Emerging Tech in Travel 2020

Report Overview

This report contributes to demystifying some of the terms, and hype about, the most important emerging technologies, especially pertaining to the travel industry. In this report we will focus on four of the main technology “buckets” that have been discussed most in the travel industry.

The report investigates: 1) artificial intelligence, with a deep dive into natural language processing through voice assistants, as well as computer vision used for facial recognition and self-driving cars; 2) hyperconnectivity, with a focus on cloud computing, 5G, and the internet of things; 3) spatial computing, investigating the potential of virtual and augmented reality technologies; and finally 4) distributed ledger technology, discussing the potential of cryptocurrencies and the blockchain.

We provide an insight into the benefits of these technologies, but also look at their shortcomings. We highlight real-life applications that are in place today and are being pushed by startups and incumbent players, and look at the future potential of these emerging technologies.

What You'll Learn From This Report

• Descriptions of four technology buckets, explaining what the fuss is all about, and how they work.
• Current applications by startups and incumbent players of these emerging technologies.
• Timescales highlighting if and when the impact of these technologies will be felt in the travel industry.
• The potential for a transformative impact, focused on and split by travel verticals, and the different customer journey stages.
• Shortcomings of each technology that need to be overcome for wider adoption and to reach their full potential.

Executives Interviewed

• Carlos Chang – Senior Principal Product Marketing Director at Oracle
• Myriam El Harraq – Vice President, Innovation at Accor
• Alexandra Fernandez Ramos – Chief Product and Sales Officer at Travelsify
• Rashesh Jethi – Senior Vice President of Engineering and Head of Innovation for Airlines at Amadeus
• McNeel Keenan – Vice President Product Management at Cvent
• Panos Moutafis – CEO and Co-Founder at Zenus
• Sean O’Neill – Senior Travel Tech Editor at Skift
• Andrew Sheivachman – Senior Enterprise Editor at Skift
• Raj Singh – Managing Director of Investments at JetBlue Technology Ventures
• Julius Solaris – Editor-in-Chief at EventMB, A Skift Brand
• Brian Sumers – Senior Aviation Business Editor at Skift
• Saraswati (Saras) Yagnavajhala – Senior Director, HGBU Data Science and Strategy at Oracle Hospitality

Executive Summary

In this report, Skift Research separates the wheat from the chaff. From conversations with industry experts operational in different travel verticals, we provide an overview of the latest technological innovations, poking through the buzz and terminology, and focusing on what actually works and the companies that are actually making a difference.

The travel industry has seen discussions about emerging tech like artificial intelligence (AI), virtual reality (VR), augmented reality (AR), the internet of things (IoT), biometrics, blockchain, cryptocurrencies, autonomous vehicles, and voice assistants for many years now. In many cases, however, their impact on the travel industry remains questionable. More of a nice marketing ploy, these technologies are often still at the fringes of operations.

This report highlights the transformative potential of AI, including natural language processing and computer vision, cloud computing, 5G, internet of things, AR, VR, and distributed ledger technology.

There is no question that AI has had the most transformative impact across all travel verticals. AI encapsulates such a diverse set of technologies that some are already used extensively, while others are only just emerging. AI also underbuilds and powers other emerging technologies, with for example, the combination of AI and advances in cloud computing offering strong potential for improved data management and innovation.

However, we also voice a warning. Terms like “algorithm,” “machine learning,” “language processing,” and countless more have become priced marketing terms. We feel that travel companies need to be careful with overusing AI terminology, particularly as technological advancements move the discussion forward, and what was once seen as cutting edge AI, might be a mainstream technology today.

Cloud computing, while maybe not as ‘emerging’ as some of the other technologies discussed in this report, continues to transform the industry, and with the future potential of 5G, it will completely change the capability and capacity of data collection, storing, and dissemination.

Other technologies, which arguably hog more of the limelight than AI, cloud, and 5G, but have a far lower likelihood of impacting the travel industry, are spatial computing and distributed ledger technology. Virtual reality, augmented reality, and the blockchain are hyped, and have real potential in other industries, but in travel are showing major shortcomings that would need to be overcome.

While this report focuses on the potential of some of the most exciting emerging technologies, we should always keep the end goal of adopting these technologies in mind. Technologies like AI, 5G, and cloud are already transforming the industry, but the full potential of other technologies is — at least partially — constrained by the rigid constructs of existing structures and frameworks, as well as vested interests by incumbent players. Breaking down the status quo by better utilizing existing technologies can be as powerful as implementing the latest technology.

