Airlines, hotels and travel agents are driven to holistically embrace social, mobile, advanced analytics and cloud to boost business performance and retain share of wallet.

1. U.S. Travel and Hospitality:
Embracing a SMAC-Driven Future
A gradually improving economy and heightened consumer expectations
for more personal and real-time interactions and transactions is driving
airlines, hotels and travel agents to holistically embrace social, mobile,
advanced analytics and cloud to boost business performance and retain
share of wallet.
Executive Summary
For an industry hampered by the weak global
economy, 2012 was a good one for the global
travel and hospitality (T&H) industry, as a record-
breaking one billion tourists traveled outside
their home countries. Domestically, the U.S. T&H
industry is experiencing a genuine revival. Real
spending on tourism has increased in the past
two years, and U.S. citizens are expected to travel
more frequently this year than last, indicating a
return to “travel as usual” in both the business
and leisure segments.
The boost bodes well for leading players in the
travel and hospitality value chain, namely, hotels,
travel agents and airlines. However, a wave of
technological advances is flooding the industry,
creating opportunities to boost operational effi-
ciencies and customer satisfaction, as well as
combat the threat of displacement by more inno-
vative, technology-savvy competitors. The wave
comprises four foundational elements: social
media, mobile, analytics and cloud computing, or
the SMAC Stack.TM
(For more on the SMAC Stack,
read Cognizant’s paper, “Don't Get SMACked:
How Social, Mobile, Analytics and Cloud Tech-
nologies are Reshaping the Enterprise, Cognizant
Technology Solutions.”)
T&H is among several service industries feeling
the disruptive impact these technologies can have
on business, spurring forward-thinking players to
begin consolidating their offerings and technol-
ogy backbones around them.
The rise of mobile and social media has impacted
customer behavior significantly. Consumers now
use mobile devices to not just research their
options but also book travel. While on vacation,
they use social media to connect to their friends
and share pictures. By doing so, they add to the
voluminous business data generated each and
every day. This data can and should be leveraged
to create efficiencies and develop insights into
customer behavior through the use of advanced
analytics. Similarly, cloud computing holds the
promise of reducing capital expenditures for
companies looking to boost their business capa-
bilities by paying only for the IT services they use
from more flexible operating budgets.
cognizant reports | april 2013
• Cognizant Reports

2. cognizant reports 2
Industry leaders are ahead on the adoption curve,
and second-tier players will soon follow suit.
Nevertheless, many T&H companies are in a state
of flux regarding the best way forward, with many
adopting a wait-and-watch approach, prefer-
ring to hold off until SMAC technologies mature
and reach mainstream status. Yet, unless they
act now, T&H companies might find themselves
outmaneuvered by nimble-footed, technology-
driven competitors that reach customers via
mobile apps and optimized Web sites, impacting
their revenues or, worse, enabling travelers to
completely bypass them. Owning the customer
(i.e., transacting directly with the traveler) is a
critical battle that each and every industry player
must fight and win.
We believe the key imperatives for T&H industry
players include:
• Take an integrated approach to the emerging
SMAC Stack, as these technologies perform
optimally when deployed holistically rather
than in silos.
• Use cloud computing to provide customers all
travel-related services in one place.
• Use social media as a cornerstone for
marketing and communication with custom-
ers, as social media and travel are consid-
ered to be a natural fit. The channel is ideal
for spreading the message directly to the
customer, using tools such as videos, personal-
ized offers and contests. Social channels can
also provide feedback for all other channels.
• Develop high-quality content, such as vid-
eos of services or destinations being offered,
accompanied by customer testimonials to dif-
ferentiate offerings and build customer trust.
• Analyze customer data to understand their
behavior and preferences and build stronger
relationships.
• Leverage personalization to meet traveler
expectations. Analytics, in combination with
mobile and social, is an ideal platform for cre-
ating an individualized experience. Analytics
is being used to match offers, provide plans
based on a customer’s previous choices and
deliver personalized offers on consumers’
social media pages.
• Integrate new technologies such as mobile
devices into legacy systems on a priority
basis. Companies should invest in new technolo-
gies that help legacy systems work with emerg-
ing technologies. Alternatively, they can build
technology layers (middleware) that interoper-
ate with cloud-delivered third-party solutions.
A Slow, Steady Comeback
The current optimism in the T&H industry is well-
founded. During the past few years, there has
been a steady rise in the industry’s key economic
indicators (see Figure 1). This is further corrobo-
rated by surveys indicating that both leisure and
business travel are set to make a strong come-
back in the coming years. For instance, the Global
Business Travel Association found that a pent-up
need for face-to-face conversations with clients,
coupled with spending on international trips,
is expected to boost travel spending in the U.S.
by 4.6%, to $266.7 billion in 2013. Similarly, the
members of the U.S. Tour Operators Association
expect higher sales in 2013 over 2012.
