The Internet has already played a profound role in the disruptions witnessed by the travel industry in the early 21st Century, creating new businesses around everything from mobile apps to the sharing economy. But a potentially more dramatic change looms on the horizon: the Internet of Things (IoT).
The phenomenon, which refers to embedding internet-ready sensors inside everyday physical objects like buildings, appliances and vehicles, is already shaping up as a transformative force. IT research firm Gartner predicts there will be 6.4 billion connected “things” by the end of 2016, with that number growing to 20.8 billion by 2020.
While a number of industries have big opportunities when it comes to IoT, the travel industry is already leading the way when it comes to IoT investment. One recent IoT study by Tata Consultancy Services found that companies in the travel industry led all industries in their investment in IoT, with organizations spending an average of $128 million per organization.
For those not already investigating IoT opportunities, this may come as a shock. But as industry experts note, the opportunities created by IoT are already moving forward. “IoT isn’t a future trend, it’s happening now,” said Jonathan Barouch, CEO & Founder of customer intelligence firm Local Measure. How are different sectors of the travel industry already taking advantage of IoT `technology? And what opportunities and challenges may arise in the future?
In the hospitality sector, IoT technology is already impacting both consumer interactions and back-of-house operations. Some hospitality groups like Virgin Hotels, for example, offer an app that allows guests to interface with their room’s thermostat or control the TV. “With the Internet of things we are looking at ways devices interact with basic functionality at the hotel,” said Doug Carrillo, vice president of sales and marketing for Virgin. “Keyless entry is next.” Meanwhile, chains like Marriott have been experimenting with real-life “like” buttons that allow guests to provide real-time feedback on property amenities, designs and procedures.
For large-scale transportation hubs like airports, as well as theme parks and conference centers, the Internet of Things offers the chance to streamline operations for guests, allowing staff to refocus on the customer experience. Entertainment company and theme park operator Disney is famous for the rollout of its “Magic Band” initiative in Orlando, a network of park-wide sensors that help simplify everything from guest transport to dining reservations to itinerary planning through a tech-enabled wristband worn by guests. “Any sufficiently advanced technology is indistinguishable from magic,” said Tom Staggs, chief operating officer for the Walt Disney Company, in a 2015 interview with WIRED. “That’s how we think of it. If we can get out of the way, our guests can create more memories.”
At airports, IoT offers an opportunity to help passengers navigate sprawling terminals and receive targeting messages from retailers. One recent study suggested 90% of airports had already deployed, or planned to launch, IoT-related proximity sensors (also known as “beacons”) in their facilities.
At some aviation hubs like in Austin, IoT is enabling new methods for guests to keep tabs on security line wait times using “RFID” (radio frequency identification) technology. “In Austin we have a pilot in progress where we’re using beacons to figure out how long it’s going to take you to get through the security lines,” said Dawn Callahan, chief marketing officer for Boingo. “We’re capturing the RFID [from a user’s device] from a specific location at the beginning of the line and then following it to the end of the line, and using algorithms [to figure out wait].”
Airlines are yet another travel sector seeing increasing impact from IoT technology. Baggage handling and tracking is one potential application. Delta, for example, recently launched an IoT-enabled global bag-tracking system to better ensure travelers can keep track of checked luggage. And in terms of back-end operations, intelligent sensors on jet engines and airplane parts can signal to maintenance staff when items need to be replaced or repaired.
On top of this, there are numerous opportunities for airlines to optimize their consumption of fuel with IoT sensors, something carriers like Malaysia’s AirAsia are already using to decrease costs. “IoT applications could improve overall fuel cost (not just the consumption) taking into account energy prices, when/where to refuel, optimal flight and taxi paths as well as when/how much to hedge for the fuel,” said Dave Bartlett, technology chief for GE Aviation.
Even as the possibilities of using IoT technology continue to multiply, industry observers are moving forward with a mix of enthusiasm and caution. A recent hacking incident in October 2016, some of which can be attributed to unsecured consumer IoT devices, has given some industry observers pause, and encouraged a renewed focus on security. There’s also the challenge of how to make this wealth of new data generated by IoT devices actionable and usable. “It presents an enormous challenge due to the paradox of too much data,” said Katie McMahon, general manager for SoundHound. “How do you even start to make sense of what’s valuable, or how to use it?”
This will be the opportunity, and the challenge, as IoT technology continues to evolve in the travel industry in the years to come.
Three Tips for Travel Organizations Considering Internet of Things Investments
- Build a Clear Business Rationale for IoT – like any new technology, the excitement and novelty of the Internet of Things can often distract executives from the hard questions about its return on investment. Before making any IoT investment, get specific what you hope to measure and think through what business decisions will result once the information has been gathered. Travel and hospitality providers need to ask themselves a simple question before investing in IoT: will this technology improve customer experience?
- IoT Infrastructure Must Be Matched with Good Analysis – the promise of the Internet of Things is that the technology will generate massive amounts of data to help streamline operations and better serve travelers. But trying to make sense of all that information requires a parallel investment in the right software and people to interpret the information and help draw actionable conclusions.
- Providing Privacy and Transparency Will Be Essential – IoT sensors will provide travel brands with incredible new insights into their travelers’ habits. But customers also need to feel confident that their personal information is being used responsibly. Make sure to lay out clear policies about what information you’re collecting and why to help avoid any misunderstandings.
This content was created collaboratively between Adobe, Epsilon, and Skift’s SkiftX content studio. For more digital insights, download the 2017 Digital Transformation Report for free here.