travel technology definition

What exactly is travel technology? All about this industry game-changer

What Is Travel Technology?

How is technology used in travel, real-life examples of technology used in travel, impact of technology in the tourism industry: numbers and stats, how has technology changed the travel industry.

Technology has become an integral part of our lives, completely changing how we work, shop, eat and spend our leisure time. With just a few simple taps on our smartphone, we can order food, purchase home appliances, make dinner reservations, and much more.

Constant technological advances have even made their way into the travel industry. We can now book hotel rooms, flights, sightseeing tours, and other activities, and plan our entire trips – all from a mobile device.

Technology has revolutionized the way we travel , making our travel adventures more convenient and fun. This massive change in the tourism industry is what we now call travel technology . Let’s take a look at some of these travel industry facts and see how you can benefit from them.

In simplest terms, travel technology means using tech to plan trips . It helps travel agencies book trips for their customers, together with airline tickets, hotel accommodation, car rentals, and many other travel-related activities.

Thanks to computerized reservation systems (CRSs) provided by their hotel and airline partners, they can handle everything travel-related in a matter of minutes.

Every reservation system stores and retrieves real-time data, so each travel agent can streamline communication with all the relevant parties.

Travel technology automates bookings, payments, and back-office tasks for travel agencies and enables consumers to make their online bookings without a travel agent .

Hotelmize and similar technology-driven companies and startups are helping the tourist industry implement travel technology. This has been welcomed with open arms.

Travel Tech Definition

Travel tech is the use of IT in the travel, tourism, and hospitality industry .

It is the application of IT and e-commerce solutions in tourism, travel, and hospitality with the goal of automating travel, saving time, reducing costs, and creating a seamless travel experience for consumers, including before, during, and after a trip.

We’ve touched upon some general applications of travel technology to help you understand what this game-changer in tourism is. Now, let’s dig deeper into how tech is used in travel.

Here are some of the latest travel technology trends worth mentioning.

Smartphone as a Travel Buddy

Using your smartphone, you can plan a trip completely hassle-free . More importantly, your mobile device can be your tour guide wherever you are.

You can use it to get real-time updates regarding your flight, check in and out of a hotel, and find your way around your travel destination. It can be your map and compass, instantly locating nearby cafes, restaurants, museums, and anything else you need.

Thanks to voice search and virtual assistants like Siri, Alexa, Google Assistant, and Cortana, your journey can be even more convenient and exciting.

AI and Chatbots

More and more online travel agencies and hotels are leveraging AI-powered solutions to automate bookings and provide personalized service .

One example is chatbots . Not only can they provide 24/7 customer support, but they can also make bookings, provide instant answers to FAQs, process payments, and carry intelligent, human-like conversations. They can be an ideal travel companion.

Thanks to machine learning , AI tools also provide insights into consumer behavior, interests, and preferences regarding travel destinations, hotels, amenities, airlines, car rental companies, pricing, and more.

Armed with such insights, OTAs and hotels can display or send relevant offers to customers.

VR (virtual reality) in travel enables you to transport yourself to another location virtually. You can take a virtual tour of a hotel before booking a room or a restaurant before making a dinner reservation.

You can “teleport” yourself into the Louvre, stand on Times Square, cross the Grand Canyon, or marvel at the breathtaking views from Mount Everest. You could watch a hundred videos on YouTube, but VR will make you feel as if you were there.

With AR (augmented reality) , you can also take room tours and engage in various hotel facilities.

You can take a peek inside an airplane, make sure your carry-on luggage is the right size, access public transportation schedules, overcome language barriers , and much more.

Internet of Things

Internet of Things (IoT) in travel helps personalize and streamline the travel experience.

For instance, hotels that embrace IoT allow guests to control various internet-enabled devices inside their room with their smartphones. They can control the lights, thermostats, TVs , and more.

Some of the most notable real-life examples of travel technology include:

• TravelCarma
• TechnoHeaven

Hotelmize (mentioned in the What Is Travel Technology? section) is the first on this list. They use capital market trading strategies and financial technologies, as well as travel industry experience, to help profit optimization efforts.

Trawex is a travel software development company that offers global B2B travel technology solutions. Its Trawex APIs seamlessly integrate with any travel portal and enable travelers to make seamless bookings and payments.

Amadeus is a travel technology company that provides solutions to everyone in the travel industry for improving travel experiences. Several years ago, it unveiled Navitaire , a VR travel search, and booking experience.

TravelCarma offers a suite of travel tech solutions for aggregation, distribution, data integration, and custom UI/UX development. It provides travel agency ERP, travel APIs, B2C/B2B booking engines, CRSs, back office, and more.

Expedia is an online travel company where you can book flights, hotels, car rentals, cruises, vacation packages, and plan entire trips.

It also has a chatbot for booking that works on Facebook Messenger, and an Amazon Alexa app with AI voice recognition. There’s also Ex pedia Travelocity , which has a price-match guarantee .

Skift is yet another great example of travel tech, except it’s a media company. It uses industry intelligence to research and define travel trends worldwide. It’s your go-to source for daily news and insights on travel tech .

Technoheaven   is travel technology company that provides  travel technology  solutions for travel and tourism business to help them manage day-to-day operations and increase business efficiency. These solutions include travel agency software,  tour operator software , B2B/B2C Booking Engine, XML API Integration and more. 

According to FCM Travels , 39% of hotel bookings are made on smartphones. The same study found that smartphones are go-to devices for 22% of flight bookings.

Condor Ferries published some very interesting stats on online travel bookings :

• 70% of travelers use smartphones for travel research
• 33% of travelers plan their trips with the help of a virtual travel assistant
• 82% of 2018 travel bookings were made without a travel agent
• 66% of all travelers make their bookings online
• 83% of consumers in the US prefer making their travel bookings online
• 80% of travelers rely on reviews on TripAdvisor before making bookings
• 72% of consumers won’t make a booking before reading online reviews

Travel technology is definitely on the rise, and the OTA market share confirms that we are slowly going towards a fully-digital future.

Technology has made travel automation possible, making trip planning less time-consuming and exciting for travelers and travel agencies.

You can plan a trip in minutes and easily book accommodation, tickets, flights, and much more. You can have your travel itinerary in the palm of your hand, with your mobile device as the perfect travel buddy.

You can stay connected wherever you are , break down language barriers, and even improve your packing routine with tech such as AR. You can have a personalized experience that makes every trip unforgettable .

Travel technology has revolutionized tourism, and we can’t wait to see what its next chapter has in store for us! It’s undoubtedly going to be brilliant!

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Marc Truyols has a degree in Tourism from the University of the Balearic Islands. Marc has extensive experience in the leisure, travel and tourism industry. His skills in negotiation, hotel management, customer service, sales and hotel management make him a strong business development professional in the travel industry.

Mize is the leading hotel booking optimization solution in the world. With over 170 partners using our fintech products, Mize creates new extra profit for the hotel booking industry using its fully automated proprietary technology and has generated hundreds of millions of dollars in revenue across its suite of products for its partners. Mize was founded in 2016 with its headquarters in Tel Aviv and offices worldwide.

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What is travel technology? An overview and its role in the travel / tourism industry

12 Feb 2024

Travel technology refers to the application of innovative digital solutions and software in the travel industry to enhance various aspects of the travel experience. This encompasses a broad spectrum of tools, including online booking platforms, mobile applications, data analytics, and emerging technologies. At the core, travel technology streamlines and automates processes that fosters a more agile, responsive, and interconnected travel ecosystem

What is travel technology?

Travel technology encompasses a variety of platforms and technologies, including those provided by travel management companies (TMCs), mobile apps, and online travel agencies (OTAs), and their primary aim is to simplify and expedite the travel booking process. The travel / tourism sectors are increasingly leveraging technologies for efficiency and improved customer satisfaction.

Through automation, travel businesses are benefiting from time-saving methods, cost reduction, and a seamless travel experience for their clients.

The advent of online reservation systems is one of the most groundbreaking changes brought about by technology. Travelers can now plan and book their trips end-to-end with just a few clicks. Due to the user-friendliness, evaluating options, comparing costs, and consulting reviews before making a purchase is commonplace in the modern digital era.

Why is technology important for the tourism industry

In contemporary times, the symbiotic relationship between technology and the tourism industry goes beyond mere operational enhancements; it has become a pivotal force shaping the very essence of travel. One of the most noteworthy impacts is the accessibility brought about by online booking platforms and mobile apps. Travelers now have the ability to plan and organize an entire trip with a few clicks- from booking flights and accommodations to confirming activities and transportation.

The integration of advanced data analytics has propelled the industry into a new era of personalization. Travel companies leverage data to understand user preferences thereby offering tailored recommendations that align with the unique needs of each traveler. This is a crucial step in enhancing the overall travel experience resulting in customer loyalty.

Technology has facilitated seamless communication and connectivity throughout the entire travel journey. Real-time updates, mobile notifications, and instant access to information have become integral components of the modern travel experience. From flight delays to last-minute itinerary changes, travelers are kept informed, contributing to a smoother and fulfilling experience.