Spending on U.S. Tourism Returning to Normal
Figure 1
Source: U.S. Bureau of Economic Analysis
-16.0
-12.0
-8.0
-4.0
0.0
4.0
8.0
2005 2006 2007 2008 2009 2010 2011 2012
%
Quarterly Growth in Real Tourism Spending

3. cognizant reports 3
In addition, the expected growth in foreign tour-
ists to the U.S., led by travelers from China, is
expected to result in one million incoming travel-
ers this year. This demand, coupled with the slow
growth in supply, is expected to work in favor of
U.S. airlines and hotels. In particular, hotels are
expected to outperform other travel industry
players. Airlines, hampered by high fuel and oper-
ational costs, express tempered optimism. Ongo-
ing industry-wide consolidation is also expected to
accelerate. Moreover, industry players are seeking
regulatory relief to help them better control costs.
Hotels
Fueled by strong fundamentals, the U.S. hospi-
tality industry is expecting a boom in the next
four years. In 2012, the occupancy rate grew by
2.4% (see Figure 2), whereas the daily rate1
grew
3.8%, to $108.53, and revenue per available room
(RevPAR) increased 6.3%, to $66.77.2
Supply has
grown slowly in the U.S. hotel industry — 0.6% in
20113
— while demand has grown at a healthy 5%
clip in the same period, which points to a favorable
pricing environment for hotels.
Revenue and profitability have improved over the
past two years (see Figure 3, next page). Simul-
taneously, hotels have maintained tight cost con-
trols to improve productivity without adding new
resources. This has added to the bottom line as
occupancy rates bounced back. Net operating
income (NOI) per available room, which fell to a
low of $10,483 during the weakest phase of the
recession in 2009, is expected to surpass the
2007 peak of $16,868 and reach $18,216 in 2014,
according to research firm PKF.4
Large U.S. hotels have rapidly expanded into
developing markets, such as China. For exam-
ple, 60% of the additions to Hilton Worldwide’s
hotel portfolio over the past few years have been
overseas.5
Expansion into developing countries
will also improve providers’ chances of attract-
ing tourists from these countries. The growing
number of tourists will trigger domestic compe-
tition, allowing new players to enter the market.
These developments highlight the importance for
hotels to revisit their marketing strategies and
find ways to boost customer loyalty.
Travel Agencies
U.S. travel agents are currently enjoying the fruits
of a growing travel market. Online leisure/unman-
aged business travel outperformed the industry,
growing 11% in 2012.6
During the recession, travel
agents bore the brunt of the weak economy,
including travel cancellations and deferments.
As bookings rebound and employment levels
increase, business is expected to bounce back.
Research firm IbisWorld expects the domestic
travel market to grow at 3.3% annually between
2012 and 2017, while international arrivals are
expected to grow 5.4% during the same period.
The sector’s 2013 revenues are expected to grow
6.7% and reach $20.7 billion in 2013, as compared
with $19.5 billion in 2012.
Rise in Hotel Occupancy Rates in 2012
Figure 2
Source: Smith Travel Research, HotelNewsNow.com
75%
70%
65%
60%
55%
50%
45%
40%
1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52
2009
Week of Year
Median (2000-2007)20132012

4. cognizant reports 4
Nevertheless, revenue growth is expected to slow
over the next few years (see Figure 4). The pres-
sure on revenues will come from multiple sources,
chiefly from lower commissions, which form the
bulk of travel agents’ income. As travel grows,
hotels will, in all likelihood, cut their commissions
to travel agents. Airlines, which struggle with high
costs, may do the same. Moreover, as hotels up
the ante on the online hotel booking front, com-
petition will heat up, further affecting revenues.
According to reseacher PhoCusWright, growth
at supplier Web sites (hotels and airlines) is
outpacing online travel agencies, with total
online supplier bookings jumping 14% in 2012
compared with 6% growth for online travel
agents (OTAs).7
Two-thirds of online bookings in
2014 are expected to be made via supplier Web
sites. Travel agency heavyweights such as Carl-
son Cos., American Express, Expedia and Price-
line.com, which together hold more than 75% of
the market, will need to sharpen their market-
ing efforts to retain customers.8
Agencies will
also need to look at ways to create efficiencies
and customize offerings to the needs of various
demographics, such as the millennial generation,
baby boomers, etc.
Airlines
There seems to be no end in sight to the airline
industry’s (global and domestic) woes. Factors
such as high fuel prices and the economic slow-
down have affected the industry’s financial
performance. Consequently, the industry has
U.S. Hotel Revenue Returns to Pre-crisis Levels
Figure 3
* GOP % = Gross Operating Profit / Total Revenue
Source: Smith Travel Research, HotelNewsNow.com
Total U.S. estimated revenue and profitability
Total Revenue ($B) Pre-Tax Income ($B) GOP %*
103.5 102.6 105.3
113.7
122.7
133.4
139.4 140.6
127.2 127.7
137.5
16.2 14.2 12.8 16.7
22.6 26.6 28.0 25.8
16.0 18.0 21.6
37.1% 35.7% 35.0% 36.6% 38.8% 41.3% 41.3%
38.2%
34.0% 35.3% 36.1%
0
20
40
60
80
100
120
140
160
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
$Billions
Travel Agents See Grounded Growth Ahead
Figure 4
Source: www.ibisworld.com
11.7%
10.4%
14.1%
16.7%
-1.1%
-13.5%
11.2%
8.8% 8.8%
6.1%
4.6%
1.8% 1.6% 1.6%
-15
-10
-5
0
5
10
15
20
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
%RevenueGrowth

5. cognizant reports 5
to adopt social and mobile technologies, analyt-
ics and cloud allow enterprises to leverage the
voluminous data generated all
around them via the power of
on-demand computing. The
new master corporate IT archi-
tecture involves taking an inte-
grated approach to these tech-
nologies by tying the individual
components to core knowledge
processes. This new architec-
ture will not only improve T&H players’ abilities
to reach consumers consistently across channels,
but it will also drive enterprise-wide efficiencies.
