Digital Transformation in Tourism & Travel

DIGITAL
TRANSFORMATION
In Tourism & Travel
Evan Burkosky | evan.burkosky@gmail.com

How Digital
is Changing
Aviation & Travel

How Digital is Changing Aviation & Travel
DIGITAL
TRANSFORMATION
means the integration of
technology into all aspects of
people’s lives - from how we
store information, even value, to
what apps we use to ease our
experience with the world.

- MIT Center for Digital Business
Companies that embraced
digital transformation are
26% 12%More
Profitable
Higher Market
Evaluation

People have adapted to the new
age of technology, from
shopping online via phone or
tablet to adjusting their
thermostat from the car before
arriving home.
One thing is clear:
We can only
move forward.
No turning
back.

The aviation, travel and tourism industry has been at the forefront of
digital disruption, changing the way people travel.
But World Economic Forum research suggests it should brace itself for
another wave of digital transformation.
There are a series of industry, customer, and technology trends
converging to redefine operating and business models in the travel
ecosystem.
New Entrants – especially digital natives such as online travel
aggregators (OTAs), meta-search engines and travel service platforms –
are shaking up the value chain.

Digitalization represents an exciting opportunity for the aviation, travel,
and tourism ecosystem, with the potential to unlock approximately
$1 trillion in value over the next decade.
Platforms such as Airbnb and Uber have radically altered demand-side
dynamics, enabling small entrepreneurs to compete with bigger
players.
At the same time, OTAs are using up-to-date information to change the
way travellers explore travel offerings.

“If we quickly rewind 15 years ago, one will see there was no
existence of anything like a BSP (Billing Settlement Plan) or
even a GDS (Global Distribution System) in the market.
There was a direct channel between the airline and a GSA
(General Sales Agent) or a travel agent (TA). This was the pure
form of distribution, where the GSA became the distributor of
ticket stock, while also being fully responsible for sales and
collection.
This, in turn, was reported back to the airlines.
Subsequently, agents used to make bookings over the phone
while manually looking for connections and flights.”
- Nasir Khan,
CEO, Al Naboodah Travel

“LCCs changed the way the industry functioned by
offering unbundling solutions and going direct. This was
coupled with the online boom.
The impact of which had its bearing on the GDS-airline
partnership, with the introduction of merchandising. It was
the GDS that gave the airlines options of really putting a
value to their ancillary products.
This was primarily done through rich content,
branding as well as advertising, which was a major
change”
- Matthew Powell
Managing Director, Middle East and South Asia
Travelport

Shopping for air travel
is changing.
Airlines offer a greater range of
products and services and more
opportunities for passengers to
personalize their travel experience
than ever before.
The New Distribution
Capability (NDC)
is a global standard to enable
airlines to facilitate product
differentiation and shorten the
time to market. For passengers, it
will provide access to a
transparent shopping experience
and the wealth of airline content.

Air travelers in 2014 spent an
estimated $28.5 billion on
ancillary products and services,
such as onboard food and
beverages, checked baggage,
premium seat assignments, and
early boarding.
The majority of this revenue came
from airline websites, where
customers are able to view
detailed product information that
may not always be readily
accessible on systems used by
travel agents.

The airline industry has faced
increased competition from the
rise of low cost carriers, which is
pushing the trend for greater
differentiation and the rise of the
retail model among full service
carriers.
Full service carriers, particularly
larger airlines with strong brand
recognition, will grow their direct
sales into the medium term.

Large airlines such as Lufthansa,
Air Canada and Air France are
already actively expanding
direct sales, particularly through
their own websites, and airlines
predict that their direct sales will
grow strongly in importance.
These airlines consider that direct
distribution provides more
flexibility and freedom to
differentiate their services and to
expand a retail model compared
to current GDSs.

Travelers want to interact with their travel providers anytime and
anywhere. This is especially so when they experience a disruption to
their journey.
The new Customer Contact Information initiative allows notifying
passengers of cancellations, delays, and other operational information.
The growing availability of airport Wi-Fi is a boom for the CCI.
Passengers can receive real-time flight information, rebook, receive push
notifications, and access airline websites.

Mobile devices are already shaping the market today and their role as a
major disruptor in the industry will continue to grow.
Their portability is modifying the way customers interact with the
industry and is driving demand for 24-hour services during travel and
in-destination.
“Micro-moment” searching and booking is growing, with consumers
taking advantage of short moments to glance at their mobiles through
the day. Mobile is displaying particularly rapid growth in emerging
markets where it is becoming the booking device of choice.

AI will play an increasingly central role in consumers lives.
In turn this will provide huge opportunities for advertising models.
For example, an advertisement for a weekend in Paris could be targeted
at a traveller based on a private conversation in iMessage about the
Louvre museum.
The potential exists to harvest and mine billions of conversations
between businesses and consumers through messaging and chat bots.
Facebook’s Messenger alone already has 900 million monthly active
users while WhatsApp, owned by Facebook, now connects over 1 billion
people.

