 31%, India comes in 2nd with 10%, China 3rd with 8%, France 4th with 7% and UK & Germany 5th with 6% of the deals each. Consequently, US-based 500 Start-ups is the most active VC investor, followed by Germany-based Global Founders Capital and Spain-based Caixa Capital Risc comes in the 3rd place.
The start-ups using AR or VR developed a value proposition that looks to satisfy at least two different needs. The first one is about having a visual experience before travelling anywhere, so people can have better information to decide, and start living their journey since the moment they are choosing the destination. One example of this is the app ‘Ejido 360 Tour’ developed by the Imaginar Project with the Department of Tourism of the City Council of El Ejido, presented on january the 17th 2018 at FITUR 2018 . The second one is to give a travel experience at an affordable price, or even free, to those who aren’t able to travel, no matter why, opening a huge business opportunity . An Example is the VR Travel company called Realities that allows users to explore scanned and modeled real world environments (for example, a prison cell in the infamous Alcatraz prison ). However, according to CCN Travel, Virtual travel is in its infancy and a long way from being mainstream .
Start-ups that focused on AI are looking to satisfy the need for personalization and more agile service experience on the side of customers. An example is the AI-powered personal travel agent Voya , that offers fast personalized bookings via chat. Another set of start-ups are using AI to offer cost reduction through automatization of the back-office, as the Weird Hotel, located in the city of Sasebo, Japan, that’s run almost entirely by robots . According to Business Insideriv, it has been so successful in its two-year run that owners are now inspired to open 100 more locations around Japan in the next 5 years.
Regarding P2P platforms and crowdsourcing, the pioneer was the well-known TripAdvisor, allowing consumers to share photos, videos and opinions on their experiences. An evolution of this model is the recent case, launched by the OTA “Al Mundo”, of their Travel Experts Program which opens the possibility to customers to share their experience in order to to enrich other customers’, and gaing reputation. It gives them an incentive to be part of a community to have the advice of a peer which has no incetive to sell but to give the best advice. It circles around an alternative idea of incentive, leveraging on the communites’ caracteristics, other than an economic one, which has been proven to be less effective when you manage to tap on people’s passion.
Transformation is huge and incumbents, including OTAs, need to evolve if they want to be successful in this environment. Some are trying to develop by themself the next generation of products and services while others are responding mostly by acquiring or making alliances with start-upsi, with several mixes in the middle. The fact is that nobody knows which one is the correct path and that the traditional 3-5 years strategic plan (we call it “plan-plan-plan-plan-do”) is not usefull anymore. Incumbent’s leaders need to work with their teams to develop a vision on how the industry is going to be in 20 years and then define 12 months plans to create that reality (what we call “a lean plan-do-plan-do-plan-do focus”). This is valid for big and small companies, technology is available to anyone; it's not about being the technology developer ... it's about being able to quickly incorporate it into value propositions for users…
The future is not defined yet… and the speed of change is giving us the unique opportunity to be protagonists in the creation of that future… Do you accept the challenge?
[ix] OTA: Online Travel Agency
Sebastian Inchauspe, Auren Argentina