Advanced data analytics, for instance, can help
companies proactively identify areas to reduce
waste, such as supply chain optimization. Cloud
computing can provide on-demand access to
the latest software tools, storage and processes
across departments and geographies. At a time
when T&H players must meet changing customer
expectations while reining in costs, taking a holis-
tic approach to implementing SMAC technologies
is a smart way forward.
Mobile
Advances in consumer-facing mobile technolo-
gies, in combination with the rise of social media
as a channel, offer a glimpse of the future play-
ing field for marketing and communication strat-
egies. For T&H players, mobile is considered the
best medium for reaching travelers before, during
and after their travel.
Smartphones have moved beyond the hardcore
business traveler segment into the wider con-
sumer electronics market, thanks to Apple’s
iPhone, which was launched in 2007. Indeed, the
same year that the world travel industry recorded
one billion international travelers (2012), smart-
phone sales hit the one billion mark.12
These
devices accounted for 40% of worldwide
shipments in 2012, with the U.S. leading the way
in smartphone usage, at close to 165 million13
iOS- or Android-enabled devices. However, the
fastest growth in smartphone adoption is in
overseas markets such as China (see Figure 5,
next page).
Available for mass consumption only two years
ago, tablets have recorded an even faster rate
of growth. According to comScore, one in four
smartphone owners uses a tablet.14
witnessed frequent bankruptcies and large-scale
consolidation, the most recent being the merger
between American Airlines and US Airways.9
This
leaves three large network players competing
for market share, even as low-cost airlines make
inroads into the market.
The most obvious benefit of a well-managed
merger is the streamlining of operations that
could potentially lead to lower costs. However,
this will not be easy, as even the best intended
mergers and acquisitions often encounter tur-
bulence. An example is the United Airlines and
Continental merger, where customers had to
endure technical glitches, including dropped
reservations, lost loyalty points and five-hour
phone wait times.10
For an industry that relies
heavily on customer choice, such a situation can
significantly erode loyalty.
Such crises can be better handled by using social
media tools to listen for early signs of customer
dissatisfaction, communicating with customers on
remedies and next steps, and providing enhanced
customer support when required. With customer
analytics, moreover, airlines can identify seg-
ments that need special attention and generate
tailored offers to assuage high-value customers.
The U.S. airline industry remains the global leader,
with almost 30% of the installed commercial fleet
based in the country; China, the second largest in
this measure, stands at 9%. Yet, China’s market
grew 11% in 2011 compared with just 1.3% for the U.S.
A strong outlook for travel will benefit the airlines
as they try to retain customers through innova-
tive services and improve efficiencies. Cost-cutting
is expected to remain a major source of profit.
U.S. airlines have led the way in cutting back on
non-profitable flights,11
and many carriers have
“rightsized” their fleets by purchasing more fuel-
efficient aircraft. Embracing green initiatives also
helps airlines meet customers’ rising expectations.
Forces Driving SMAC Adoption
By adopting SMAC technologies, the T&H indus-
try can drive down costs and support revenues
through more innovative offerings that help
retain existing customers and attract new ones.
SMAC technologies are transforming business
models by redefining corporate IT infrastruc-
tures. While consumers are driving businesses
SMAC technologies
are transforming
business models
by redefining
corporate IT
infrastructures.

6. cognizant reports 6
Smartphones and tablets offer consumers a tool
to research and plan their travel while on the go.
The fight for customer attention will, therefore,
play out on the touchscreens of these devices.
Although the PC is still the favored medium for
travel booking, travel searches and bookings on
mobile devices have steadily increased over the
past couple of years (see Figure 6). The number of
Americans booking travel via mobile is expected
to more than double from an estimated 16 million
in 2012 to 36.7 million in 2016.
These devices have embedded themselves deeply
in travelers’ daily routines. Price alerts and
reminders are slowly moving from PCs to mobile
devices. With emerging technologies such as con-
text- and location-aware services, mobile devices
and tablets are set to take the travel experience
to a different level. Not surprisingly, T&H indus-
try players are upping the
ante in their efforts to create a
strong presence on this chan-
nel. Hotels, for example, are
increasing their spending on
mobile marketing as a percent-
age of their digital marketing
budgets. According to a survey
by Hospitality eBusiness Strat-
egies, the percentage of digital
marketing budgets allocated
to mobile was 10% in 2012
and is expected to rise to 15%
in 2013. The focus of these initiatives is likely to
include activities such as enhancing mobile Web
With emerging
technologies such
as context- and
location-aware
services, mobile
devices and tablets
are set to take the
travel experience
to a different level.