Travel services will be integrated
increasingly into social media
and messaging.
In some messaging functions,
such as WeChat, it is already
possible to book travel.
In this way, chat apps are
positioned to become new
market places and distribution
channels.

Hotels and cars
New business models the
hospitality and personal transport
industries are being impacted by
sharing economy platforms, such
as Airbnb and Uber.
Hotels and car hire will need to
continue adapting to the sharing
economy by meeting higher
consumer expectations of service
and by incorporating business
content into new sharing
economy platforms.

Rise of the Gatekeepers
Tech giants such as Google,
Facebook, Microsoft, Amazon and
Apple control the acquisition of
billions of consumers.
They have already begun to
disrupt travel distribution through
their advertising models.

The development of virtual
assistants will enhance the
customer experience by reducing
search times and personalising
purchases. At the same time, the
search control of gatekeepers will
grow, consolidating their traffic
acquisition power, giving them
greater access to consumer data
and enabling more precise
consumer targeting.
Travel booking is likely to be
integrated increasingly into social
media and messaging, with
advertising and referrals tailored
to social network discussions and
searching.
The rise of virtual reality will lead
to more inspiration marketing and
traffic acquisition.

How Digital
is Changing
PR & Marketing

How Digital is Changing PR & Marketing
Traditionally marketing, advertising, and PR agencies had clear roles. Ad
agencies conceived, created, and produced ads, while PR agencies
reinforced a firm's marketing message with communication strategies.
In digital these roles have been blurred because it is not just about
producing ad content for mass media, it is about developing targeted
messages that resonate with a target audience.
Ad agencies, PR firms, digital players, consulting firms, social media
companies, and media publishers are all fighting for a fresh role in the
digital marketing value chain.

A major shift has come with changing consumption patterns in a digital
world, where users are on multiple devices and operate in an
omnichannel world.
Agencies now need to realign themselves to the changing needs of the
end consumer and their own Clients to stay relevant and not get
relegated to only being the ‘creative’ partner. In fact, even the definition
of ‘creative’ is transforming.
It is no longer a one to many, one-way advertisement but an
omnichannel delivery of a conversation, and engagement and an
experience. This needs new approaches, new technical skills and new
analytical and data marketing skills than ever before.

For the first time since the 2009
recession that sent the industry into
a downward spiral, advertising’s
big four – WPP, Publicis, Omnicom
and Interpublic Group – are stalling.

Advertising revenue that comes from TV and print has been on a
downward spiral since 2011.
- Paul Vincent,
CEO at Neuranet and Founder of Flexitive

Traditional public relations
includes event planning, speech
writing, press release distribution,
and press outreach.
Those versed in traditional tactics
are likely to have strong,
pre-existing relationships with key
players in traditional media –
newspapers, radio, and broadcast
TV – and utilize those
relationships to leverage
favorable media coverage for
their clients.

In terms of audience reach,
traditional PR can be extremely
successful, but measuring that
success is difficult.
With a traditional press placement
it can be nearly impossible to
track the exact amount of
viewers who see a media segment
or read an article featuring your
client.
The closest estimate tends to be
through potential audience, or the
average number of readers or
viewers per month.
Rather than focusing on specific
numbers, traditional PR analyzes
success based on the tonality of
an article (is my brand portrayed
positively in this story?) and overall
message penetration (how many
times is our key messaging
communicated in this story, if at
all?).

Digital public relations also hinges
on strategic relationship building,
but the major benefit to digital
public relations is its grounding in
SEO and link building, which
provides a tangible and – most
importantly – measurable benefit.

Digital public relations
understands the value in
connecting with the new age of
reporters and writers – the
blogger and the social
influencer.
Online these bloggers and
influencers have just as much
clout – and in some cases, even
greater reach – than their
traditional counterparts.
Similarly to traditional public
relations professionals, those who
focus on digital are likely to have a
number of bloggers they work
with regularly and partner with to
spread the word about their
clients, which can be in the form of
a blog post, a simple followed link
with strategically placed anchor
text, or a well-timed and highly
penetrative tweet.

What really distinguishes digital public relations from its traditional
counterpart is the ability to clearly track and measure success.
With tools like Google Analytics it is now possible to track exactly how
many digital placements a media tactic is getting and how many of a
site’s readers are actually clicking through an article link, and back to
your client’s website.
There is incredible value in having the ability to track a user’s journey
from a placement through to your brand’s site. These simple interactions
can be leveraged to guide future digital public relations initiatives – it
can show exactly what does and doesn’t work for your brand’s audience,
and that knowledge is invaluable.

Over the last five years, the way the public consume news and get
information has gone through a rapid “digital transformation”. While
there are still people who prefer to get their news via a newspaper, the
ones who grew up during the internet boom of the 2000s have
drastically shifted their attention to the digital sphere – what with the
internet and smartphones today.

