The 2021 Digital Transformation Report shines a light on the travel industry’s post-pandemic shift towards a digital future. In this article, we offer a sneak peek into 10 insights pulled from the report’s findings on the latest digital transformation strategies among travel business leaders worldwide.
Propelled by new consumer behaviors and a transformed business environment, travel and hospitality businesses have significantly increased their adoption of digital tools and business practices. While digital transformation was a feature of the landscape before 2020, the pandemic has accelerated the embrace of digital transformation over the past 18 months. It’s now very clear that digital-first business practices, toolsets, analytics, and ways of working are becoming increasingly crucial as companies adjust to the transformed market landscape.
Amazon Web Services (AWS) and Skift’s recent 2021 Digital Transformation Report shines light on the attitudes around digital transformation strategies in the hospitality and travel industry. The report distills data surveyed from more than 1,000 travel industry leaders and executives across a range of industry sectors in North America, Europe, Asia-Pacific, and Latin America in the summer of 2021.
This article examines 10 insights from the report, including industry executives’ attitudes toward digitization, how they’ve evolved since the onset of the pandemic, the kinds of digital strategies business leaders are prioritizing, and whether or not they’re likely to be temporary or permanent changes.
Digital Transformation Is Embraced Across the Industry
One of clearest conclusions from this year’s report was the near-universal prioritization of digital transformation in travel and hospitality. According to this year’s research results, 91 percent of respondents reported that digital transformation was a very or somewhat important priority for their business, a finding consistent with the results from the 2020 survey.
“People knew [digital] was important, but I think it was something on the periphery,” said Slalom Consulting’s Bethany Frick. “[In 2020] digital became a bigger part of the business, and we saw more people investing their dollars in the places that were driving the business.”
Digital Business Sophistication Is Maturing
Even as businesses are embracing the digital shift, there’s still a lag in the ability for companies to put the strategies into practice. Most respondents rated their digital capabilities as average at best — 60 percent said their company merely kept pace with industry peers, suggesting room for improvement. Still, the awareness has grown over the past year — only 10 percent of respondents said their companies “were behind” on digital efforts (compared to 20 percent in the 2020 report).
Health, Safety, Contactless Tech, and Efficiency Rank High
Customer experience is another key area of focus for industry organizations looking to evolve their digital business practices. When asked about the most important areas, new technologies and protocols related to pandemic safety were a core focus for travel industry businesses. Fifty percent of respondents reported that they were moving forward on adopting more contactless solutions and health and safety protocols. Additionally, 50 percent of participants mentioned a strategic focus towards “running more lean or efficient operations.”
Figuring Out How to Use Data Effectively Is Critical to Success
Ninety percent of report respondents said collecting, analyzing, and acting on business data was very or somewhat important to their success in 2021. This figure is unchanged from the 2020 digital transformation report. The need for good data appears to be a mainstay, as businesses seek to tap into customer needs and strongly personalize the customer experience.
“The new world coming out of this crisis will have different dynamics and expectations,” said Jeffrey Goh, CEO of Star Alliance. “What organizations and airlines will need to do is adopt a strategy on data management and data analytics, [as well as] more customization and personalization, [allowing] more of a targeted approach to their customers.”
Using and Acting on Data Remains Cumbersome
Various challenges persist that are related to the industry’s approach to data strategy. While a significant proportion of respondents said their data collection and analysis (44 percent) also rated their abilities as “average.” Respondents added that data security and privacy issues (41 percent), lack of skilled employees (37 percent), and inadequate funding (37 percent), were some of the barriers to achieving greater data efficiency. So, too, incomplete data: 69 percent said this was a “considerable problem.”
AI and Machine Learning Offer a Path Forward
Companies are increasingly looking towards AI and machine learning technologies to help turn raw data into action, to help better personalize the customer experience, and to forecast future business demand. Respondents reported that these technologies made them more competitive (47 percent), saved them time (46 percent), and unlocked new business opportunities (44 percent).
“Machine learning is absolutely becoming a differentiator for travel and hospitality companies,” said David Peller of AWS.
Companies Strongly Invested in Software Upgrades During the Pandemic Lull
It was clear that many travel businesses made significant updates to their customer experience and data strategies in response to the pandemic. Seventy-three percent of respondents strongly or somewhat agreed that they had made upgrades to their technology systems throughout 2020 and into 2021. In many cases, this was as much about “flexing down” as it was “flexing up” to have resilient systems on board to deftly scale capacity according to the highly unpredictable and fluctuating demand.
Cloud Computing Has Huge Potential
There’s a growing interest in cloud services due to their agility, elasticity and capacity for innovation, but it’s still early days for the industry’s shift in this direction. Thirty-five percent of respondents reported being in the “early stages’’ of investigating solutions, with 30 percent in the “middle stages” of shifting operations over to cloud. This was largely put down to cost (26 percent), lack of experienced staff (17 percent), and potential IT or data security concerns (14 percent).
Finding Digitally Fluent Talent Is a Challenge
The past year highlighted fresh challenges around finding and retaining great talent. Skilled employees who are fluent in the capabilities of digital-first organizations are a finite pool, and remain in high demand. Nonetheless, many travel and hospitality executives reported that they were already very or somewhat confident they had the necessary talent to deliver on their current digital objectives (78 percent) and that their teams had the necessary training to support their digital objectives (70 percent).
C-suite Decides While IT, Marketing, and Customer Services Teams Drive
Digital transformation appears to be a high-level priority around most organizations, with decision-making focused at the C-suite level — 65 percent of respondents said that either their CEO or another C-level executive was involved in the process. In terms of who drives the change, respondents listed IT (39 percent), marketing (37 percent), and customer experience teams (32 percent), highlighting how digital transformation efforts, and efforts to enhance the customer experience, are highly intertwined.
Want to learn more about how digital transformation is evolving in the travel industry?