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Exclusive: The 3 “waves” of tech disruption in the travel and tourism industry

The travel and tourism industry has undergone 2 major "waves" of technological disruption, altering their business models forever. We are now on the cusp of the third "wave".

Wave 1: Enter Expedia and Online Travel Agencies (OTAs) Wave 2: Uberification takes place What about the third wave?

In the past, it was enabler tech companies like Expedia, Trivago and were the ones disrupting the traditional brick and mortar travel and tourism industry, revolutionizing how we book hotels, arrange flights, and more. 

Today, companies like these have become the standard. 

Innovations such as blockchain, AI and IoT are on the horizon. Will the innovators of old be the ones to herald in the new wave of disruption, or will fresh, new startups take the lead?

The “first wave” of disruption: The industry has got the internet to thank

When the first online hotel listings domain went online in 1994, no one would have been able to predict that this new type of site would change the travel industry forever.

Soon, site after site would continue to build on this model, until eventually, in 1996, the biggest tech giant at the time, Microsoft, made its own foray into online travel agencies (OTAs): Expedia. Today, Expedia is an OTA powerhouse, among the likes of younger competitors such as, TripAdvisor, and others that followed suit while introducing their own innovations as well.  

One of Expedia’s old site designs. Image: Rewind and Capture

In the following years, world events such as 9/11 and the 2008 global recession provided online travel businesses with an opportunity for massive expansion, when the market was stagnating and traditional hoteliers were struggling to maintain demand. 

“[OTAs] have done a phenomenal job of marketing, and they are so far ahead of (the hotel industry) in terms of technology,” Robert Rauch, CEO of management company RAR Hospitality, told Hotel News Now (HNN). “They also have a tremendous grasp of what’s coming down the pike in social media marketing, channel management and use of the internet. They understand this space better than any hotelier does.”

Indeed, traditional hoteliers were slow on the uptake, rigid in their business models and unwilling to adapt so easily. 

Michael Tall, president and COO of Charlestowne Hotels, speaking to HNN, said that he believes the inability of some hotel companies to leverage technology was another reason OTAs were able to rapidly gain share during the [2008] recession.

It is no surprise then how these once-niche enablers became the go-to way to plan your trip. 

The Uber effect

The advent and massive success of Uber has brought an interesting colloquialism into the English vocabulary: Uberification. But, what does this mean?

Uber revolutionized the cab model and how we book rides. Hence, any simplification of an on-demand or booking service has come to be dubbed Uberification. It’s no science, but it serves its purpose. 

So why the digression? You see, 11 years ago, a certain business had launched: AirBedAndBreakfast. This mouthful was later shortened to the much more popular service you know and love today: Airbnb.   

What the Airbnb site used to look like. Image: Tech Crunch

Airbnb’s breakout success in 2008 represented the “second wave” in the disruption of the travel and tourism industry. 

“The idea of creating a virtual marketplace where property or house owners could share their space for short-term rents struck a chord with a new breed of travellers looking for a different way of seeing in a destination,” May of explained.

The “third wave” – Alexa, at your service

While we are currently still in the second wave of disruption, we are on the cusp of a third one. This third wave will be punctuated by the likes of AI and blockchain. 

Voice technology, enabled by artificial intelligence, is here to stay, Mark Holt, CTO of digital rail and coach platform Trainline, told (IA).

“For the travel tech industry, that means AIs trained with huge amounts of data, to provide bespoke contextual information for individuals,” explained Holt. “This will continually be combined with smart and seamless ticketing, particularly for multi-modal journeys – those using train and coach or other modes of transport in one trip.”

As if online booking wasn’t convenient enough, an AI assistant would be able to book a designated flight or hotel for the user, with minimal input from them. 

A command could go like: “Alexa, book the cheapest 3-star hotel in London, within 5 miles of the city centre, from 15 April to 20 April.”

The key to voice assistants is using keywords, similar to search engine search strategy. Through a well-worded sentence such as this, Alexa would be able to book its user the perfect hotel that fits the criteria they set. 

But this is just the tip of the iceberg with AI. 

“We recently launched the UK’s first ever train ticket price prediction tool, which predicts when advance fares are likely to increase,” Holt continued to IA. “Since launching the feature, we have seen two million customers engaging with this product, resulting in a total saving of more than £9 million.”

“We’re only able to do this because 127,000 people travel every day using a ticket bought through Trainline. This provides a vast trove of customer & rail data that we’re able to leverage to train our AI.”

Blockchain’s changes to the industry will be as immutable as blockchain itself

Blockchain will similarly have an impact on the industry, and many new businesses are cropping up because of the opportunities for innovation that it is creating for the sector. 

Bee Token, for example, “created a decentralized peer-to-peer marketplace called Beenest where hosts make additional income, guests find unique and affordable accommodations,” reports. “The best part is, since transactions don’t go through any middleman, there are zero commission fees.”

Another company, Sandblock, is streamlining loyalty points programs by allowing hoteliers and airlines to create their own loyalty tokens that their customers can not only redeem for brand-specific rewards, but also can be used across a variety of services beyond the company. Loyalty points could even be exchanged into fiat currency, Invest in Blockchain explains.

TUI Group, the world’s largest tourism company, has not slept on blockchain either. According to Forbes, the company has developed a project called BedSwap which utilizes a blockchain-enabled system to maintain records of hotel bed inventories in real-time, cutting the need for intermediaries like Expedia.

We are only scratching the surface here, and as with every “wave” of disruption to the industry, the biggest winners are the ones who crack the code first. If risk-taking gave us Expedia and Airbnb, an even higher caliber of risk will need to be taken to bring the world widespread implementation of blockchain and AI in the sector. 

 “We’re all overloaded with talk of artificial intelligence, blockchain, machine learning and ultra-personalization – but, as with other major developments in travel, certain triggers need to take place for true disruption to take place,” PhocusWire noted.

At the moment, the big names are already taking action, with Trivago already hiring a team to research data science and machine learning, for example.  

It has yet to be seen whether these veteran disruptors of the first and second waves will be the ones to triumph once more in the third wave. For all we know, a star-eyed startup might swoop in to bring the industry it’s next big thing.