When Emerging Tech Becomes Mainstream

Consider this.
Jack is a remote worker from New York, working for a software company headquartered in Toronto, Canada. While he has regular meetings with his team at home using his HoloLens goggles, a few times per year he travels to Toronto for an in-person gathering with his entire team.

When the time comes, he takes an overnight autonomous vehicle to Toronto. Before shared, self-driving cars became ubiquitous in New York and throughout major metropolises around the world, he would get up early to catch the first flight out of Newark and take a taxi to the business park from Toronto Pearson Airport. With the advancements in self-driving cars, however, he can now ask his iPhone25 to order a self-driving Waymo. The fully flat seats allow him to sleep and arrive refreshed in the morning.

The car drops him off at the hotel at 7 a.m. where he has already been checked in, with the hotel notified of his early arrival. Jack is able to have a quick shower, while listening to the Skift Daily podcast beaming from the IoT-enabled shower speakers, and while getting dressed, he reads his meeting notes on the bathroom mirror. Realizing he has forgotten his toothbrush, he requests one from his in-room Alexa. Two minutes later he receives a notification that his toothbrush has arrived. As he opens his door, a soft-spoken robot offers him a bamboo toothbrush and drives off.

Arriving at his head office, he enters the building using the chip implanted in his hand. This is the same chip which allows him to access his work laptop, and which he uses to pay for any expenses while traveling for work.

The rest of his trip is uneventful, but Jack is pleasantly surprised when he is able to have lunch in the newly formed on-property gardens. With improved public transportation and autonomous vehicle availability, his company was able to convert the staff parking lot due to low demand.

Or consider this.
Laura is a social media influencer from New York, and after seeing a promotional video about Dubai on Facebook, she decides to book a flight and stay. She pays with the Libra tokens she has earned over the past year through her work.

An hour before she is due to leave for the airport, Laura receives a message from the airline that her flight is delayed, and that her taxi has been rebooked for her. When eventually arriving at the airport, she uses the facial recognition kiosk to check in. Signs around the airport guide her to the best security line, and provide the fastest route to her gate.

While at the gate she checks the baggage tracking feature in the airline app, and she is glad to see the bag is already in the hold of the plane.

When arriving in Dubai, she takes an autonomous flying taxi to her hotel, and while walking into the lobby she receives her room keycard on her phone. The hotel was notified of her delay, so although it is late, her room remained ready for her arrival.

After an interrupted night’s sleep due to jet lag, she takes a morning yoga class in her room with a virtual yoga instructor, before heading to the center of town where she takes a self-guided tour using her smartphone as the tour guide. She also manages to squeeze in an afternoon in Abu Dhabi, now easily accessible with the newly built Hyperloop, which takes her there in a blistering 12 minutes.

Not only has this trip been a great experience, Laura is already planning her next trip, and savvy as she is, she has been able to earn some tokens toward this by sharing her experience of Dubai and Abu Dhabi with her followers.

In the not so distant future, this might be a reality. Some aspects of these scenarios already happen today, others might come to fruition in this or the next decade. Technology might transform travel in ways not even foreseen in these scenarios.

While these types of scenarios are great to get a sense of the changes emerging technology can bring to the industry and the traveler experience, it is difficult for companies to decide which technologies have the potential to be transformative, and which are more fad than the future.

In this report, Skift Research separates the wheat from the chaff. From conversations with industry experts from Skift and beyond, we provide an overview of the latest technological innovations, poking through the buzz and terminology, and focusing on what actually works and the companies that are actually making a difference.
 

The Emerging Tech Hype

Today, we have a situation where established players are cautiously testing new technologies, while a swarm of startups find niche applications for these emerging technologies. Investment in travel startups, many of which are utilizing emerging technologies, was at an all-time high in 2019, with startups raising $9.6 billion of venture capital, across 585 deals, the highest level of travel venture funding ever.

The travel industry has seen discussions about emerging tech like artificial intelligence (AI), virtual reality (VR), augmented reality (AR), the internet of things (IoT), biometrics, blockchain, cryptocurrencies, autonomous vehicles, and voice assistants for many years now. In many cases, however, their impact on the travel industry remains questionable. More of a nice marketing ploy, these technologies are often still at the fringes of operations.

