The world of travel and hospitality has entered a new era of growth and transformation. Global business travel spending hit a record-breaking $1.2 trillion in 2015, up five percent from the previous year. In the United States, renewed consumer confidence, along with a shift in household spending from goods to services and experiences  (Figure 1) helped leisure travel gross bookings sustain a growth rate well ahead of gross domestic product (GDP). Healthy booking trends in the business segment, as well as growth in some of the world’s largest leisure markets, will fuel global travel growth in 2017. Direct travel & tourism GDP growth is projected to reach 3.8%, outpacing broader global GDP growth of 2.5%.
While healthy booking growth is projected to continue across the leisure and business fronts in 2017, the spoils are not guaranteed to travel’s biggest or most-well-known brands. The past few years taught established industry incumbents to never again underestimate a seemingly innocent travel startup.
A combination of forces, including shifts in the global economy, game-changing innovation, geo-political turmoil, natural disasters, pandemics, and rising consumer demands reshaped the travel landscape in 2016. Expect a similar climate in 2017. Below, we reflect upon powerful elements of change in our industry, including evolving consumer mindsets, enabling technologies, rising forms of risk and platforms, and how they may all transform travel in 2017.
With the exception of frequent business travellers, most consumers in even the most mature global travel markets like the USA and Europe do not travel very often — maybe two or three times a year. Consequently, their exposure to travel brands is relatively limited. Everyday brands, however, showcase their innovation and services to their customers often — sometimes daily. Many well-known brands, such as Amazon and Starbucks, are leading on the customer experience front and setting the bar quite high for consumers’ brand expectations. Travel and hospitality brands will find themselves subject to the same expectations. Those able to capitalise on these changing expectations with speed and agility are more likely to capture their share of the billions of additional dollars that will be spent on travel in 2017. Experience is now integral to core travel product offerings.
But what exactly are these expectations? While different businesses offer consumers various products and services, there are overarching themes around how expectations are changing — and these generally centre around authenticity, personalised experiences, removal of friction and on-demand functionality.
From augmented and virtual reality to the Internet of Things (IoT), the promise of emerging technology has never been greater. When it comes to leveraging new technology, today’s travel brands have a daunting amount of choice. 2017 should be the year travel companies think beyond the “what” of technology innovation and proliferation — the shiny devices, applications, and capabilities — and understand what technologies consumers are ready to adopt, and what experiences will drive real value. Travel companies must first envision the customer experience they want to deliver. Then, they can explore the technology options best suited to support their goals. Companies should resist the urge to invest in new technology simply because it seems innovative.
The influence of Brexit and recent terrorist acts in Western Europe are reminders that, while globalisation has brought innumerable benefits to the travel market, interdependence also has its downsides. Pandemics such as the Zika virus can also have regional and global impact on travel behaviour.
Additionally, travel and hospitality companies will become more vulnerable to other risks in 2017, such as cyber-attacks and food safety. Data breaches are happening more often — and with unprecedented sophistication. In the months ahead, mitigating cyber-risk will only prove more challenging as travel companies continue to open their ‘doors’ to new technology enablers and third-party vendors. And, in an effort to satisfy the enormous demand for locally-sourced, organic food options, restaurants and hotels are leaving themselves more exposed to food safety incidents. Investing in Enterprise Risk Management (ERM) is no longer an option for travel and hospitality companies. Thoughtful awareness of risk should be embedded into the very fabric of the organisation — with senior executive and board level support.
Finally, in 2017, we urge travel companies to conceptualise their brands as platforms for new opportunity and growth. Travel is fragmented across many micro-experiences. For example, during a single trip, a traveller may transact with a variety of suppliers and businesses — including hotels and private accommodations, airlines, cruise ships, and multiple modes of ground transportation. And don’t forget destination activities and shopping. Most travel companies operate in just one (or maybe a few) of these verticals. With organic growth hard to come by today’s competitive market, travel brands must realise the benefits of scaling across the travel experience — rather than only trying to grow within their vertical.
For years, travel suppliers have been trying to crack consumer loyalty by offering intricate programs and schemes. 2017 calls for a shift in thinking to make customer experience paramount. Over the next 12 months, travel companies should leverage an increased awareness of customer expectations, re-imagined technology strategy, and differentiated offerings to provide unmatched travel experiences. Loyalty will follow.