As technology continues to evolve, innovations such as artificial intelligence (AI), virtual reality (VR), blockchain, and the Internet of Things (IoT) are poised to further reshape the tourism landscape. These advancements hold the potential to enhance security, streamline transactions, and provide even more personalized and efficient services to travelers.

In conclusion, the amalgamation of technology and tourism has ushered in an era of unprecedented convenience, customization, and connectivity. The ongoing evolution of technological solutions ensures that the travel industry remains dynamic, adaptive, and attuned to the evolving needs and preferences of modern-day travelers.

It further serves as a catalyst for evolving business strategies as far as travel management companies are concerned. Technology enables them to cater to the demands of contemporary clients while maintaining a competitive edge in a highly dynamic and demanding industry.

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The New Technology and Travel Revolution

Millennials have also played a significant role in this paradigm shift. They love to travel and are also passionate about new technology. This combined interested has given way to a new context where social media, apps, blogs, and so more have an important part to play when it’s time to play a trip. By that same token, the industry, as it becomes increasingly aware of this trend, has followed suit by adapting its business model and product offering to attract this coveted target. 

Who hasn’t gone somewhere just because Ryanair was offering round-trip tickets for 30 euros? If we merely feel like going somewhere, we go online and look for what the budget airlines are providing, we see what destination will be the cheapest, and voilà, let's go! This scenario, so ubiquitous today, was unthinkable some years ago.

Trends and updates in travel and tech 

As we mentioned in our tourism trends report , the industry is in the midst of a deep metamorphosis. There are many mitigating factors but the new technological solutions coming about are some of the main actors. 

Eurecat Tourism Innovation Department Director Salvador Anton Clavé commented during the Forum TurisTIC de Barcelona event that “the change goes beyond improving processes or the tourist experience; it entails transforming the tourism system itself.” We’re participating in making improvements to processes, customer service, relationships with customers, and the creation of new business models. All this naturally leads to benefits for the traveler, letting them simplify, and often enrich, the travel planning process.  

Booking.com Senior Vice President and Chief Marketing Officer Arjan Dijk recently echoed similar sentiments and stated that “in this new decade, we’ll see how the travel industry tries to respond to the needs of a type of a traveler more concerned with sustainability, and with more tech knowledge or curiosity, through developing products, functions, and services make discovering the world easier for all.”

Next, we’ll take a look at some of the technological advances currently leaving their mark on the industry and will, according to various studies, bring significant short-term changes to the sector. 

The seven most important tech solutions for the tourism industry 

1. mobile technology.

This is undoubtedly the main character in the new ways of travel. The cell phone has become our tour guide, travel agency, best restaurant locator, map, and more. It's by our side during the entire purchase journey. In fact, according to TripAdvisor, 45% of users use their smartphone for everything having to do with their vacations.

This is why there’s a need to adapt corporate services and communications to these devices. KLM, for example, has already created an information service for passengers using Facebook Messenger. 

This system, once someone has made a reservation, sends the user information regarding their ticket through Facebook Messenger as well as their boarding pass or updates about the status of their flight. This way, the user has all the pertinent information about their trip in the palm of their hand using an app that they already use , eliminating the need to download anything else.

2. Augmented Reality

Augmented reality (AR) or virtual reality (VR) have also entered the travel world, and the truth is that it’s a trend due to all the possibilities they can offer . More and more companies use it to show users a cabin on a cruise ship or transport them, for a few seconds, to the Great Wall of China. 

Today, it’s possible to “teleport” ourselves to the most remote corners of the globe without getting off the couch . That’s what you can get using Everest’s EVEREST VR app, which lets you see the top of the world without having to climb to the top. Or, if you would prefer, you can cross the Grand Canyon in a kayak enjoying the landmark’s sights and sounds. 

3. Internet of Things (IoT)

The Internet of Things (IoT) promises to bring significant updates to the tourism industry. They include integrating sensors connected to the Internet inside items like cars, suitcases, buildings, and more.  

In fact, Spain’s Hotel Technology Institute (Instituto Tecnológico Hotelero, or ITH) affirmed that the Internet of Things “is going to be the major transformative factor in the personalization of the customer experience over the next few years.” 

Some Virgin Hotel properties offer an app to their clients that lets them interact with the room’s thermostat or control the television in the room. There are also suitcases that have devices that allow users to use their cell phones to follow where their suitcase is at any time to avoid lost baggage at the airport or other public places.

4. Virtual Assistants

We’re all familiar with Siri and Alexa, the virtual assistants that meet all our needs: what’s the weather like today in my city, turn the radio on, open my email, and more. 

Hotels are now starting to enlist this “help” thanks to the arrival of virtual assistants that are specifically designed for this environment. IBM recently launched Watson Assistant, an AI-powered virtual assistant that creates an interactive and personalized experience for consumers.

This is the open technology that firms can employ and adapt to their needs . This way, the virtual assistant won't be called Watson but instead, have the name that the hotel chooses.

5. Big Data

There has been a lot of recent talk about Big Data, but they have yet to show all the opportunities it offers for the travel industry. Nonetheless, many industry players are already using it .

The Meliá hotel chain uses information about their guests to figure out what is the best target for marketing campaigns. Primarily, they examine their database to look at the amount spent, the reason for the trip, the country of origin and cross-checks this information with public data from government sources to develop the most appropriate customer profile and achieve a higher success rate. This way, they make a better segmentation for their campaigns to increase their efficacy and optimize the investment required for these campaigns.

6. Blockchain

Blockchain is a technology poised to transform the world as we know it. Although it’s mainly associated with finance, it also appears that it can impact travel. 

While there has not been that much experimentation with it, it is possible that it will be useful in identifying passengers at the airport, guaranteeing transparency in tourists' opinions, and easy and secure payments.

Travel technology becomes all the more powerful with help from 5G networks. They promise much faster loading and downloading speeds, wider coverage, and more stable connections. Beyond downloading content 20 times faster than before, 5G allows us to develop and deploy technology that 4G limited us. That means the connection between smart devices will be more efficient and we’ll be able to start to truly enjoy the Internet of Things (IoT). 

Immersive tourism, where technology turns travelers into the experience’s protagonist, will be a reality. Plus, augmented reality (AR) or 360° video will be more ubiquitous and accessible.

The BBC ran a test project that used 5G and an AR application at the Roman Baths in Bath, England where users could go back in time to reconstructions of the site in key moments throughout history. This video shows the pilot testing, which saw that over 80% of participants reporting they would be more willing to visit a museum if it had experiences of that caliber:

My personal experience: The techiest Eurotrip

I confess that I am one of those travelers that value the comfort that comes with mobile technology; above all in those “non-stop trips.” That’s why I want to share my experience in how technology has influenced my latest trip to Budapest, Vienna, and Krakow.  

Planning: Online reservations

While planning my trip, I made all the hotel reservations online. I've been doing this for years, but this time I found myself with a different surprise: they gave me the option of downloading a free guide about every city I was going to visit . I like to look for more information about the cities I'm going too, but I also recognize that this is an Inbound tactic that motivates people to reserve using that web portal again the future.

All these reservations, for both flights and hotels, stayed inside my inbox avoiding me having to print everything out and then worry about losing anything.

On the road: My cellphone, the best co-pilot

Traveling with a Smartphone and mobile data (thanks to the end of roaming in Europe) has been a revelation. It reminded me of all my journeys and reservations; it was there to guide me when I got lost (more than I could count) in a city, to keep me busy on long travels, or to help me find out interesting facts about the places I was visiting.

Post-Trip: sharing is living

When I come back from a trip, I always like to review the hotels, restaurants, and activities I’ve been in and done to share with others my experience and help them on their upcoming trip. I am a fan of the Internet philosophy: collaborating and sharing knowledge so everyone can find them. I did it all comfortably with my phone and on the couch at home.

The travel industry is one where interaction with the consumer is becoming more critical, and the technological advances are letting corporations get closer and know their customers a bit better.

Steve Jobs said: "technology is nothing. What's important is that you have a faith in people, that they're basically good and smart, and if you give them tools, they'll do wonderful things with them.”

We have the tools. Now the question is: what are we going to do with them?

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• INTELLIGENT TRAVEL

The Travel Tech of the Future

It’s no secret: Technology is changing the way we explore the world, and our relationship with it.

Here’s Traveler magazine’s take on ten new developments that are   making it easier for travelers to see more of our extraordinary planet, with a softer ecological impact:

1. Liquid Gold:   Inventor   Dean Kamen ’s ingenious   Slingshot water purifier   could be the answer to bringing clean water to some of the 738 million people in the world who don’t have it—and to travelers whose use of it puts an extra burden on developing areas.

2. The Big Picture:   One-shot, 360° photo technology will change how we document our travels. New or in-development omnidirectional cameras by   Ricoh   and   Giroptic   capture, with one click, panoramic images that smartphone cameras can’t yet record. The next generation? Affordable omni­directional video cameras.