Gartner’s Hype Cycle plays an important role in identifying the maturity and adoption levels of technologies and applications. The Hype Cycle visualizes the path most emerging technologies go through from inception to mainstream adoption. Gartner posits that the cycle helps companies identify the position of different hyped technologies, to make better decisions on tech investments.

It is true that the model has received considerable criticism, but it unquestionably highlights the buzz that exists around different technologies, and the pitfalls that companies face when trying to decide where and when to invest their limited budgets.

In this report, we want to contribute to demystifying some of the terms and hype about the most important technologies, especially pertaining to the travel industry. To do this we will focus on four of the main technology “buckets” that have been discussed most in the travel industry.
 

It’s All About Data

Before diving into the four most important emerging technology buckets, it is crucial to highlight the importance of data. Big data is not an emerging technology as such, but it certainly is a major buzzword in every area of business. With advancements in technologies like cloud computing and artificial intelligence (two of our emerging tech buckets), data can be better extracted, collected, stored, and analyzed for patterns and trends.

“Sometimes people talk about having big data, but the real trend is how do you take the data and a) make sure that it is correct, b) merge it with other data to produce something that has value, and c) take an action on it in the appropriate place,” said JetBlue Technology Ventures’ Managing Director of Investments Raj Singh.

While there are few people in the travel industry today who do not believe in the power of data, there are barriers to extracting and using data. The travel industry might seem progressive and innovative in many ways, but the fact remains that many players rely on outdated systems for their daily operations. Many airline and hotel systems were built in the 1980s and 90s. Even technology players like online travel agents often rely on older technology.

This forces the industry to work within pre-established frameworks which were built for older technology, unable to harness the power and opportunities of emerging technologies. And so while emerging technology like AI, cloud computing, or blockchain have the potential to be transformative to the industry, the potential is often constrained by the rigid constructs of existing tech and vested interests by incumbent players.

Breaking these existing constraints and altering accepted frameworks can be powerful, and we are seeing some success stories here. Travel management companies (TMCs) like TripActions and TravelPerk, for example, have been very successful in changing the understanding of what a TMC should do. They are doing this by better extracting and utilizing data and offering a better user experience. Rather than offering the latest technology to improve usability within old structures, they are changing the actual structures, without a major reliance on the latest emerging tech.

Singh of JetBlue Technology Ventures explained: “There are plenty of companies that we are looking at that are doing things just smarter. A good example would be in managed travel, you have a lot of corporate travel players, they aren’t necessarily doing anything terribly exciting in terms of new technology, but what they are doing is updating the UI [user interface] and UX [user experience], updating the way you connect into travel inventories, and that’s enough, that makes a difference.”

So while this report focuses on the potential of some of the most exciting emerging technologies, we should always keep the end goal of adopting these technologies in mind. Does an AI-based upselling tool or booking engine offer better results than existing alternatives? Does a distributed ledger based on blockchain technology really function better than any other distributed database? Does augmented reality really offer a better guest or attendee experience? Is this latest technological innovation fundamentally improving the user experience or operational processes? It is important to continuously ask these questions when deciding on tech investments.

Four Technology Buckets Changing the Travel Industry

Okay, let’s dive in. We will discuss four major technology buckets, and the host of subset technologies that are related or enabled by these technology buckets, as set out in Exhibit 3.

 

Artificial Intelligence

Hollywood loves a good drama about a dystopian future where Big Brother (Orwell’s 1984, The Truman Show), or robots (The Matrix, Terminator, Minority Report, iRobot) rule our existence.

But it’s not just Hollywood that foresees a future with robotic overlords. Elon Musk has called artificial intelligence (AI) “our greatest existential threat,” while Stephen Hawking, the famous theoretical physicist, said: “Once humans develop AI, it would take off on its own and redesign itself at an increasing rate; the development of full AI could spell the end of the human race.”

It is, then, no surprise that there is widespread trepidation about the rising reliance on AI. Terms like trust, ethics, security, and privacy are regularly discussed in conjunction with AI, because while the technological feats keep coming, the regulatory system falls increasingly behind in ensuring there is an agreed upon framework in place for future developments.