Thank you to Marcello Gasdia (Center for Industry Insights at Deloitte) for his contribution to this piece.
 Global Business Travel Association Press Release, June 11, 2016
 Deloitte’s Retail Volatility Index 2016
 Phocuswright’s Online Travel Overview: 15th Edition
 WTTC projections (March 2017)
At Google, we believe that we are only 1% of the way to how technology will transform our lives and businesses. The foundation of acceleration for the next 99% has been fully coming into place with the combination of mobile devices, increased connectivity, and machine learning. We believe this combination of transformational technology will challenge each company to reimagine their core business, resulting in new and innovative approaches to the historic complexities of our industry.
Over the next 4 years, another 1 billion people globally will be coming online in emerging markets; for the vast majority of these people, a mobile device will be their only computing device. A burgeoning population of mobile users, however, remains starkly in contrast to the slow pace of mobile development that we see across travel companies at large.
The onus of being mobile-first is now on travel companies; we owe it to global mobile users to both improve baseline experience (in terms of speed and usability) as well as to take advantage of the powerful capabilities of mobile devices (there are about 10 distinct sensors in most smartphones). Progressive Web App technology is delivering lightning fast speeds for companies like MakeMyTrip and Booking.com as well as offline functionality for AirBerlin passengers on the go. Uber, which used the power of GPS to revolutionise transportation, recently allowed travellers to book simply via phone number in India, where downloading the full app might present a barrier for many users.
From initial research to on-location assistance, mobile devices have the ability to truly transform the core of travel experience… but only if companies reimagine their offering in a user and mobile-first way.
A few years ago, I wrote that true transformation would occur when travellers were being assisted by technology, but the technology itself was no longer noticeable. Between increased overall connectivity across device types and the rise in virtual/augmented reality, we appear to be moving solidly in that direction.
Computing infuses our daily lives, built increasingly on devices that work together to solve complex user problems. Our TVs and phones are connected through systems that extend to our cars, our thermostats, our watches. Correspondingly, as connected devices become ubiquitous, the dominance and even physical presence of any one specific device fades.
New ways of interacting with computing also accelerate this trend. Progress in natural language processing means we will use fewer keyboards; for the global traveller, being able to converse, without stopping to type, will be transformational. Virtual reality (fully immersive digital worlds) can deliver travel experiences independent of location. Augmented reality (digital objects presented in the physical world) enables an entirely new layer of interaction with one’s surroundings.
Ironically, with more devices and technologies, we are able to focus more closely on the experience being delivered.
Major technology shifts come in roughly decade-long waves — from the PC to the web to the smartphone. Though travel, as an industry, is still playing catchup in terms of mobile adoption, broader technological shifts are already driving us all to consider the next wave: machine learning. What is machine learning? Simply put, it means that computers don’t need to be told exactly what to do. They can be given an objective and lots of data and then teach themselves how best to achieve the objective.
The concept of machine learning may be applied to transform nearly every component of how businesses function. One example of this connects back to the importance of mobile experience: Google recently partnered with leading data analytics company SOASTA to use machine learning to determine the biggest drivers of mobile bounce rate and conversion rate.
The power of machine learning allows us to solve highly complex problems faster than ever before. Most importantly, the nature of this data-driven transformation is that it is something that any company, no matter how big or small, can use to evolve or scale their business for the future.
● Leverage existing machine learning algorithms, like the open source code from SOASTA, to improve insights and business operation.
● Hire and develop a strong data science team, employing the best and brightest to innovate with your company’s goals in mind
Travel companies cannot hope to simply add new features to old business models and succeed. Instead, we must always keep our eyes to the horizon, thinking about how certain transformational technology will allow us to reimagine our business in ways that benefit the user and the industry.
● Is your mobile experience fast, simple, and delightful? How can mobile experiences strengthen, and possibly even revolutionise, your core business?
● Are you leveraging the connectivity of devices or immersive experience to deliver a superior discovery, booking, and/or travel experience?
● How can you use machine learning to solve the biggest challenges in your business?