A range of new tech solutions and ideas has entered the marketplace this year with significant investment being made into the travel sector. In the last five years alone travel startups have received over £1 billion in new investment. The online travel market, for example, is expected to grow to $817 billion for 2020.
In a sector that added a record $8.8 trillion to the world’s combined GDP last year– a massive 10.4 per cent of the world’s total economic activity there are massive strides to be made in digital transformation to manage huge quantities of data and meet customer expectations.
As 2019 comes to a close, we identify the four areas of focus for 2020:
1. System connectivity - a new era of interfaces
Connectivity and integration will continue to be major trends for 2020. This year saw the growth of ecosystems of interconnected software with the launch of Siteminder’s Hotel App Store and Apaleo Marketplace, much like the Protel and Snapshot marketplaces that came before. These enable products to be integrated with compatible PMSs (or other hotel systems) via an essentially plug-and-play approach, making integration much simpler and more efficient. These markets will expand in 2020 and competitors offering similar cloud-based integrations will also prosper.
With the API ecosystem estimated to be worth over £1 trillion, it’s no wonder that open APIs are a trend that will continue into the next year. With smaller players looking to hook up legacy systems to new applications and industry giants like the big OTAs, open APIs will remain a credible way for the industry to become more connected.
Yet the increasingly common situation is when both partners have Open APIs, the need here is for one of them to write and maintain an adaptor to the other, thus either requiring resources internally to build and maintain these interfaces, or third party outsourcing to develop and manage them.
This is a huge challenge the sector is facing when systems need to be connected but businesses do not have the experience and resources to develop them. We have developed our role to provide that support to companies needing the essential interfaces to unlock system performance and commercial capabilities.
Furthermore, new products will increasingly take an API-first approach that puts integration at the forefront of everything they offer. Open APIs and software ecosystems certainly make life much easier for start-ups, enabling them to quickly forge partnerships with and link their products to the wider ecosystem. It also spells the end for the old model, exemplified by Thomas Cook, where relying on small networks of partners was a viable way of doing business. However, new tech needs to ensure it has a diverse range of connections and not solely rely on one to attract market interest.
Might 2020 see the death of more dinosaurs within the travel and hospitality industry? Don’t bet against it.
2. Big data - Automation applied to hospitality technology and solutions
With the huge investment in AI and machine learning, automation will continue to be a dominant trend in 2020. With 70 per cent adoption by OTA’s and 52 per cent of airlines planning on investing in large AI-based programmes in the next three years, it’s not hard to see why.
Consumers are becoming ever more familiar with chatbots helping to normalise automation and reducing its heavily discussed threats to jobs. As chatbots become increasingly sophisticated to the point where they are indistinguishable from humans, minds are opened to the wider application of machine learning.
Businesses are seeing the benefits of freeing staff from manual and repetitive processes allowing them, to focus on more creative and strategic tasks. We are seeing more AI-powered devices interacting with travellers too, from AI-powered digital robot concierges in hotel lobbies and voice assistants like Amazon’s Alexa stationed in guest rooms, or responding to email booking enquiries like that of HotelResBot.
And these are just the front-of-house applications. Behind the scenes AI will increasingly be taking control, analysing big data to provide insight to make intelligent strategic decisions, and improving personalisation with more targeted communication, marketing and offers based on consumers’ engagement and interaction.
AI will be also be used in conjunction with facial and voice recognition technologies – another growing trend in 2020 – and will automate a whole host of tedious and repetitive back office tasks like optimising rate structures and distribution channels, as well as processing standard guest requests (much like Radisson Edwardian’s chatbot Edward, freeing up humans to concentrate on higher level customer engagement.
3. Digital skills - preparing the workforce
As digital transformation continues apace, lack of digital skills in the workforce will become a prominent issue in the coming year. Businesses, even down to the level of individual hotels, will become used to working alongside and in cooperation with automated digital processes, as well as highly technologically proficient team members such as data scientists and integration specialists.
The base level of digital skills will be raised by this yet further investment will need to be made in learning and development programmes to keep abreast of new technology and processes. In addition, technical abilities are being lost, although staff may be able to use digital platforms there is a huge demand for developers and data analysts to optimise the performance of systems - with significant numbers of vacancies on the market unfilled. Automation will allow for the upskilling of workers in other areas, which will offer better staff mobility and clearer and more accessible career and knowledge pathways within businesses if these changes are embraced and support is provided to develop skills in these areas.
In addition, the new digital platforms will lead to an improved level of what humans have always been best at – the soft skills that depend on curiosity, friendliness and compassion that are at the heart of hospitality.
Another upshot of digital transformation will be greater cooperation between teams and departments. Integration of systems and data means that no one can act inside their own bubble anymore. Staff need to be comfortable integrating their own tasks and skills with that of other areas of the business in order that data is shared for maximum potential and the operation works as an organic whole rather than several partitioned units.
Digital transformation will also pave the way for more diversity and inclusion within the workplace, with HR teams able to concentrate more on the balance of their team and how to perfect it.
4. Unlocking revenue potential
Whereas airlines earned over $82 billion in ancillary revenues in 2017 alone, hotels are still way behind the curve when it comes to tapping the potential of additional offerings. Studies have found that only 25 per cent of hotels have ancillary products and services promoted along their booking funnel. And only 57 per cent of properties upsell during guest stays. Both Cendyn eUpgrade and Oaky have moved into this space to help hoteliers maximise income personalised to each guests travel journey and stay experience.
2020 will see hotels straining to catch up by offering their own added extras and teaming up with external partners to offer additional experiences. Some of the more common trends will be opening communal spaces to external and local events such as business events, start-up incubators and coworking areas.
Working with partners to provide local experiences will also become more popular, with hotels increasingly establishing themselves as local hubs for travellers to find authentic local experiences, falling more in line with the AirBnB model. Smaller businesses will increasingly look to partner with growing tech companies that provide complementary offerings in order to optimise the potential and boost the earnings of additional products.
Stephen Burke, SVP & Practice Principal, Sciant