In their 2019 article in the academic journal Business Horizons, Andreas Kaplan and Michael Haenlein refer to AI as “a system’s ability to correctly interpret external data, to learn from such data, and to use those learnings to achieve specific goals and tasks through flexible adaptation.” Despite the immense speed of innovation and implementation of AI, and the publicity it has received in mainstream media, the technology is “still a surprisingly fuzzy concept,” according to the authors.

A major reason for this is the sheer breadth of types, stages, and use cases of AI. It is important to set out the different classifications of AI briefly here, because it gives a good insight into the AI technologies that businesses are adopting today, and highlights how infantile this sector still is.
 

Artificial Intelligence Classified

When Hawking and Musk mutter their trepidation about AI, they are referring to a future where AI becomes able to make its own decisions and learn for itself. This is a stage of AI which we are only just starting to explore. There are three stages that describe the evolution of AI.

The first stage is artificial narrow intelligence, also referred to as weak AI. Weak AI is only as smart as the human developer that develops it (and often much dumber), and it can only undertake specific and predefined tasks. Think of Alexa, Siri, self-driving cars, or facial recognition software. The fact that all AI we use in our daily lives and business operations falls in this “weak” category highlights the potential of AI that might lie ahead.

The next stage is artificial general intelligence, also referred to as strong AI, where AI is able to take in unstructured data across multiple domains, can make sense of it, and can make decisions for itself. There is general acceptance that we will start to see this soon, although today there are no examples of operational strong AI yet. The final stage is artificial super intelligence, where AI surpasses human intelligence. This is the point popularly referred to as technological singularity which Hollywood loves so much.

Next to the stages of AI, another generally agreed upon classification is focused on the different types of AI. This functionality-based division separates reactive AI, limited memory AI, theory of mind AI, and self-aware AI. Again, this is an incremental scale, with reactive AI responding to stimuli without the ability to learn. Limited memory machines are able to respond to stimuli, but also able to learn from historical data. Theory of mind machines would be able to recognize emotions, needs, desires, and beliefs, while self-aware AI would have developed self awareness.

All AI applications in existence today, including voice assistants, chatbots, facial recognition, and self-driving cars, are limited memory machines. While artificial emotional intelligence is a major buzzword, theory of mind machines are not yet reality, although concepts are becoming more sophisticated. There is a general agreement that self-aware AI machines are still decades away.

For the purpose of this report, the easiest explanation of AI might be in terms of different “AI branches.” Here you find popular terms such as machine learning, natural language processing, computer vision, and deep learning. Exhibit 4 provides an organizational chart of all the different branches of AI, as well as the previously explained classifications. We will delve deeper into some of the AI branches later when discussing the AI that is particularly relevant to the travel industry.

 

Is AI Terminology Overused?

Before looking at the applications of AI in the travel industry, we need to briefly address the rampant usage of AI terminology. Terms like “algorithm,” “machine learning,” “language processing,” and countless more have become priced marketing terms. It seems every startup and incumbent today sets itself apart from its competitors by referring to its AI capabilities.

This has not gone unnoticed, both in the business community and in academia. In the introduction to their book titled Data Science, Vijay Kotu and Bala Dashpande note that “artificial intelligence, machine learning, and data science are … often used interchangeably and conflated with each other in popular media and business communication.”

According to the authors, AI is “about giving machines the capability of mimicking human behavior,” machine learning is a subfield or one of the tools of AI which allows machines to learn from experience, while data science is the “business application of machine learning, AI and other quantitative fields like statistics, visualization, and mathematics.”

While many of the terms in Exhibit 5 will go beyond a layman’s grasp, it is important to highlight the distinction between these fields, particularly since there is an apparent increase in statistical analysis, visualization, and mathematics being marketed as AI.

Raj Singh of JetBlue Technology Ventures noted that companies like to sell themselves “as the latest and the greatest. Everybody has or is talking about machine learning or AI, and there is a confusion of terms out there. I think the reality is not everyone is doing quite what they say they are.”

And while McNeel Keenan, vice president product management at Cvent, said that “AI is starting to become more real,” he argued that companies have been using “the words AI and ML [machine learning] for basic algorithms. Many times companies shouldn’t have called it an algorithm; it was just a filter on a search result list. All of a sudden, because everyone wanted to be on the leading edge of new technology, simple algorithms were falsely labeled as ‘AI recommendations.’”