3. Twist for the Wrist:   The Pebble smartwatch , which syncs via Bluetooth to smartphones and displays texts, tweets, caller ID, and other bits of information, is paving the way for wearable computing. The watch can be customized with downloadable watch faces and Internet apps, including ones to control your music or track your running pace and distance. An Apple iWatch is reportedly in the works, too.

4. Hail Yes!:   Controversial in some cities, e-hailing apps are on the move.   Taxi Magic   provides reliable tracking,   Sidecar   takes on ride-sharing, and   WOW Taxi   has the first platform for booking wheelchair-ready cabs in Manhattan. That’s no mean feat in a city of 13,000 taxis—only 233 of which handle wheelchairs.

5. Spectacular Spectacles:   With the potential to change the way we travel, access information, and experience destinations, Google Glass now takes the form of augmented-reality eyewear that projects data (addresses, e-mails, images) in a small LCD, visible only to the wearer; this technology will eventually translate to contact lenses. Looking backward, Past View augmented-reality video goggles show images of long-gone structures as you tour a city (currently available in Seville, Spain).

6. Stick It to Me:   Utah-based Chamtech Enterprises has developed a Wi-Fi sticker for laptops and cellphones. The bandwidth-enhancer is loaded with thousands of nanoparticles that are capable of boosting a device’s signal strength.

7. Dig It?:   Scientists such as   National Geographic Explorer   Albert Yu-Min Lin   use satellite imagery and infrared scans to search for buried pyramids in Egypt or Genghis Khan’s tomb in Mongolia without invasive digging. What they find may be our next travel hot spot.

8. Cash Out:   Mobile-commerce apps such as Square ,   which works in tandem with a credit card reader, simplify transactions, turning smartphones into a tool for buying, selling, or receiving receipts. If transactional kinks get fixed, digital peer-to-peer currencies like bitcoin could let you bypass banks entirely.

9. Fast Pass:   Your next passport could be your smartphone. Apple and other tech giants are developing traveler-focused systems that could replace a paper passport with a digital one, which would store personal identification data, boarding passes, and reservations. Fingerprint immigration checkpoints in Singapore have already proven that biometrics are the secret to hassle-free arrival.

10. Share Economy:   Campinmygarden.com lists yards where travelers can pitch a tent. Spinlister.com helps visitors rent bikes from locals for as little as ten dollars a day. Emerging apps ParkatmyHouse and Park Circa offer parking spots at homes and businesses.

• Nat Geo Expeditions

George W. Stone   is an editor at large at   National Geographic Traveler   magazine.  

Do you know about a tech development that’s changing the way we travel? Share your insider intel with the Intelligent Travel community by leaving a comment.

> Related:  

• 13 Big Questions on the Future of Travel  
• Three Clutch Travel Apps

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12 Technology and Travel

• Published: July 2021
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This chapter discusses the crucial links between technology and travel behaviours, looking both at traditional transport technologies and the impacts of other technologies. The development of transport technology has enabled us to travel more cheaply, more comfortably, faster and for longer distances – hence the massive growth of travel with all its attendant and varied effects. The chapter argues that the impacts of substitutionary technology (e.g. telecommunications) or non-transport technology (e.g. better storage of food) are more complex and difficult to predict, especially since people do not always behave rationally, but these technologies play an important role in shaping our travel behaviours. The chapter briefly examines possible future technological developments before concluding that we need to develop resilient technologies to allow for uncertainty whilst tackling the need for sustainability in future travel.

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What AI means for travel—now and in the future

“Revenge travel.” It’s what a lot of people are doing these days—hitting the runways in big numbers to make up for travel time lost during the pandemic. On this episode of The McKinsey Podcast , McKinsey partners Alex Cosmas and Vik Krishnan join global editorial director Lucia Rahilly to discuss a new report on travel in the age of AI : what the technology’s promise and pitfalls are and what it may mean for the travel industry overall.

This transcript has been edited for clarity and length.

The McKinsey Podcast is cohosted by Roberta Fusaro and Lucia Rahilly.

The promise of AI

Lucia Rahilly: Much of the research for the report drew from interviews with executives at 17 companies across five types of travel businesses. One of those executives is Luca Zambello, CEO of Jurny—an AI-fueled hospitality platform. He says AI will be the new normal.

Luca Zambello: We’re at the very beginning of the hockey stick. Economically, we are at the start of what is potentially the biggest technology disruption that humanity has ever seen.

Lucia Rahilly: So everyone is talking about the disruptive juggernaut that is AI, and particularly gen AI [generative AI]. At a super-high level, and acknowledging that we’re still in early days, what do we expect this to mean for the travel industry in particular?

Vik Krishnan: The travel industry is unquestionably going to be significantly disrupted by AI. Whether it’s gen AI or other forms of AI that have been around for some time remains to be seen. It’s quite clear that if you work through the customer journey and the process of trying to understand where you want to go, where you want to stay, what are the things you want to see, how you want to plan your day-by-day itinerary, gen AI significantly eases the process of travel discovery.

If you then step into what this means for travel suppliers, which includes airlines and hotels and cruises and car rentals and rideshare providers, the promise of AI is very much to help them deliver on the promises, both explicit and implicit, that they make to their customers.

Gen AI significantly eases the process of travel discovery.

What I mean by that is, very often, the expectations of travel are that your flight is on time, your bags get delivered to you safely, you then get to your hotel, your hotel room is available to check into when you get there, and you have a room that provides exactly what you asked for. That baseline expectation is one that many travel companies have historically struggled to meet.

What AI can do is help airlines ensure that planes are on time. It can help hotels ensure that what they deliver in terms of staffing and the product promise is consistent with what they advertise in their marketing and branding strategies.

Alex Cosmas: Not only is travel and hospitality the world’s largest sector, but it’s actually the most intimate sector. That means the answer for each of us to what a good experience looks like—whether I’m traveling for leisure or for business—is, by definition, fundamentally different. And the promise of AI has been to take the pattern of history, take the pattern of millions, and boil that down to the individual response that is relevant to me as a segment of one.

Nowhere is that promise needed more than in travel, where the experience should be a segment of one. That’s what makes it magical. To be clear, AI is already being applied in the travel sector in spades—specifically, in the operation of schedule assets and the optimized allocation of rooms and crews. That’s been true for decades, and it’s only getting better.

But the customer-facing applications of AI are only now really becoming next-generation. And for the most part, in travel, the best AI applications will largely be opaque to customers, because they’ll still be delivered through the mediums that customers prefer: often through humans, through the front line, through desk agents, through guest agents.

AI is already being applied in the travel sector in spades—specifically, in the operation of schedule assets and the optimized allocation of rooms and crews.

That’s ideally the promise. But the starting point is to say we can’t suddenly expect that customers will prefer to interact through more digital channels than they have in the past. Travel is a very human-centric business. And so the best AI, the best models, will be delivered through traditional channels.

How AI can change travel—for the better

Lucia Rahilly: What kind of value might come from using gen AI in the travel industry?

Alex Cosmas: Our latest estimates suggest that gen AI alone, across sectors, is bound to unlock $2 trillion to $4 trillion of incremental value.

Lucia Rahilly: Wow.

Alex Cosmas: Therefore, not surprisingly, capital is chasing the disruptive sector of AI.

Lucia Rahilly: What are some good examples of products that customers might expect to be using or that might be in the background enhancing customers’ experiences in the future?

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Vik Krishnan: Imagine the last time any of you tried to book a trip. You probably started on a search engine such as Google, or you started at an online travel agent such as Expedia, or you started at an actual supplier website if you had some certainty on what airline you wanted to fly or which hotel you wanted to stay at. You probably started with a little box where you put in your destination, you put in your approximate dates, and then you had the search engine present to you a series of results that may or may not have met your needs.

What we’re imagining in a future with gen AI or AI in general is that you start with something much more free-form and say, for example, “I’m looking to plan a trip with my family to New Orleans for a week in October. Can you help me find a hotel that has a pool for my seven-year-old and is within walking distance of the French Quarter?”

Wouldn’t that experience be much easier in terms of trying to figure out where you want to stay and what you want to do, as opposed to getting a list of a thousand hotels in an order that may or may not meet your specific preferences and what you actually want out of that trip? It is one of the most obvious examples wherein customers can see a real difference in what gen AI can do to help them with the travel discovery process.

Alex Cosmas: The other application of AI that I’m excited about is this: every customer gives tells. They drop digital breadcrumbs of things they like and don’t like when they bounce off of the page of a dot-com when they’re shopping; when they abandon a cart; when they return less frequently to search; when they arrive on a page only to check a single itinerary on a single day, on a single fare, rather than browsing for 20 minutes.

All of these are small tells that we as consumers provide travel brands. And so the ability to record, “I actually know what Alex is keen on in general and frankly less keen on and less likely to convert on,” and turn that into relevant offers is really important.