Travel Research and Booking Move to Mobile
Figure 6
Notes: Ages 18+; researchers defined as travelers who researched information prior to a trip via mobile Internet
or app services at least once in the past year but did not necessarily book; bookers defined as those who booked
travel via mobile Internet or app services at least once in the past year.
Source: eMarketer
U.S. mobile travel researchers and bookers by device (millions)
Smartphone users Nonsmartphone users
16.6
3.1
19.7
7.7
1.0
8.7
Researchers Bookers
21.3
3.3
24.6
10.7
1.1
11.8
Researchers Bookers
26.2
3.5
29.7
13.9
1.2
15.1
Researchers Bookers
2010 2011 2012
Developing Markets Drive Smartphone Growth
Figure 5
Source: Flurry Analytics
Note: Year-on-year growth 2011 — 2012
Fastest growing iOS and Android markets by active devices
401%
279%
220% 217%
196% 193% 193% 189% 185% 171%
China Chile Brazil Argentina Iran Vietnam Mexico Russia Turkey India

7. cognizant reports 7
sites and display advertisements (see Figure 7).
Airlines also provide flight information and vari-
ous other ancillary services, such as hotel booking
and travel insurance via mobile apps, which could
boost their revenues.
Social Networking
As smartphones become ubiquitous, social net-
working has emerged as the most important
cog in the communication wheel for most ser-
vice industries. Travel and social are considered
a natural fit, and with good reason. From updat-
ing their Facebook status to checking into a hotel,
many individuals actively indulge in social net-
working, even when on vacation. Perhaps more
importantly, social has influenced the way con-
sumers plan, book and experience travel.15
The notion that an agent knows the customer
best is being challenged by algorithms that comb
members’ Facebook interac-
tions to make personalized
recommendations.16
TripAd-
visor, a leading online travel
review site, managed to boost
its membership by more than
100% year-on-year in 2012 by
acquiring members (domes-
tic and international) through
Facebook.17
In fact, users log-
ging into the site to shop for
hotels increased by 30%. As
a result, the site was able to
drive revenues through tar-
geted click-based advertisements generated by
insights extracted from travel reviews gleaned
from members’ Facebook updates.
For travel industry players, there is a clear incen-
tive to provide services that generate positive
social networking feedback. In a survey by VFM
Leonardo, 92% of respondents said they trust
the opinions of people they know above all other
advertising.18
This makes mastering social media
a key imperative. Social spend by travel compa-
nies is on the rise, driven by videos and images
used in advertising and content-based direct
marketing initiatives. However, social can be a
double-edged sword, as negative publicity tends
to spread faster than praise on social networks.
For this reason, T&H players need to approach
social media strategically and place it at the heart
of their marketing and public relations efforts. This
can be done by embedding a social component in
their communications strategy, directing users to
the company’s social media page and employing
PR-savvy customer relations executives to help
create a responsive and personalized experi-
ence. Given the propensity of social media users
to share their experience with friends, this chan-
nel holds much promise for attracting potential
customers, with no marketing effort on the com-
pany’s part. However, the key differentiator for
T&H players will be the social content generated,
either by the company or by their guests. This
content, in the form of videos or photos, is emerg-
ing as a key promotional tool for T&H players.
The notion that an
agent knows the
customer best is
being challenged
by algorithms that
comb members’
Facebook
interactions to
make personalized
recommendations.
Hotels Investing in Improving the Mobile Experience
0%
10%
20%
30%
40%
25.9
37.5
26.0
22.4
37.5
27.4 27.6 25.0
8.2
19.0
12.5
4.1
24.1
8.9
N/A
N/A
8.2
32.8
38.4
11.0
17.8
50%
Mobile site Mobile
booking
engine
SMS
text
marketing
Mobile
banner
advertising
iPhone app Mobile
search
I am not
planning any
mobile
marketing
initiatives
for the year
2010 2011 2012
Figure 7
Source: 6th Annual Benchmark Survey on Hotel Digital Marketing Budget Planning, HeBS Digital, 2012
Which mobile marketing initiatives are you planning for? (Percent of respondents)

8. cognizant reports 8
Quick Take
Big Data, Analytics and Cloud Computing
Just as mobile and social have become crucial
to how T&H companies interact with custom-
ers, data analytics and cloud
computing have emerged
as the backbone of a digital
marketing strategy. Travel
companies have traditionally
stored volumes of data about
everything from pricing mod-
els to customer relationships.
But today, the focus has shifted
to deriving insights from this
data.
Thanks to increasing digiti-
zation, companies find them-
selves at the center of a data
deluge, in which the volume,
velocity and variety of data are growing faster
than ever before. Flights, for example, generate
terabytes of data on every journey, and travel
agents and hotels have access to crucial personal
information on their clients.
