The Tech Innovations and Trends Shaping Travel in 2024 from PhocusWire

Generative artificial intelligence still dominates the headlines and conference discussions, but it’s not the only travel-related technology influencing business operations today – or likely to affect them in the near future.

With that in mind, Phocuswright expert analysts came together for a webinar to discuss the technology and innovation trends influencing travel and elaborate on how they are impacting the industry.

Moderator Mike Coletta, Phocuswright’s senior analyst of research and innovation, made clear from the outset the importance of keeping up with tech trends.

“It’s clear that at least a couple of things in travel are certain,” he said. “One is that travel demand is resilient, having shown that it can and will bounce back from even the direst circumstances. And [second], more than ever, travel businesses that don’t embrace emerging technologies are on a path toward obsolescence.

“And generative AI is clearly the biggest emerging technology to pay attention to, but there are plenty of other developments in travel tech that will influence how travel businesses operate in the coming years.”

One example was the rise of self-sovereign identity (SSI) and biometrics. Senior technology and corporate market analyst Norm Rose discussed SSI’s potential to empower travelers to control their personal data, opening opportunities for more personalized and frictionless travel while lowering fraud risks.

“The role of robust, flexible, verifiable digital identities at the heart of automating and personalizing the travel process and [in] the future creating the connected trip that we’ve been talking about for many years will become a reality through this technology,” Rose said.

“Now the important thing … to keep in mind is that this is something that’s coming to the marketplace, not just coming to the travel industry,” he added. “This is coming to society – driven by government, driven by companies. Once we get used to having digital IDs like this and verified capabilities, I think the infrastructure will be in place for us to move forward and really accelerate the frictionless aspects of travel.”

A mixed ROI so far for generative AI

Of course, generative AI had its moment in the discussion. As senior research analyst Cathy Walsh explained, the technology was driving efforts to optimize everything from customer interfaces to back-end operations in 2023, and this year has been all about companies’ efforts to start operationalizing.

“Emerging technology comes with a lot of hype and hyperbole,” she said. “So we really set out to dig deeper to find out what have travel companies learned so far, really to understand what’s working and what’s not.”

Most companies have been focused on integrating generative AI into their own assets. This had led to common themes in types of applications travel companies have used, from chatbots, virtual assistants and review summaries on the consumer side, to help for customer service agents and text translation.

On the internal side, support for customer service agents and increased efficiency in coding.

The crucial question is what’s the return on investment, she said.

“The results are mixed so far. Travel companies have indicated that GenAI-powered products are having a few benefits, depending on the company: saving customers time, getting them deeper into the funnel more quickly, driving engagement and, in some cases, revenue. …

“On the other hand, Expedia says its ChatGPT integration has had minimal impact on either revenue or conversion. And it was interesting to hear Expedia’s former CEO Peter Kern say bluntly late last year that the opportunity for AI to plan an entire trip is, quote, grossly exaggerated.”

Where travel lags in tech integration

Analyst Marcus Shreyer looked at the reasons some technologies — including virtual and augmented reality (VR/AR), Web3 and the internet of things (IoT) – go largely underappreciated in the industry and how they might be better leveraged for travel.

Fear of new technology disrupting the established human touch is one reason travel lags behind other industries in adopting new technologies. But Shreyer spoke of why travel companies should seek to integrate modern technologies so that they complement human touch rather than replace it.

As an example, he pointed to the potential applying big data in hospitality could have.

“There’s probably no industry out there that has more access to consumer, more access to data points, but still sometimes we are poorly executing it,” he said. “How many times do we get asked when we check in our favorite space, ‘Is this the first time you’re staying with us?’ And my hope – and we’re seeing this now happening with generative AI – [is] this will help us to leverage data, improve personalization and then without heavy investment sometimes.”

The green dilemma for corporate travel

Just as corporate travel seems poised to recapture pre-COVID spending levels, compensating for the rise in video conferencing with an increased demand for in-person connections, a new challenge has emerged for the sector with the advent of thousands of companies making pledges to curtail emissions and meet sustainability goals.

“These pledges are a big deal,” said Lorraine Sileo, senior analyst and founder of Phocuswright Research. “And they can make a big impact, a positive impact, obviously, on the environment.”

Yet the catch for companies in the business travel sector, she added, is that the easiest way for corporations to limit greenhouse gas emissions is to cut back on air miles. “Pledges toward science-based targets will put a dent in corporate travel figures for years to come,” Sileo predicted.

The companies most at-risk, she said, are those focused on serving corporate travel needs. Also affected will be the suppliers and other partners that can’t meet corporations’ targets for reducing carbon footprint.

But while sales figures have been trending in the right direction for business travel interests, Sileo warned of what an economic downturn could mean.

“The rebound after COVID, high prices and growing demand have made up for some of the billions in travel spend cut from budgets,” Sileo said. “But as soon as the economy weakens, corporations will have a great excuse to be cutting back on [travel] spend — and that great excuse is called the environment.”

The rise of central bank digital currencies

As the ups and downs of cryptocurrencies fade into the background, Rose returned to speak of the emergence of central bank digital currencies – called CBDCs. The state-controlled digital currencies, which act as a digital version of a country’s currency, seek to combine the promised efficiencies of cryptocurrencies with the stability of traditional banking.

According to one tracker, 134 countries and currency unions representing 98% of global GDP are exploring CBDCs.

“Ninety-eight percent,” Rose emphasized. “In May of 2020, the number was 35. So many are in exploration, development, and some have launched” including China and India.

Given how slow the travel industry was to adopt digital payments, Rose said travel companies should be evaluating global markets to be prepared for more advancement of this trend.

“The more that we see digital currencies become part of this, it’s more likely the governments are going to offer digital identity also as part of this,” Rose continued. “Recently, I saw an article where the [U.S. Department of Homeland Security] is going out for bid for a digital ID. So the connection between central bank currencies and digital ID is there as well.”

This article originally appeared on PhocusWire.