AI is only part of the answer

Lucia Rahilly: Where are we in terms of companies really embracing the use of this next-gen AI and other related technologies?

Alex Cosmas: We’re pretty far down the path of companies both embracing traditional AI and experimenting with gen AI. Very few of the airlines, hotels, cruise lines, and suppliers that I’ve interacted with are not already embracing deployment and actively experimenting with advanced tech. It’s only going to grow.

But there is risk. More is not always better. Faster is not always better. There’s a bit of, let’s say, a cautionary tale that we’ve learned from other sectors, which is that first off, AI is only part of the answer.

I like to say it doesn’t matter if you got the answer right if you got the delivery wrong.

The digital-delivery mechanism is how I go about delivering the answer: a mobile app, a push notification, an e-commerce experience, a kiosk, digital signage, or data just given to the front line. Those mechanisms are as equally important as or, I’d argue, even more important than the predictive and gen AI models behind them.

Vik Krishnan: To build on Alex’s point about getting the delivery wrong, many of you listening have probably been on an airplane in the last year. How many times have you experienced the outcome of landing, pulling toward the gate, stopping short on the tarmac somewhere, and it turns out the gate’s not available yet. Therefore, you have to wait for the other aircraft to taxi out, so your plane can then pull into the gate.

The reality is that putting together an operational execution plan involves data from so many different sources that aren’t necessarily pulled together in a large model. So it doesn’t necessarily enable or unlock this type of orchestration. And this is where AI can be enormously helpful.

There are companies out there that try to understand turning an aircraft, which is the process of essentially getting it from arrival to departure for the next flight. That involves actions both above the wing—for example, getting passengers off and onto the plane, getting the aircraft catered—and below the wing—for example, getting bags on and off the plane.

It involves refueling aircraft. It involves a number of other maintenance-related and ground-handling-related activities that many consumers don’t see. All of that is an extremely delicately orchestrated ballet that happens at an airport every single day, while involving multiple third parties and several different suppliers. It involves a fuel provider. It involves a ground handler. In some instances, it involves a different gate agent than the airline itself. That orchestration requires data and communication of very, very large volumes of information.

There are companies out there that are now saying, “We can actually identify when, during an aircraft turn, something didn’t happen according to schedule.” In other words, that catering truck didn’t pull in three minutes after arrival as it was expected to, which induced a delay. And that delay then allowed for a replanning of the entire turn process, so as to deliver an on-time departure. AI has an extremely large role to play in helping deliver on that promise in a way that suppliers have historically struggled to.

Don’t be AI stranger

Lucia Rahilly: In order to deliver on that process, understanding the data is critical. Here’s Ella Alkalay Schreiber, the GM of fintech at Hopper.

Ella Alkalay Schreiber: Machine learning is important, gen AI is important, predictive AI is important—but the actual challenge is to understand the data, ask the right questions, read prediction versus actual, and do this in a timely manner. The actual challenge is the human thinking, the common sense.

Lucia Rahilly: “Know your customer” is really a business axiom at this point. What does understanding your customers mean specifically for the travel industry?

Alex Cosmas: It means a few things. AI models learn the same way humans learn. It’s a test-and-learn process. I ask a question. I observe a behavior. That reinforces either my false or positive conception of who you are and what makes you tick. If you can’t measure cause and effect precisely, then avoid running an experiment entirely.

This is what our general advice is to our clients. I’d rather they experiment correctly on something small than swing for the fences and have no idea where the ball lands. That’s particularly true in microexperiments, where I have individual customers, where I provide individual treatments, but I have to be able to measure the response. If you can’t measure it, don’t bother. Focus your energy and resources on a different experiment.

This is what our general advice is to our clients. I’d rather they experiment correctly on something small than swing for the fences and have no idea where the ball lands.

If a brand, for example, doesn’t have the digital tech to be able to send a tailored offer to me as an individual, then you don’t really need to know my personal willingness to pay. In that case, stick to the microsegment or the macrosegment and take action that way. If you can’t send a personalized message without making it feel generic, then don’t.

Vik Krishnan: The experience of hyper-personalization has to feel authentic. So in other words, a flight attendant coming up to you and saying, “Hey, I know you normally like a Diet Coke with a slice of lime. Is that what you’d like this time?” is different from presuming what your preferred drink might be. That might be an example of how AI actually delivers on hyper-personalization, but with a bit of a human touch so it doesn’t appear creepy.

Lucia Rahilly: Both of you are deep in this industry. Any examples that come to mind of companies that are really doing AI right? And if so, how?

Vik Krishnan: Hotels that actually understand or acknowledge your past history of staying at that specific property—that’s quite a personal touch I really appreciate. But the reality is many hotels struggle to even understand basic facts such as the frequency, duration, and purpose of a recent stay. Many hotels don’t easily make that type of information available to their frontline staff. And so empowering those employees to use that information to deliver a hyper-personalized greeting or experience is a good example of companies using AI well.

Alex Cosmas: If done right, the frontline workforce should look and feel like superheroes powered by AI. There’s a luxury fashion retailer that arms its sales associates with iPads to link shoppers to the styles and the sizes they searched for online. That’s pretty cool. Now, augment that with the propensity models in the background that give the agent a steer to what a customer wants, and suddenly they appear clairvoyant. Think about that application in travel. There are far more interactions on average in a travel journey.

So as consumers, how do we preserve the magic of travel, which is more about heads-up time and being immersed in our surroundings, rather than about heads-down time and researching on a device? It means more agents who surprise and delight; say, “Welcome back”; say, “Happy birthday”; know you arrived earlier than planned; and swap the room preemptively so you could get in and get on your way. And that’s what we call knowing your customers like you know your friends.

I’ll share one example. When I check into a hotel, I really don’t like the kiosk and the app check-in. But I love it for checking out. For other customers, the complete inverse is true. My hotel can know that. It certainly knows how I check in and check out. It should act on that or understand the why, just as you understand your friends. This is the test-and-learn experiment that we talked about earlier and that most suppliers can begin right now.

AI and talent: What’s next?

Lucia Rahilly: Alex, that makes a very nice segue to Christiaan Hen, chief customer officer at Assaia, talking about frontline talent using AI as an assistant.

Christiaan Hen: Sometimes, people say automation might be a risk to people’s jobs, but that’s not the case here, because there are not going to be enough people to do these jobs in the first place. I like to see it as we’re equipping people with the right tools to do their jobs in a better way to accommodate for the additional workload that is coming.

Lucia Rahilly: This clip invokes the palpable fear that AI and automation will eliminate people’s jobs. We hear that time and again. How do you see these advanced technologies changing things for the front line in the travel industry?

Vik Krishnan: I see technology helping frontline employees do a better job more than I see it eliminating those jobs. We don’t necessarily see, for example, AI reducing flight attendant staffing any time soon, because those flight attendants are on the airplane to provide primarily for your safety, followed by the guest experience.

We see AI in many instances allowing those flight attendants to deliver a better customer experience, because they know that passenger in seat number 17C better as a result of the information provided to them. But it’s not replacing their jobs.

In certain pockets of the economy, technology and AI will end up replacing people. The reality in travel, though, is that the quality of the guest or passenger experience for so many people is tied to human interaction. Consequently, we don’t necessarily see a large-scale replacement of people here by technology and AI.

Alex Cosmas: Let’s look at the facts for a moment. Post-COVID-19, the travel sector employs 12 percent fewer staff than pre-COVID-19. And that’s not necessarily by choice. It is hard to find folks with the hospitality gene who genuinely want to deliver for guests, engage with them, and serve at the highest level day in and day out.

That’s part of the reason we see a smaller workforce in travel today than we have in the past. It takes twice as long, an average of five to six weeks, to fill roles as it did before the pandemic. Those with that hospitality gene would love nothing more than spending less time fixing broken itineraries, fixing issues that frankly could be automated. They’d rather spend their energy serving, which is what travel and hospitality is all about.

It should be a net-positive growth. The travel sector itself should grow as a result, creating jobs. We estimate the travel sector to grow at roughly 6 percent over the next decade, which is twice the rate of the overall economy.

Lucia Rahilly: Could AI and related technologies help with training folks who don’t come by that gene naturally but could be trained to fill those roles more efficiently?

Alex Cosmas: Absolutely. We’re already seeing applications of virtual reality, augmented reality, and AI coming together to offer more efficient ways to enhance and accelerate employee training, because you can throw live, immersive scenarios in front of employees at a higher clip than they would get organically on the job.

Oftentimes, the same is true not just of the front line but also of training corporate and call center employees. AI can learn from the patterns of thousands upon thousands of call-ins and transcripts—which no single human can ever be expected to go through—boil them down to the top ten core issues and suggest outcomes that seem to resolve 70 percent of situations. That’s the power of AI in training.

Lucia Rahilly: Alex, you mentioned virtual reality. Would travel drop if you could experience Bhutan from your sofa rather than actually having to take an arduous flight?