Integrating this data into a coherent whole, and
then using advanced analytics to slice and dice it
according to various parameters, can drive fact-
based decision-making across all departments.
This could lead to improved efficiencies, better
marketing campaigns and more personalized
customer relationships. Big data is already driv-
ing innovations, such as Web sites that provide
travelers with better hotel deals and help them
gauge providers’ reputation and service quality
by crunching data from millions of Web pages.
An example is Hopper, which converts raw data
from Web pages into structured information to
create a better travel search and planning expe-
rience. Olset, another big data startup, derives
user information from sites such as Expedia and
Facebook to identify user preferences and offer
matching results in the travel planning stage.19
Going forward, big data and analytics will help
travel providers better understand customers and
create more personalized service offerings.
Cloud computing is gaining popularity across
industries, and T&H is no exception. The benefits
of cloud computing include cost reduction, scal-
ability and access to the latest software. Cloud
also allows companies to free up resources to
focus on core business activities. Functions such
as data storage, productivity tools and messaging
are moving to the cloud in various service sector
industries. For travel, cloud computing can create
a low-cost but highly efficient platform to offer
all customer-facing services that hitherto were
offered separately.
Owning the Customer
As mobile becomes the preferred channel for con-
sumer engagement, airlines, hotels and agents
will fight harder to “own the customer” by per-
suading customers to transact directly with them.
A Changed Customer
The financial crisis brought about dramatic changes in customer behavior as consumers became more
savings-oriented and pragmatic in their purchasing behavior. They became choosier and willing to spend
time researching the products that they desire. This behavior is more visible among the millennial
generation, who are more willing than previous generations to share their experiences on the Internet.
A survey by Boston Consulting Group found that 60% of the millennial population, compared with
46% of the non-millennial population, were willing to rate products and services on the Internet, while
an equal percentage of millennials engage in uploading videos, images and blog entries to the Web
(compared with 29% non-millennials).20
Technology has empowered individuals across generations. It has also made them more open minded
about switching brands. Driven by their price sensitivity or feedback from friends, today’s consumers
are more open to changing their minds. For T&H companies, which have traditionally relied on loyalty,
it is important to consider the behavior patterns of these connected customers across channels if they
are to make the most of the rise of mobile and social media.
Just as mobile and
social have become
crucial to how T&H
companies interact
with customers,
data analytics and
cloud computing
have emerged as
the backbone of a
digital marketing
strategy.

9. cognizant reports 9
Doing so will help them maximize revenues and
obtain firsthand access to both transactional and
interactional data. However, gaining and retain-
ing customer loyalty is a far more challenging
task in the age of mobilility, given the plethora
of options that can be revealed through a simple
online search. Moreover, customer behavior has
changed dramatically following the financial crisis
(see sidebar, previous page).
A SMAC-enabled strategy should focus on cre-
ating a consistent and invigorating experience
across channels. Mobile Internet users are set in
2013 to overtake fixed-network users.21
With the
growing adoption of tablet and smartphones, tai-
loring Web sites to fit the screens of these devices
will be a step in the right direction.
But the key element
of the mobile Web
site experience will be
content, in the form
of blogs, photo-shar-
ing, newsletters and
video. Video, in fact, is
expected to be a key
vehicle for engaging
with travelers on the
mobile Web, whether
through reviews, demos or interviews. Travelers
use video at almost every stage of travel plan-
ning (see Figure 8). However, while 85% of the
U.S. population watches video online, travel
advertisers reach just 3.5% of this audience.22
Online travel-related video viewing is expected to
remain popular, especially among business travel-
ers, according to an April-May 2012 Google travel
study. Through high-quality, informative videos,
providers can engage with travelers in the early
planning stages and highlight the uniqueness of
their offerings. Clearly, travel companies must
focus on offering Web sites with quality content
and optimize the site for mobile viewing, paying
close attention to basic aspects such as readabil-
ity and navigation.
But there is a lot more that mobile devices can do
for T&H players. Hotels, for example, can smooth
the customer journey by enabling them to check
into a hotel without waiting at the reception
desk. Mobile services such as these can help T&H
players generate revenue. The Intercontinental
Hotel Group, for example, generated $2 million
in revenues from mobile booking in 2009, and
this increased to $40 million in the first month
of 2013, alone.23
The customer experience can be
further enhanced by incorporating hotel loyalty
programs into mobile apps.
The impact of social media on T&H providers
can be gauged from the number of travelers
who change their choice of hotels, agents or air-
lines based on social media feedback.24
Surveys
have also found travel companies generating
direct revenues from social media.25
It is impera-
tive for T&H players to treat social media as the
Video, in fact, is
expected to be a key
vehicle for engaging
with travelers on
the mobile Web,
whether through
reviews, demos or
interviews.
Travelers Use Video at all Stages of Travel
Figure 8
Source: “The Traveler’s Road to Decision,” Google and Ipsos MediaCT, July 2012.
