Generative AI still dominates headlines and conference discussions, but it’s not the only travel-related technology influencing business operations today — or likely to affect them in the near future.
With this in mind, expert analysts from Phocuswright gathered for a webinar to discuss the technology and innovation trends influencing travel and detail how they are impacting the industry.
Moderator Mike Coletta, senior research and innovation analyst at Phocuswright, made it clear from the beginning the importance of keeping up with technology trends.
“It is clear that at least some things in travel are certain,” he said. “One is that travel demand is resilient, having shown that it can and will bounce back from even the most dire circumstances. And [second]More than ever, travel companies that fail to embrace emerging technologies are heading towards obsolescence.
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“And generative AI is clearly the biggest emerging technology to watch, but there are many other developments in travel technology that will influence how travel businesses operate in the years to come.”
One example was the rise of self-sovereign identity (SSI) and biometrics. Senior enterprise technology and market analyst Norm Rose discussed the potential of SSI to empower travelers to control their personal data, opening up opportunities for more personalized and frictionless travel while reducing fraud risks.
“The role of robust, flexible and verifiable digital identities at the heart of automating and personalizing the travel process and [in] the future that creates the connected travel we have been talking about for many years will become a reality through this technology,” said Rose.
“Now the important thing… to keep in mind is that this is something that’s coming to the marketplace, not just the travel industry,” he added. “This is coming to society — driven by government, driven by businesses. Once we get used to having digital IDs like these and verified capabilities, I think the infrastructure will be in place for us to move forward and really accelerate the frictionless aspects of travel.”
A mixed ROI so far for generative AI
Of course, generative AI has had its moment in the discussion. As senior research analyst Cathy Walsh explained, the technology was driving efforts to optimize everything from customer interfaces to back-end operations in 2023, and this year has been all about companies’ efforts to start operationalizing it.
“Emerging technology comes with a lot of hype and hyperbole,” she said. “So we really set out to dig deeper to find out what travel companies have learned so far, to really understand what’s working and what’s not.”
Most companies have focused on integrating generative AI into their own assets. This has led to common themes in the types of applications travel companies have been using, from chatbots, virtual assistants and consumer-side review summaries, to assisting customer service agents and text translation.
On the internal side, support for customer service agents and greater coding efficiency.
The crucial question is what is the return on investment, she said.
“The results are mixed so far. Travel companies have indicated that GenAI-powered products are having a number of benefits, depending on the company: saving customers time, moving them deeper into the funnel more quickly, boosting engagement and, in some cases, revenue. …
“On the other hand, Expedia says its integration with ChatGPT has had minimal impact on revenue or conversion. And it was interesting to hear former Expedia CEO Peter Kern say bluntly late last year that the opportunity for AI to plan an entire trip is, quote, grossly overstated.”
Where travel lags behind in technology integration
Analyst Marcus Shreyer looks at why some technologies — including virtual and augmented reality (VR/AR), Web3 and the Internet of Things (IoT) — are largely underappreciated in the industry and how they can be better leveraged for travel.
Fear that new technologies will disrupt the established human touch is one reason travel lags behind other industries in adopting new technologies. But Shreyer spoke about why travel companies should look to integrate modern technologies so that they complement the human touch rather than replace it.
As an example, he highlighted the potential that the application of big data in the hotel industry could have.
“There’s probably no industry out there that has more access to the consumer, more access to data points, and yet sometimes we’re executing poorly,” he said. “How many times do we get asked when we check into our favorite place, ‘Is this your first time staying with us?’ And my hope — and we’re seeing this happening now with generative AI — is that we’re not going to be able to do that.” [is] This will help us leverage data, improve personalization, and sometimes without major investments.”
The Green Dilemma for Corporate Travel
Just as corporate travel looks set to return to pre-COVID spending levels, offsetting the rise in video conferencing with greater demand for in-person connections, a new challenge has emerged for the sector as thousands of companies pledge to reduce emissions and meet sustainability targets.
“These pledges are a big deal,” said Lorraine Sileo, senior analyst and founder of Phocuswright Research. “And they can have a big impact, a positive impact, obviously, on the environment.”
However, the problem for companies in the corporate travel sector, she added, is that the easiest way for corporations to limit greenhouse gas emissions is to cut air miles. “Pledges toward science-based targets will have an impact on corporate travel numbers in the coming years,” Sileo predicted.
The companies most at risk, she said, are those focused on meeting corporate travel needs. Also at risk are suppliers and other partners that fail to meet corporate targets for reducing their carbon footprint.
But while sales numbers are trending in the right direction for corporate travel interests, Sileo warned about what an economic downturn could mean.
“The post-COVID recovery, high prices and rising demand have offset some of the billions in travel spending cut from budgets,” Sileo said. “But once the economy weakens, corporations will have a great excuse to cut spending.” [travel] spend — and that great excuse is called the environment.”
The rise of central bank digital currencies
As the ups and downs of cryptocurrencies fade into the background, Rose returned to the rise of central bank digital currencies — known as CBDCs. State-controlled digital currencies that act as a digital version of a country’s currency seek to combine the promised efficiencies of cryptocurrencies with the stability of the traditional banking system.
According to one tracker, 134 countries and monetary unions representing 98% of global GDP are exploring CBDCs.
“Ninety-eight percent,” Rose emphasized. “As of May 2020, the number was 35. Many are in exploration, development, and some have been launched,” including in China and India.
Given how slowly the travel industry has embraced digital payments, Rose said travel companies should assess global markets to be prepared for the trend to take hold.
“The more we see digital currencies become part of this, the more likely governments are to offer digital identity as part of this as well,” Rose continued. “I recently saw an article where the [U.S. Department of Homeland Security] is going out for bidding for a digital ID. So the connection between central bank currencies and digital ID is also there.”
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