Alex Cosmas: Here’s my honest read on it. We’ve been able to visit Bhutan virtually for over a decade through YouTube and through National Geographic . And yet, travel is at an all-time high. And it’s because we all, as social animals, continue to enjoy experiencing new things, meeting new people, hearing new stories, and being inspired by a new site’s history and cuisine.

The numbers also suggest that we are in an unprecedented growth phase for travel. We are also in a phase where, over the past 15 years, customer satisfaction has steadily grown, despite how much we all like to beat up on our travel suppliers.

Consumers are admitting that the area they want to splurge on in the next year is travel and hospitality, such as experiences and restaurants. So they’re giving us that gift of their wallets and their trust. We have to deliver on that expectation as a sector. Gen AI, traditional AI, augmented reality, virtual reality, and digital technologies are going to help us deliver on the promise.

Alex Cosmas is a partner in McKinsey’s New York office. Vik Krishnan is a partner in the Bay Area office. Lucia Rahilly is the global editorial director and deputy publisher of McKinsey Global Publishing and is based in the New York office.

Comments and opinions expressed by interviewees are their own and do not represent or reflect the opinions, policies, or positions of McKinsey & Company or have its endorsement.

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Transportation Technology Definition

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Benefits of Transportation Technology 

As transportation technology continues to advance, the way we get from one place to another will improve. The transportation sector has the ability to help humans create more sustainable modes of travel — as demonstrated by electric cars and biofuel-powered airplanes. Even major industry players like Boeing see the benefits of more sustainable travel, as the company has announced plans to deliver planes that run completely on biofuel by 2030 .

Transportation technology also allows people and goods to get to their destinations faster. Improved speed for trains or delivery systems can save companies and consumers alike valuable time and money. The logistics industry is also set to benefit from improved transportation methods and infrastructure, as the two industries often work together to move goods efficiently and affordably. Connected cars and freight trucks are one way logistics may improve, thanks to further transportation technology development. As the number of IoT sensors in CCTV cameras along highways grow, data can be collected to help solve traffic and congestion problems along major thoroughfares and delivery routes. Connected cars are also able to predict traffic patterns with the help of signal phase and timing information collected through IoT vehicles. 

Although autonomous vehicles are not quite widespread yet, manufacturers and developers in the field hope that one day self-driving cars will improve safety for millions of people. Nearly 40,000 people were killed in traffic accidents in 2020 in the United States alone. As autonomous vehicles continue to develop, their capabilities of preventing accidents and sense collisions will drastically alter the number of fatal car accidents each year.  

Recommended Reading Artificial Intelligence in Cars: Examples of AI in the Auto Industry

Transportation Technology Examples

Innovation in transportation technology is at an all-time high with creative solutions that are helping us get down the block, across the country and even into outer space. Check out some of the most groundbreaking modes of transportation below.

Underground Tunneling

Underground transit is all about moving people or things through vast systems of tunnels underneath the Earth’s surface. Musk’s Boring Company — derived as Musk sat in Los Angeles traffic — is an infrastructure and tunnel construction company that builds underground pathways for cars to travel through at higher speeds and with less traffic congestion. So far, the company has built a tunnel in Las Vegas called the LVCC Loop system. The three-station tunnel system connects the LVCC New Exhibit Hall with the existing campus and is said to reduce a 45-minute walk time to approximately two driving minutes. Underground tunneling, though in its early stages, is seen as an interesting concept that has the potential to reduce traffic congestion and the overall environmental effects of current car travel.

Best Transportation Companies With Open Jobs View the Top Transportation Companies Hiring Now

The transportation technology garnering the most excitement right now is aerospace. Companies like SpaceX , Blue Origin and Virgin Galactic are battling it out to be the first company to offer commercial space flights. That’s right, you no longer have to be a NASA astronaut to live out your childhood dream of flying through outer space.

The rise of commercial space flight has brought about a series of incredible technological advancements, including the use of reusable rocket boosters. Originally, rocket ships would shed their boosters about two minutes after liftoff. These boosters were one-time use and would fall back to the earth in a flaming heap. SpaceX has designed boosters that gently propel themselves back down to Earth with precision. The reusability of these rockets is an achievement in cost-saving travel tech that now opens up spaceflight to civilians (albeit  extremely wealthy civilians  at the moment). Relativity Space is even  3D printing rocket ships .

The new-age “Space Race” is pushing transportation technology to its limits and producing some of the most awe-inspiring tech we’re seeing today. It’s reducing original spaceflight costs from $500 billion to about $60 million per flight and having us picture future life on the moon, Mars and beyond.

Related Reading 21 Aerospace Companies Extending Our Reach

Autonomous Vehicles

The battle over autonomous vehicles is also heating up. Virtually every big-named auto manufacturer and startup vying to create the first mass-produced wave of self-driving vehicles. Imagine getting into your car, punching in an address, sitting back and letting a car take you to your endpoint without you having to touch the steering wheel or get stressed out navigating traffic. That used to be an unreachable dream for decades. Now, it’s becoming a reality.

Companies like Google, Waymo , Uber, Tesla and Ford are all developing machine learning, AI and deep learning platforms that help cars calculate their surroundings in real-time and act accordingly. These vehicles are taking in millions of data points each second through a variety of sensors, software and GPS. Sensors constantly monitor surroundings like people crossing roads, surrounding vehicles and animals darting out into traffic and make split-second calculations on how to respond safely and efficiently. Additionally, GPS monitors routes to find the quickest way to a destination, upcoming accidents or bottlenecks that can be subverted.

The biggest hurdle in autonomous vehicles right now is safety. There are an infinite number of scenarios that occur on the road. How can a car respond to each one like a rational human would? Each automaker and startup are training these cars to drive safely and with the same rationale as a human being. Although in their early stages, autonomous vehicles have made strides in transportation technology that will have a massive impact on the overall future of how we get around.

More on Autonomous Vehicles 25 Self-Driving Car Companies You Should Know

Last-Mile Robots

Transportation tech isn’t all just about transporting people. It can also include the technology that helps get our packages and products from point A to point B. One of the biggest advancements in transportation technology for the shipping industry is last-mile robotics.

Instead of relying on a delivery driver or postal worker to drop off the item at your front door, companies are now employing robots that traverse cities and glide down sidewalks to deliver your package straight to your door. Amazon and FedEx are currently employing robots in certain cities to deliver packages within a few-mile radius of their fulfillment centers, and Domino’s Pizza is using  robots to deliver their pizza orders  on time.

Electric Vehicles

Electric vehicles are having a massive effect on how we get around, whether it’s across the city or across the country. Companies like Tesla and Nissan have popularized the electric car, which runs strictly on battery power to get us to where we need to go. Instead of refueling at a gas station, electric vehicles need a battery charge to get them back on the road. Today’s most advanced electric vehicles can run from  150 miles to 350 miles on a single charge . These vehicles are fantastic examples of transportation tech because they’re fundamentally changing how vehicles operate and how they’re powered.

Electric bikes, scooters (known as e-bikes and e-scooters) have become viable travel options for traversing neighborhoods or entire cities. These vehicles provide ease of use and convenience that hasn’t been provided by other last-mile forms of transport. Subverting traffic to get to work or making that dinner reservation across town is now easier thanks to the options and eco-friendly benefits provided by electric scooters and bikes.

Emerging Transportation Technology

It seems there are countless possibilities for travel already, but humans are determined to explore every avenue for transportation. Flying taxis and cars might be reality in the not so distant future. Smaller aircraft to transport people easily around cities are in the works at least 20 companies . One notable example is Uber’s efforts to bring air travel to a more casual level. Companies like Ilium are working to create hyper-local air travel that offers zero-emission, low-noise transportation.

Hyperloops are a proposed method of passenger or freight transportation that use electric propulsion and low-pressure tubes to glide along at speeds that surpass those of commercial aircrafts. The use of magnets to propel the passenger tube significantly reduces the amount of energy and monetary costs it takes to operate the technology. Hyperloops are still in their infancy, with top speeds reaching only half of the proposed 750 miles per hour. Still, they’re being put to the test as viable alternatives to traditional travel methods in the near future.

Maybe in the far, far future we will won’t need vehicles at all, as scientists continue their pursuit of teleportation after the first atom was teleported in 2017 . 

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Great companies need great people. that's where we come in..

Why B2B Travel Technology is Vital to the Industry

Travel Industry Analysis

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Depending on who you speak to, there are different definitions of what constitutes travel technology. As a travel marketplace provider, we certainly see that definition in a different light to a transport company like Uber or an OTA like Expedia. Our job as a (mostly) B2B service is to enable operators to reach as many travellers as possible. We provide the travel technology and work in the space in between operators and customers.

But it makes sense that, as technology becomes more of a feature in our daily lives, travel companies of one sort or another will utilise different aspects and become a part of the 'travel technology' family. A case in point is Skift's Travel Tech 250 , which includes everything from deal sites like GroupOn to rental platforms and price comparison websites.