When
choosing a
destination
64%
When looking
for activities
at a destination
62%
When
deciding on
accommodations
at a particular
destination
57%
When deciding
on which
Web site to book
34%
When thinking
about taking
a trip
66%
Respondents were asked which of the following they have performed online in the past six months.

10. cognizant reports 10
cornerstone for marketing and communication,
and their social activities need to be backed by
strong content, such as videos, photos, contests,
etc., while dedicated teams respond to customer
feedback and inquiries, behind the scenes.
T&H players have traditionally used analytics in
areas such as campaign management, but the
role is expanding, due to the amount of data
generated today. For instance, travel agencies
can deploy analytics on customer data across
channels to create personalized offerings, and
recommendations can be made based on demo-
graphic data, such as younger baby boomers
(aged 46 to 57) with strong spending power and a
desire to reward themselves.26
Analytics can help airlines create a holistic view
of customers, known as the customer composite
vector, based on their travel frequency, spend per
trip, non-travel spend, trip profitability, etc. (For
more on this topic, see “Leveraging Advanced
Analytics to Drive Customer Behavior in the Air-
line Industry.”) This holistic approach is better
than traditional customer scoring cards used by
T&H providers, as these are less effective for pull-
ing together disparate customer data. Developing
a holistic picture can help airlines, for example,
build targeted offerings and campaigns based on
specific aspects of customer behavior. If internal
resources are limited, providers can also look to
cloud-based analytics solutions.
To effectively embrace the SMAC Stack, T&H com-
panies must create systems of engagement that
interoperate with their legacy systems. They can
invest in new technologies that help legacy sys-
tems work with emerging technologies, or they
can deploy translation software, or middleware,
to enable interoperability with external platforms
to offer Web-based or mobile-based services. In
fact, cloud computing has wider applications for
the travel industry, as this platform can be used
to internally provide software access to offices/
franchises across the globe. An example of this is
the choiceAdvantage platform offered by Choice
Hotels in the U.S. This platform enables a cloud-
based central reservation system for its franchi-
sees, which no longer need to invest in new tech-
nology, resulting in cost savings.27
Providers are also developing integrated
customer-focused platforms that allow access
to services across the travel and hospitality
spectrum. These cloud-based platforms allow
travel providers to sell their products to consum-
ers cost-effectively. Such a service will be a boon
to industry players that may not want to invest in
new technology.
Industry-wide SMAC Imperatives
The combined forces of social, mobile, analyt-
ics and cloud is causing T&H players to rethink
their business models. As customers become
more empowered, companies need to tune their
offerings to meet new expectations. However, we
believe that a gradually recovering economy will
provide the impetus needed for T&H players to
widely adopt these technologies. The following
are key imperatives, opportunities and challenges
for industry players.
Hotels
• Revive customer loyalty: Hotels are
experiencing an unprecedented erosion in
customer loyalty.28
Mobile Internet and social
networking have changed the way customers
plan their travel. To minimize further erosion,
hotels need to revive their loyalty programs
by integrating them with customer and social
media analytics.
• Predict behavior: Combining analytics on
historical data with future scenarios can
allow hotels to anticipate changes in
customer behavior and modify their offerings
to maintain wallet share, if not increase it.
• Make CRM programs count: As smartphones,
mobile Internet and social media become
an integral part of travelers’ lives, they pro-
vide hotels with critical touchpoints that can
streamline and unify their CRM processes,
something that was not easy to do in the era
of newspapers and television.
• Boost productivity with real-time tools:
Tools to monitor processes such as procure-
ment on a real-time basis can reduce the cost
of day-to-day operations. Such a tool could be
deployed on a cloud-based platform to enable
organization-wide access, supported by ana-
lytics that can improve spending decisions.
• Create a culture of fact-based decision-
making: In addition to adopting technologies
that help cut costs, it is important to create a
collaborative environment and initiate a cul-
tural change toward fact-based decision-mak-
ing. Such change needs to be driven by top
management, with technology teams working
hand-in-hand with users.

11. cognizant reports 11
Travel Agents
• Create enhanced offerings: Travel agents are
well-placed to leverage location-based offer-
ings. Based on a customer’s location, the travel
app can send relevant location-based service
coupons for restaurants, shopping, etc.
• Go beyond the Web site: As customers add
new sources of information to their travel
decision-making, travel companies risk being
marginalized. To avoid this, they need to forge
a connection with travelers through different
channels such as social media, using content
that customers want to see.
• Provide agents with cloud-enabled
capabilities: A cloud-based communications
system allows travel agents to work on the
go, responding to urgent requirements from
customers on a real-time basis using their
smartphones or tablet devices.
Airlines
• Plan a cloud-based future: Airlines are
saddled with high operating costs and other
external factors, and their troubles will not
vanish overnight. However, they can harness
the power of cloud computing to cut costs
further, while simultaneously pursuing a
mobile and social strategy aimed at retaining
customer mindshare and wallet-share.