Many now consume their news
through community pages,
forums, and even social media
platforms.
For example, a white paper
produced this year by PR
Newswire and Infoquest on
Thailand’s media landscape found
changes in the reading habits of
Thai people where online
networking and social media are
now providing more reading
sources for the local populace.

LINE, a messenger app widely
used in Thailand, has an
app-based function “LINE
TODAY” – a news distribution
service provided to Indonesia,
Taiwan, and Thailand.
94% of Thais (around 41 million)
are LINE users. Social media still
remains one of the mostly used
platforms in Thailand, particularly
Facebook.
More Thai people are accessing
the social media of news websites
and get their news via news apps.

This is one reason for lower sales
growth for advertising agencies
despite the $200 billion in digital
and $600 billion in broader
marketing spending.
People don’t want to watch ads,
especially on social media.
The average digital ad viewing
time is 1.7 seconds, with only 20%
of ads being viewed for more than
2 seconds.

Consulting firms are competing
for this business with their
solutions based sales approach.
Last year, for the first time ever,
four of the ten largest creative
agency companies in the world
were consultancies – Accenture
Interactive, PwC Digital, IBM iX
and Deloitte Digital – with a
combined revenue of $13.2
billion.
There is no doubt that
management consulting firms
are winning client accounts that
just a few years earlier would
have gone to creative agencies.

The good news for creative agencies is that if they are able to combine
their design, innovation and creativity with the intellectual discipline,
analytical skills and scientific rigour from consulting, they will be very
well placed to take the fight to consulting – but crucially, creativity on
its own will not be enough.

Marketing and brand are now key elements of company strategy.
Chief Marketing Officers and other board members want to work with
firms who can use data analytics to solve the big marketing and
branding problems facing their businesses – capabilities which
creative agencies have traditionally struggled to match.

Agencies need to learn and adopt a structured approach to problem
solving and opportunity generation – and develop the associated
analytical skills – as found in the majority of the top consulting firms.
Where ‘creativity’ is in the DNA of agencies, so ‘insight’ based on data
is in the DNA of the top consulting firms – agencies will have to learn
the skills and behaviours to compete in this new arena.

Profitable Digital Services
The traditional agency model was
built upon revenue generation
based on media placement.
That model today has been
overhauled with the advent of the
self-serve demand and supply
side platforms that allow
marketing teams of brands to
deploy programmatic media
buying for their campaigns.
The only way agencies can
harmoniously fit into this changed
reality is by being a strategic
partner to a brand’s needs and
take on an agile marketing
approach that takes shorter
turnaround times to adapt data
insights and works on quicker
workarounds for campaign
success.

Today the power of a creative
idea needs to be backed by data.
After Google and Facebook
initiated the ease of accessing
data from ad campaigns,
marketers are now powered to
bring science to the art and
creativity in advertising.
While traditional advertising
focused on raising awareness
through creative campaigns,
today we need to help marketing
teams to develop deep,
meaningful insights from their
data to deliver great customer
experiences and drive purchase
behavior.

Faster, well-tested campaign
execution will ensure continuous
performance optimization,
making it a win-win for both
brands and agencies.
Accepting data, insights, and
analytics can help advertisers
move beyond instinct and a “this
is how we’ve always done it”
attitude.

“Today, 86 percent of all marketing investments go toward
advertising when…consumers distrust ads and…creating
relevant experiences across the customer lifecycle is a
better approach for engagement.”
Shar VanBoskirk,
- VP and Principal Analyst at Forrester
With the wealth of data available to advertisers today, it is
important that they leverage these people-based insights
to drive hyper-personalized, immersive and real-time
consumer experiences

Think Consumer First
At a time when consumer choices
are unpredictable, the one fact
that agencies can control are
designing strategies that focus on
delivering great experiences
rather than mere selling tactics.
The constant barrage of messages
that a consumer comes across on
multiple channels every day only
confounds their buying decisions.

Zeroing in on Benefits
over Banter
While the past decade has been
about developing content in the
social channels to humanize
brands and bring visibility, the
next decade will be about
advertisers conveying benefits to
the consumer.
Too many advertisers confuse
their messaging to emphasize
features over utility.

The era of 50% of budget being
wasted is over.
With digital attribution models we
can calculate the exact ROI of
every marketing dollar spent
The key is to provide
analytics-based, data-driven
consultative solutions with clear
ROI on every project. This is the
most future-proof model
The best way to control pricing
and demand higher rates is to
have a direct, and measurable,
impact on our clients’ bottom
lines. It’s much easier to sell
services when the costs can be
justified based on new leads,
customers and revenue achieved
as a result
Clear ROI proves our effectiveness
to the client, which ensures not
only contract renewal next year -
it provides a lever to upsell them

Digital Transformation in Tourism & Travel

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