Travel Technology Now Comes In Many Forms

From looking through Skift's map of '250 travel tech companies' shaping the modern day travel experience, it's clear to see that travel tech has an extremely broad meaning. It spans marketplaces for travel, transport and accommodation. There are also B2B services covering distribution, booking engines and even travel industry marketing specialists.

As Skift writes, "We recognize that the travel industry is in constant flux, with new brands and disruptors coming on line all of the time. The design we chose for this visualization is exactly that – a snapshot of what the industry looks like today."

Sure, we might be biased, but we think we deserve a little more recognition here. Not in terms of being included, although that would be nice. But in terms of the significance of what we and other booking engines do. The Skift image is just a snapshot of the industry as a whole, so let's try to explain why what we do is so vital.

As more and more travellers research and organise their trips online, having a web presence is becoming a prerequisite to winning bookings from international tourists.

But that's putting it mildly. Having an online presence is a pre-condition to attracting tourists in the same way that having a warm pair of socks is needed if you're going to climb Mt Everest. There's a lot more to it than that. There are some serious marketing challenges facing small travel operators that we've outlined again and again.

The first - and most important - is  being discovered . An online presence is worth nothing unless people can find it. Only once your products are found can you begin actually selling them. This is getting harder by the day for two reasons. First, a small number of B2C travel industry giants dominate search engine results. And by dominate, we mean that you'll be lucky to get a look in. They've got more content than you, more backlinks than you, and you can bet that their marketing budgets far exceed your own.

The second challenge to getting noticed is increased competition from other smaller operators. As they fight to take traffic from the big guys, many smaller travel startups are making life harder for each other.

But it's not all bad...

But there is a silver lining. There are two, in fact. The first is that once they get over the hurdle of being heard, smaller operators are in a unique position to concentrate on a single niche. They can then easily build brand awareness and customer loyalty around that target market. By definition, smaller travel operators can be lean, more flexible and highly specialised. That's the personal touch that many travellers want, not a mass tourism package trip churned out by an industry giant.

With specialised knowledge comes a specialised service. And with that comes a trip that travellers remember for all the right reasons.

Why True Travel Technology is an Enabler

In our view, true B2B travel technology is tech that helps startups in the industry overcome the challenges mentioned above. True travel technology is empowering, breaks down conventional barriers and gives the small guys a fighting chance against established dominance.

Sure: all of the companies listed above under 'Travel technology' are, according to  Skift, " shaping the modern-day travel experience". We don't deny that Uber, Secret Escapes and Trivago are all offering valuable services that the industry couldn't do without. Yet the key word for us in that Skift  definition is 'experience'.

Shaping the Travel Experience for the Better

Here at Travelshift, we firmly believe that smaller operators are in a much better position to give 21st century travellers the immersive trips and personalised service they're looking for.

As we've mentioned before , there is a fear that the combining forces of big data and seamless integration will leave the largest technology companies in the best position to dominate the travel industry - even more so than the current industry giants. There is no telling what kind of impact even more dominance in the hands of a few major players will have on the traveller experience.

That's why we are remaining firmly in the corner of the little guys, enabling them to compete with travel industry giants with our unique, feature-packed marketplace software. We hope that the result will be a greater number of specialised marketplaces, catering to their chosen niche and providing the best possible experience to travellers - right the way through from booking to returning home.

Our Travel Technology Gives Smaller Operators The Platform They Deserve

As we've mentioned, setting up in the travel industry and offering your expertise to tourists is only the first step on a long, difficult journey. Many fall at the opening hurdles, and many more follow suit soon after that.

That's why we put our heads together before launching our first platform in 2014  to produce the perfect solution: A travel marketplace that brings together small operators and allows them to reach a larger audience than they could ever imagine when working as individual suppliers.

Take a look at the impact our platform had in its opening few years when combined with the Iceland tourism boom.

This goes to show that a small but dedicated (and talented) team can achieve great things with the right travel technology in place. Our aim is for the same platform solution and techniques to be used to develop partnerships and niche marketplaces all over the world.

The result will be the growth of smaller travel operators, as they each benefit from the support and association of a marketplace that's purpose-built to drive traffic and sales for niche travel sectors. More success among smaller operators promises to shift the travel landscape, provide tourists with more authentic experiences and bring back the concept of 'loyalty' to an industry that has lost its personal touch.

All of this takes us back to the title of this post. So why are B2B travel technology suppliers so vital to the industry? Simply put, we support startups and breed innovation. We make things happen.

More Than Just Another Booking Engine

Earlier in this post we compared having an online presence in the travel industry to having a pair of socks at the base of Mount Everest: It's only the beginning. And the same can be said for having a travel marketplace that aggregates operators in your chosen niche.

Building a marketplace is only half of the challenge. You still need to market it properly, to streamline its systems and drive as many sales as possible.

That's where Travelshift's technology comes in. Our marketplace solution has been honed over time and proven in practice. It's complete with localisation features, built-in SEO tools, flexible inventory systems and much more besides. Most important of all, the Travelshift platform was built and designed to bring in as much relevant traffic as possible.

To do that, we've combined a smart, flexible SaaS travel marketplace solution with unparalleled content marketing capabilities. But the key is where that content comes from: The community. By encouraging locals and tour guides to contribute article and blog posts, our platform allows you to amass a huge social media following and drive significantly more traffic into the marketplace than operators can manage independently. With our tools and no shortage of hard work, you can quickly become the leading producer of content in your field.

Community-driven content is a foundation of our success, and we're convinced that the model can be applied to any number of travel niches.

Feeling Inspired?

We're always on the lookout for new partners, exciting startups and talented individuals to work with. If you'd like to be considered, all we need from you is a discovery letter. In the letter, you should indicate as concisely as possible the following elements of your proposal:

• Define the market. What are you trying to aggregate?
• How do you plan to bring in suppliers and/or access inventory?
• What is your preferred form of partnership (joint venture, revenue sharing agreement, etc)?

You can send your discovery letters to  [email protected] .

The travel industry is an exciting and thriving sector with a seemingly endless amount of business opportunities and prospective ventures. We love to team up with intelligent and creative people and enjoy receiving new proposals. Get in touch with us today!

January 6, 2017

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Gender Equality in the Travel Industry: There's More to be Done

Travel Industry Blog

Travel technology for dummies: what is ndc.

• 30. June 2021
• ndc , travel technology for dummies

Dear Readers, during a tough year with a global pandemic which cost the travel industry according to IATA in excess of $118 billion, I was under the impression, no-one would be interested in educational stories about travel technology. Hopefully, we have better times ahead of us. Hence, I decided to continue my series with focus on necessary technology improvements such as NDC and ONE Order.

NDC is to become the standard for airline distribution of the 21st century. As mentioned in my article about NDC from Oct. 2017, NDC is the replacement of a communication protocol from the 1980s (EDIFACT) by a communication protocol of 2000 (XML) – which basically means data becomes more readable. The reason behind this development: Every data element gets a description of what it stands for (you can find out more about that in the other articles of this series). 

Blog Series: Travel Technology for Dummies

• What Is Full Content?
• What Is a Booking Reference or PNR?
• What Is Overbooking?
• What Is a Passenger Service System (PSS)?
• What Are Booking, Waitlists, Tickets, Codeshare & Interlining?
• What Are Active and Passive Segments?
• What Are Incentives, Commissions & Overrides?
• What Is a ‘Married Segment’?
• Blockchain in Travel: All You Need to Know – for Now
• What Is the Difference Between Fares, Rates and Tariffs?
• What Is NDC?
• What Is Continuous Pricing?
• What Is Direct vs. Indirect Distribution?

The Bumpy Road to NDC

The road to NDC was bumpy as a technology standard was used for political reasons: NDC was confused with  direct distribution  (airlines sells directly to traveler) compared to the classical distribution channel airline use GDSs and agencies for indirect distribution (compare with the picture  from my article about PSS ), where every entity in the value chain takes a  cut  of the sale.

Even prior to NDC, direct distribution was common – better known by booking through the airline webpage. On average 50% of sales of the classical legacy airlines, as well as up to 100% of low-cost carriers (such as Southwest), were sold through the website of the airline. Besides the above referenced article, I explained at length commercial challenges, people used to address using NDC as a weapon in my  2nd article about NDC .

At this point, NDC is (or will become) reality. Airlines effectively have been working on providing NDC interfaces since 2018 after IATA was able to provide a (to some extent) stable version with NDC version 17.2 (it’s the 2nd version of the year 2017). Approximately two versions will be released every year. GDSs have committed to providing NDC interfaces (NDC-X, Sabre Beyond NDC, and Travelport announced Travelport+). TMCs are engaged, but obviously rather prefer the traditional program with  kickback  for monetary reasons. Online Booking Tool provider are also somewhat engaged including SAP Concur and our own  OBT .