• Enhance the passenger experience: Airlines
can use the cloud to create services that allow
technology-savvy passengers to utilize their
in-flight time to the fullest. For example, Luf-
thansa’s CloudStream service allows passen-
gers to choose and store content that they can
access on their tablet devices after take-off.29
• Use apps as a branding tool: Mobile apps
allow airplanes to create a presence on the
device that a customer is most likely to use
while planning travel. This may or may not
result in direct business from the consumer,
but it will add to the possibility of gaining wal-
let-share.
• Use social to build trust: A strong social pres-
ence can drive brand loyalty in the same way
as frequent flyer programs. By being active on
social networks, airlines can build customer
trust. An example of this is Southwest Airline’s
dedicated social media team that not only
responds to comments and questions, but also
rebooks flights, tracks bags and issues travel
vouchers.30
Ready for Takeoff
A gradual return to pre-crisis levels of travel, com-
bined with an increasingly mobile and informed
consumer, make it imperative for T&H industry
players to offer a personalized and consistent
user experience across all phases of travel. Adopt-
ing an emerging master IT architecture compris-
ing social, mobile, analytics and the cloud will
enable T&H players to meet this challenge and be
rewarded with improved operational efficiencies.
These technologies will not only transform com-
munication with applicable customer segments,
but they will also push companies toward a more
collaborative work environment.
Hotels, travel agents and airlines face
different challenges. Yet, whether it is about
cutting operational costs, improving sourcing
or increasing wallet-share and mindshare, the
emerging SMAC-driven business model will be at
the heart of these efforts. Success will hinge on
how well organizations manage the transition to
new technologies. While there is no one-size-fits-
all approach, the effort must be driven from the
top. Industry players should also look to partner
with third-party providers with the necessary
experience and wherewithal to
not only build solutions based
on these technologies but also
deploy them holistically to
unlock value and exert a mul-
tiplying effect on business per-
formance.
We believe that an integrated
strategy for mobile, social
media, analytics and cloud
computing is the way forward
for T&H players. Companies
should look at these technologies as one inte-
grated stack instead of embarking on isolated
initiatives. Organizations that focus initially on
eliminating data, process and operational silos
will be positioned to reap early multiplier effects
of the SMAC Stack.
Organizations
that focus initially
on eliminating
data, process and
operational silos
will be positioned
to reap early
multiplier effects
of the SMAC Stack.

12. cognizant reports 12
Footnotes
1
Total guest room revenue for a given period divided by the total number of paid occupied rooms
during the same period.
2
David Barley, “The Americas Hotel Market Posts Positive Performance Growth in 2012,” World Prop-
erty Channel, STR Global, Jan. 24, 2013, http://www.worldpropertychannel.com/north-america-vaca-
tion-news/2012-hotel-report-los-angeles-hotels-str-global-san-juan-hotels-santiago-hotels-6476.php.
3
“2012 U.S. Hotel Valuation Index,” HVS, October 2012, http://www.hotelnewsresource.com/pdf11/
HVS100312.pdf.
4
Patrick Mayock, “Hotel Profits Up; Growth Expected Through 2015,” HotelNewsNow.com, June 22, 2012,
http://www.hotelnewsnow.com/articles.aspx/8446/Hotel-profits-up-growth-expected-through-2015.
5
Simon Hobbs, “Four-Year Boom Expected for the U.S. Hotel Industry,” CNBC, Jan. 22, 2013, http://
www.cnbc.com/id/100398330.
6
“Report Shows Murky Outlook for ’13 Travel,” MeetingsFocus, November 2012, http://www.meetingsfo-
cus.com/ArticleDetails/tabid/162/ArticleID/19786/Default.aspx.
7
Ibid.
8
Johanna Jainchill, “Four Agencies Account for More Than 75% of Market,” Travel Weekly, June 4,
2012, http://www.travelweekly.com/Travel-News/Corporate-Travel/Study--Four-agencies-acco-unt-for-
more-than-75--of-market/.
9
“AMR, U.S. Airways Predict Clear Skies,” Wall Street Journal, Feb. 14, 2013, http://online.wsj.com/
article/SB10001424127887323478004578303630011153910.html.
10
Ben Mutzabaugh, “Customers Vent on United-Continental Switchover,” USA Today, March 28, 2012,
http://travel.usatoday.com/flights/post/2012/03/united-continental-airlines-switchover-com-
plaints/648618/1.
11
“Airline Industry Stock Outlook — Dec. 2012,” Zacks Equity Research, Dec. 13, 2012, http://www.zacks.
com/commentary/24969/.
12
Dan Rowinski, “Know What’s Cool? A Billion Smartphones. And They're Changing Everything,”
Readwrite Mobile, Oct. 17, 2012, http://readwrite.com/2012/10/17/know-whats-cool-a-billion-smart-
phones-and-theyre-changing-everything.
13
Ibid.
14
“Majority of Tablet Users Watch Video on their Device, 1 in Every 4 Viewers Pay to Watch,” comScore,
June 8, 2012, http://www.comscore.com/Insights/Press_Releases/2012/6/Majority_of_Tablet_Users_
Watch_Video_on_their_Device.