Still Challenges Lie Ahead

However, as of 2021 we have still been facing challenges as there is no one-stop NDC provider. GDSs are releasing capabilities for a few airlines each year. While some aggregators claim to have numerous airlines, in many cases the fact is, they only have a few real installations. Aggregators claim for instance to have Austrian Airlines (OS), Lufthansa (LH), SWISS (LX), Air Dolomiti (EN) and Brussels Airlines (SN) while all of these airlines are from the same Lufthansa Group Application Programming Interface (API) – it is exactly one and the same interface.

Additionally, Lufthansa’s technology provider of the NDC interface is Accelya’s Farelogix. And Farelogix is the technology provider for other airlines, too – among those, besides the Lufthansa Group, Aeromexico, Aegean, Air Canada, American Airlines, Copa, Delta, Emirates, Etihad, flydubai, Hawaiian, Olympic, Qantas, Qatar, United, Virgin Atlantic, and WestJet. Theoretically and ideally, once you have integrated Farelogix once, one would expect to have all such airlines. The latter unfortunately is not true as we have different IATA NDC versions, different airline interpretations of such XML messages, in most cases we need a certification with each airline, and once all this has been taken care of, there is a good chance you run into bugs and/or technology limitations by the 3rd party IT vendor of the airline.

GDS Aggregator as well as a NDC Aggregator

Technical challenges should be mentioned.

Regardless, the claim to have all those airlines in one’s aggregator’s pocket is made quickly. But make no mistake, in order to have a comparable all-embracing offering as today’s GDSs, a new entrant “aggregator” needs to integrate up to 500 airlines, as I  highlighted . If this was at all possible, it would basically mean to rebuild a GDS just using newer, more flexible but less proven and robust technology with questionable performance. As this is obviously not realistic, it will take time for NDC to get majority adaption and any NDC installation will need to be supplemented by a GDS aggregation.

• New integrations to up to 500 airlines,
• mid- & back-office challenges to manage a booking,
• Super-PNR database to manage bookings in various sources,
• unified agent desktop to modify or change bookings in various sources by a professional, and
• travel risk management  (TRM) for bookings in various sources – especially  TRM post-COVID .

Commercial Challenges Are Often Overlooked

NDC also comes with a number of commercial challenges, such as agreements between airline and NDC consumer (corporate, TMC, TRM, etc.) are necessary to get full visibility of all fares and features. Otherwise, the content is limited to zero or a “public NDC model”. In such a public model, an airline might make available limited content for those who do not have an NDC partner program agreement between the entity and the airline. The usual way is what some call “agency-paid” model, whereby an agency would first reach a bilateral agreement between the airline or airline group and such entity as part of a partner program, enabling access to all agreed NDC offers as part of such program. It is almost similar like public fares vs. private or negotiated fares in a GDS – where certain entities get access to certain negotiated fare of such entity.

The Biggest Change of NDC Is Shifting the Booking Responsibility From the GDS to the Airline

Apart from the communication protocol changing from EDIFACT to XML, the biggest change in the light of NDC is the change from a GDS created offer to an airline created offer. This is one of the prime factors for airlines to get out of their – as they call it – “commodity trap”, of reduced product presentation (no rich content – just a seat on a plane), no ancillary placement and no upsell options in their indirect distribution channel compared to the attractive product presentation on their own airline.com website along with filter criteria and upselling opportunities. Along with these restrictions comes: a static offer creation in traditional (GDS/ATPCO based) distribution compared to a dynamic offer management all the way to continuous pricing.

With NDC the offer and order model is introduced. The airline is in charge and provides the offer at the time of shopping. In addition to  ancillaries ,  bundles , upselling, etc. this allows the airline to dynamically price at the time of shopping/booking as the airline is no longer limited to a tier model.

A more complete list of differences between the traditional ATPCO based workflow and the newer NDC based workflow can be found in the table further down.

• XML based data transmission
• a revenue opportunity through XML based standard allowing product differentiation (see all drivers below)
• a commercial model (although commercial questions arise)
• a retailing solution

NDC Introduces Offer & Order Management

One of the Key Elements Proposed for an Airline NDC Platform is Offer and Order Management.

An offer management is part of the travel agency’s “NDC Shopping” request and triggers an offer creation by the airline dependent on information provided in the request. Also called “offer store” (as illustrated in the graphic further down), it enables airlines to distribute their full product offerings and to merchandise additional services using rich content (pictures, videos, sound VR experiences) in either an anonymous or personalized fashion. This may include dynamic pricing all the way to contineous pricing.

Order management is the ability to create, store and manage its orders. The order gives an entire view of the various products and services ordered. In a first step, a single identifier (Order ID) references to the  PNR ,  e-ticket (ETKT)  and  EMDs  involved in an order. The idea is that the order management becomes as sophisticated as in the retail world where the order is managed from purchase, payment to delivery. At some point in time, it is expected that order management is extended to cover the entire lifecycle, beyond fulfillment, to delivery and accounting. This is one aspect of the replacement of the PNR by ONE Order.

NDC as the Standard for Airline Distribution in the 21st Century Will Become Reality as a Hybrid NDC and ATPCO Model:

In the following, you will find a comparison of the traditional ATPCO based distribution environment to the new NDC based distribution environment. I’m fairly certain that both workflows will remain around for at least until I retire.

On the top, the traditional distribution workflow with a communication protocol which is sometimes still based on the over 40 yr. old EDIFACT protocol and a workflow which is based on ATPCO (filing of fares through ATPCO limited to 26 price points of the alphabet instead of airline offers allowing continuous pricing based on supply and demand at the time of shopping/booking).

On the bottom the new NDC workflow where shopping occurs in the airline offer store (not the GDS) based on supply and demand at that time and the booking occurs directly in the airline order management system. Both models will coexist for a while and intermediaries will have to manage to support both workflows.

A Typical NDC Booking Workflow

The NDC booking and ticketing workflow consists of three main areas:

Shop (search & price of flights, seats, baggage and services) as part of the Offer Management System (OMS):

• Air Shopping: Request Offers for flights on a specific route/date combination (Flight Search using search parameters);
• Offer Price: Reprice Offer and request upsell offers to account for e.g. updated exchange rates (OfferPriceRQ is always requested using References such as OfferID, OfferItemID);
• Service List: Request available Ancillary Offers; The ServiceList returns chargeable ancillaries. Additional SSR requests can be entered via Augmentation Point;
• Seat Availability: Request Seatmap with prices (if applicable);

Book (create, retrieve & modify orders) as part of the OMS:

• Order Create: Create the booking (if FOP – Form of Payment – is included, documents may be issued automatically). FOP is the trigger for ticketing in Order Create or Order Change;
• Order Reshop: Reprice existing Order, repricing taxes/fees;

Pay (travel documents issuance, retrieval and payment):

• Order Change: Send payment detail (FOP) and trigger payment/ticketing along with EMDs;

Other items such as airline profile & misc. stuff can follow after these steps.

Accomplishments Expected with NDC

With the help of NDC, airlines are primarily trying to differentiate one from another, however, there are a few additional achievements.

Personalization: such as enhancing loyalty with personalized pricing offers (e.g. frequent flyer status may enhance an offer by tier or service experience), but also by enhancing its CRM to be able to propose tailor-made offers which could lead to improved look-to-book ratios and strengthen customer loyalty for future sale. From a customer perspective: Relevant content (“Understand me!”), smart content (“Recognize me!”), complete content (“Service me!”) and easy (“Facilitate me!”).

Differentiation: ability to show competitive features that may be unique to the offer and therefore drive purchase decisions.

Merchandising: displaying additional products (ancillaries) à la carte or bundled (for instance: Wi-Fi or lounge access may drive purchase decisions and/or generate additional revenue for the airline).

Rich content to inspire: instead of a seat on an airplane, airlines want to sell an experience fitting their brand. In the traditional channels, traditional airlines were unable to differentiate their products, which eventually caught them in a commodity trap and a race for the cheapest fare. Especially with low-cost carriers, it is hard for traditional airlines to compete. In the old days, the business and first-class clients presented airlines with lucrative profits, but prior to Covid-19, the back of the aircraft paid the bills. In today’s world of high resolution image or video information at everyone’s fingertips, lie-flat seats, an appealing meal, a top-notch modern cabin, or just a cleaner, truly sanitized and/or social distancing accommodating interior can only be sold via rich content and attractive product presentation. Airlines sell via impressions on their websites, so they need to be able to reach the traveler the same way through their indirect sales channels. In a post-Covid-19 world, this might be even further important as traveler want to see how they can sit in a distance to the neighbor and what measures have been taken to avoid contamination.

Dynamic continuous pricing  conductive to modern offer management: flexible prices for products or services based on competition, supply and demand which do not require fare filing. With that said, airlines might have to file fewer fares as if they rely on classic dynamic pricing, hence the current fare filing processes can be simplified and therefore the airlines use this argument to gain NCD traction saying it leads to lower costs.