15
NewMedia TrendWatch, European Travel Commission, 2012, http://www.newmediatrendwatch.com/
world-overview/34-world-usage-patterns-and-demographics.
16
Justin Bachman, “Can Social Media Lift Travel?” BloombergBusinessweek, Feb. 16, 2012, http://www.
businessweek.com/articles/2012-02-16/can-social-media-lift-travel.
17
Trefis Team, “TripAdvisor’s Focus On Hotels, Social Media & Mobile Are Paying Off,” Forbes, Feb. 19, 2013,
http://www.forbes.com/sites/greatspeculations/2013/02/19/tripadvisors-focus-on-hotels-social-
media-mobile-are-paying-off/.

13. cognizant reports 13
18
“2013 Hotel Marketing Trends: From Standout Social Media to Marvelous Mobile Marketing,” VFM
Leonardo, November 2012, http://vfmleonardo.com/sites/default/files/2013-Hotel-Marketing-Trends-
vfmleonardo2012.pdf.
19
Kristen Bent, “10 Big Data Startups at Strata,” KDNuggets.com, Feb. 28, 2013, http://www.kdnuggets.
com/2013/03/10-big-data-startups-at-strata.html.
20
Christine Barton, Jeff Fromm, Chris Egan, “The Millennial Consumer: Debunking Stereotypes,”
The Boston Consulting Group, April 16, 2012, https://www.bcgperspectives.com/content/articles/ con-
sumer_insight_marketing_millennial_consumer/.
21
“Mobile Internet Users will Overtake Fixed Users in 2013,” Hi-media Group, September 2011,
http://blog.hi-media.com/mobile-internet-users-will-overtake-fixed-users-in-2013/.
22
Simon McDowell, “Online Video and the Travel Industry,” River Film Communication, Nov. 30, 2012,
http://www.riverfc.com/online-video-and-the-travel-industry-statistics/.
23
Jessica Davies, “IHG’s Mobile Revenue Will Soon Outstrip Web, Says VP of Marketing Michael Menis,”
The Drum, Feb. 26, 2013, http://www.thedrum.com/news/2013/02/26/ihg-s-mobile-revenue-will-soon-
outstrip-web-says-vp-marketing-michael-menis.
24
“2012 Social Media and Tourism Industry Statistics,” Stkkymedia.com, 2012.
25
“Online Travel Statistics 2012,” Infographicsmania, October 2012, http://infographicsmania.com/
online-travel-statistics-2012/.
26
Maria Lenhart, “6 Consumer Trends to Act on in 2013”, TravelMarketReport.com, January 17, 2013,
http://www.travelmarketreport.com/articles/6-Consumer-Trends-to-Act-on-in-2013.
27
Dennis Schaal, “Choice Hotels Targets UK, France and Germany with Cloud-Based Property Manage-
ment System,” Tnooz, June 8, 2011, http://www.tnooz.com/2011/06/08/news/choice-hotels-targets-
uk-france-and-germany-with-cloud-based-property-management-system/.
28
“New Deloitte Survey Uncovers the Erosion of Travel Loyalty,” Deloitte, Jan. 22, 2013, http://www.
deloitte.com/view/en_US/us/Industries/travel-hospitality-leisure/b8f3794f6d36c310VgnVC-
M1000003256f70aRCRD.htm.
29
Sourya, “How Lufthansa Got Into the Clouds with CloudStream,” CloudTweaks, Oct. 25, 2011,
http://www.cloudtweaks.com/2011/10/how-lufthansa-got-into-the-clouds-with-cloudstream/.
30
Jason Whitely, “Airlines Using Social Media to Change the Way You Fly,” WFAA, Feb. 1, 2013, http://
www.wfaa.com/news/business/Airlines-using-social-media-to-change-the-way-you-fly-189456191.html.

14. About Cognizant
Cognizant (NASDAQ: CTSH) is a leading provider of information technology, consulting, and business process
outsourcing services, dedicated to helping the world’s leading companies build stronger businesses. Headquartered
in Teaneck, New Jersey (U.S.), Cognizant combines a passion for client satisfaction, technology innovation, deep in-
dustry and business process expertise, and a global, collaborative workforce that embodies the future of work. With
over 50 delivery centers worldwide and approximately 156,700 employees as of December 31, 2012, Cognizant is a
member of the NASDAQ-100, the S&P 500, the Forbes Global 2000, and the Fortune 500 and is ranked among the
top performing and fastest growing companies in the world.
Visit us online at www.cognizant.com for more information.
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­­© Copyright 2013, Cognizant. All rights reserved. No part of this document may be reproduced, stored in a retrieval system, transmitted in any form or by any
means, electronic, mechanical, photocopying, recording, or otherwise, without the express written permission from Cognizant. The information contained herein is
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Credits
Author and Analyst
Akhil Tandulwadikar, Senior Research Associate, Cognizant Research Center
Subject Matter Expert
Samrat Sen, Director, Cognizant Business Consulting’s Travel & Hospitality Practice
Design
Harleen Bhatia, Creative Director
Suresh Sambandhan, Designer