Control the offer/sale: as the airline produces the offer and is responsible for booking and ticketing, it manages more closely how its product is sold with less risk of interference. Hence, numerous revenue integrity checks may become redundant. In an NDC world, the airlines also carry the true PNR (or order for that matter), and not just a copy of the GDS PNR like in the traditional ATPCO based distribution channel. This fact seems a little scary for the classical GDSs as they lose control (and actually need to find out, how to get the real truth back into their system and synchronized the airline order to their system) – a fairly new thinking process for the GDSs. Not so much for the aggregators (incl. ourselves), as aggregator always had to worry about where the true PNR (or order in the new world) is stored and synchronize prior to making adjustments to the order. For classical GDS aggregators not much changes, as all they have to worry about is if they create a PNR in a 3rd party system called GDS or an order in a 3rd party NDC system of an airline.

Flexibility of the sale: in the past, airlines were restricted in their flexibility to sell. The selling capabilities are simplified with NDC, new products can be introduced much faster (Time to Market), offers can be bundled to the liking of the airline, and upselling (e.g.  fare families ) by, for example, displaying multiple price points, with increased value, may drive additional business and better sales of higher class features to the airline. All this comes at a downfall, as it obviously makes it much harder for the consumer to compare apples to apples. I guess it comes down to the Travel IT provider to come up with smart solutions to compare – such as the  Next Generation Storefront (NGS)  by ATPCo’s Routehappy in order to bring consistency to how product offerings are displayed across the airline distribution ecosystem. The disadvantage is only that every such technology comes at a price, and the content is only as good as it is maintained – which is not always dead-on. I’m still trying to picture how advertising financed user generated content (UGC) can wrap this up. In a post COVID-19 world, such content also needs to include COVID-19 testing, border control and vaccination requirements at the time of booking.

Interlining :  NDC promises simplified interlining along with a transformation into a revenue opportunity. When an offer needs to be completed by a partner, this can be done dynamically. The partner can make its own offer for their part and seamlessly integrate into the Offer Responsible Airline (ORA). Airlines may not need to file interline agreements as before. Interline settlement disputes could disappear as settlement values are communicated and agreed upfront at time of shopping. However, I consider this also debatable, as then each airline could have to integrate with each other and that might also cost and create conflict. Just imagine, a traveler being able to have two free pieces of luggage with one airline but only one piece on the other airline. Until this all is working seamless with all aggregators, I can see passengers being stranded, where an airline requires that passenger to check or gate-check his luggage at a stopover. In the end, it is up to the airline to decide and one can say: at least now, an airline who wants to integrate with one another can do so.

Reach: increasing reach such as tapping new sales channels geographically and digitally; Reach may be a controversial benefit as it is obvious that GDSs have a pretty high reach. Why else would the largest US domestic airline (Southwest) who has historical not been in the GDS enter the GDS world? IATA claims that direct connect and new aggregators may increase the reach. On the other side, with the multiple adapters to be built, “reach” – especially in the beginning of NDC is debatable and seems rather like a theoretical marketing claim by IATA.

Complexity Reduction: according to IATA, standardization means a common API, which could mean less complexity. This argument I’d like to challenge: IATA proposes two new versions per year, some airlines might adopt new versions, other not. In addition, the standard is not unified and each airline may interpret certain structures differently. Example: A stopover entertainment program by Lufthansa in Munich (e.g. visit a brewery) might be differently implemented by American Airlines to visit the Cowboys in Dallas. Now we have a multidimensional IT challenge: aggregators have to integrate x airlines using y versions of NDC with z interpretations of certain fields.

Payment innovations: with airlines in control of the payment, airlines might further cut costs by introducing payment instruments such as PayPal, Bank transfer, Pay by installment, Air Miles, or Cash to avoid the up to 3% credit card fee.

What Are the Drivers Behind NCD?

• The capability of airline websites is constantly improving. Airline retailing is following the online selling standards of the retail industries. For instance, one can purchase airline ancillaries such as seats, baggage, meals or lounge access as well as 3rd party ancillaries such as hotels, rental cars, local entertainment, etc.
• The Passenger Service Systems (PSS) consisting of inventory, reservation, departure control, etc. that were built in the 1970s by airlines in house have been replaced with systems provided by 3rd party IT providers with many more capabilities.
• The Consumer better understood with CRM tools along with analytical capabilities for personalization and tailor-made solutions.
• The modernization of 40-year-old data exchange standards for ticket distribution developer before the internet was invented. This will make change more cost-effective.
• Besides the GDSs, the facilitation of new entrants was expected to increase competition and drive down cost. It remains to be seen how Covid-19 affected those new entrants and as at length discussed in my other NDC articles bringing together numerous airlines and multiple TMCs/corporates on a technical as well as commercial level is quite a challenge.
• NDC is expected to provide airlines with cost optimization opportunities in the areas of ticketing, payment, revenue accounting, back-office and fare auditing.

Travel agency landscape

• OTAs and metasearch have grown, allowing a much larger number of offers to be processed.
• TMCs have evolved moving to a service-oriented model (duty of care, etc.), partnering with OBTs and mobile solution providers.
• Agents are confronted with a highly educated traveler and an increasing complexity of sourcing content, and thus have a need for intermediaries that fully aggregate content.
• Satisfy the traveler and the corporation in a convenient and simple way.
• Be able to control.
• Security and duty of care.
• Be able to book fares enriching the official corporate channel to satisfy travelers while maintaining their corporate travel policy.

Compatibility

Examples of typical ndc booking and exchange workflows.

Disclaimer: Flow charts are for illustration purpose only. Always check with your NDC airline for up-to-date information. No warranties are made that flow charts are correct.

For Ancillaries NDC Allows Three Options:

• During Booking: Air Shopping à Offer Price (optional) à Service List à Offer Price à Seat Availability à Offer Price à Order Create;
• Post Booking: Order Retrieve à Service List à Seat Availability à Offer Price à Order Change
• Post Ticketing: Order Retrieve à Service List à Seat Availability à Offer Price à Order Change (same)

It seems like some airlines allow services and seats in some cases only after ticketing – which is confusing, as at some point ticketing is supposed to be eliminated. Also, when using deferred payment, certain airlines restrict ancillary services to be added at the Order Create step. In these cases, ancillary services can only be added once payment is made. During booking, such services only seem to be allowed if they are accompanied by a payment guarantee. Again, depending on the implementation this may be combined with an EMD and if so, EMDs in NDC are non-refundable, which might be areas for disputes.

For aggregators who want to mimic the traditional ATPCO workflow in order to be backwards compatible with their clients who will use a hybrid model, it may be necessary to only allow ancillaries after ticketing.

Airline Retailing Maturity Index

• Capabilities verification: Capabilities enabled by the IATA standards
• Partnerships deployment: Scalability across the retailing value chain
• Value capture compass: Maturity of capturing potential value

PASS Travel Agent Desktop

Cover: Shutterstock

This Post Has 2 Comments

Thank you for your comment. I appreciate that. This is a good question. And no, the answer is “I do not believe that an airline will pay any GDS any money in an NDC environment”. An agency will have to recover fees from the traveler (or strike a deal directly with the airline), and the GDS will have to factor in their contracts with the airline as well as with the agencies the fact, that they will not receive commission & overrides ( https://www.travel-industry-blog.com/travel-technology/travel-technology-for-dummies-what-are-incentives-commission-overrides/ ) from the airline any longer.

Hi Michael,

Thanks for the article – just wondering if you have an updated view on how you think the Unit economics are going to turn out like in this new Hybrid channel vs the traditional GDS channel?

Taking an example for the traditional GDS channel today, If a customer buys a $250 air ticket, the airline pays a $5 booking fee to the GDS and the GDS pays a $2.50 incentive fee to the Travel Agent, it results in a $2.50 gross profit for the GDS (50% Gross margin). What would this same transaction look like within the Hybrid NDC model noted above?

I guess what I am trying to understand is whether or not the GDS is still going to be paid for what it does in the channel and if it is getting paid, will it be more or less?

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Definition of technology

Examples of technology in a sentence.

These examples are programmatically compiled from various online sources to illustrate current usage of the word 'technology.' Any opinions expressed in the examples do not represent those of Merriam-Webster or its editors. Send us feedback about these examples.

Word History

earlier, "treatise on an art, terminology, branch of knowledge dealing with the applied arts," borrowed from New Latin technologia "systematic treatment (of grammar or rhetoric), systematic description of the arts and sciences," borrowed from Greek technología "systematic treatment (of grammar or rhetoric)," from téchnē "art, craft, proficiency in an art or craft, systematic method of performing or engaging in an art" + -o- -o- + -logia -logy — more at technical entry 1

1829, in the meaning defined at sense 1a

Phrases Containing technology

• anti - technology
• high technology
• information technology

technology park

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technologize

Cite this Entry

“Technology.” Merriam-Webster.com Dictionary , Merriam-Webster, https://www.merriam-webster.com/dictionary/technology. Accessed 17 May. 2024.

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Kids definition of technology, medical definition, medical definition of technology, more from merriam-webster on technology.

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