We feel that travel companies need to be careful with overusing AI terminology, particularly as technological advancements move the discussion forward, and what was seen as cutting edge AI once, might be a mainstream technology today. Companies can be caught out when marketing a blackbox, data processing algorithm as a “state of the art” AI feature.

We will now take a look at some of the most promising branches of AI, focusing on machine learning, natural language processing, and computer vision.

 

Machine Learning and Predictive Analysis Applications in the Travel Space

As highlighted in the discussions above, AI is a broad field and one that is continuously evolving. It is also the technology bucket that is consistently mentioned as having the most far-reaching and fundamental impact on the travel industry. This counts both for the customer journey and the operational side, and across most travel verticals.

As Myriam El Harraq, vice president of innovation at Accor said: “AI is big because it touches many things. It’s reshaping the business through chatbots, image recognition, predictive analysis, revenue management, and potentially the automation of jobs.”

Machine learning is a key branch of AI, and one that is already extensively used throughout the travel industry. It continues to have further potential. Personalization is an area where machine learning can make a big impact. We are used to more personalized shopping experiences on platforms like Amazon, but in the travel industry, there remains major scope for personalizing the booking experience.

Rashesh Jethi, senior vice president of engineering and head of innovation for airlines at Amadeus, said that the “concept of retailing and merchandising is making its way to airlines. With airlines, the primary vein with which we shop, particularly for leisure travel, is on price and to some extent dates. … The opportunity is much larger. If we can say ‘we know what is important to you’, whether it is extra legroom, access to the lounge, or priority boarding. If you’re traveling with children maybe you want extra checked bags, if you are an internet junky you may want Wi-Fi on the flight. Rather than having to wade through all these options, machine learning can help to provide a much more curated list of options for you.”

One startup doing interesting things to personalize the airline experience is Formation. In the cruise industry, the Ocean Medallion from Carnival Cruises is widely lauded as pushing the boundaries of personalization, utilizing AI in conjunction with an internet of things infrastructure on board its ships to capture guest data and offer a more personalized service.

Meanwhile, in the hotel industry attention is focused on personalizing the booking process. Companies like Avvio provide a layer for the brand.com website, which will recognize the user as a potential guest, a pre-stay guest, or a post-stay guest, and change the website accordingly. For a pre-stay guest, Avvio can remove reviews from the website, and instead offer upsell opportunities. For a post-stay guest it can offer discounts to drive return visits. The company uses machine learning to understand what works and what does not.

In a different use case, Travelsify also personalizes the hotel booking experience, but it does this by using semantic AI and machine learning to understand the key defining factors of hotels from written reviews and photographs. This way Travelsify is able to give each hotel a bespoke “DNA,” which is then used by companies like Accor, Marriott, and IHG to offer its direct bookers a match score based on their search query and preferences.

Predictive analysis is another area where AI and machine learning have been making major inroads in the travel space. Startup Lumo and tech behemoth Google both offer flight delay predictions, while Volantio helps predict and manage flight overbooking. In airline and hotel revenue management, machine learning, and algorithmic forecasting is used to price commodities in highly uncertain markets.
 

Natural Language Processing — Chatbots and Voice Assistants

• Voice assistants and chatbots are becoming ubiquitous, including in hotel rooms.
• There is still a way to go before the travel booking process can and will be done through voice, but this only seems a matter of time.
• Travel booking through voice will be the largest transformative impact this technology will have on the industry. The impact on other areas remains limited.

The rise of smart speakers and chatbots
In 1997 Bill Gates said, “In this 10-year time frame, I believe that we’ll not only be using the keyboard and the mouse to interact, but during that time we will have perfected speech recognition and speech output well enough that those will become a standard part of the interface.”

Gates might have been slightly optimistic in his time frame, but he was spot on about the growing influence of speech recognition. A major breakthrough came in 2014 when Amazon launched its Amazon Echo with Alexa. This brought an affordable voice assistant into millions of homes. Google followed two years later with its Google Home smart speaker with the built-in Google Assistant.

Google is widely seen as having surpassed Amazon in its natural language processing, text to speech, and deep learning capabilities. Google Assistant is not only available on its home speakers, but also pretty much on every phone running the Android operating system. This means that Google’s reach is more widespread than its competitor Amazon.

Amazon, however, has led the way in moving beyond its own smart speakers and instead is increasingly building Alexa into third-party electronics and appliances. Amazon has sold more than 100 million devices with Alexa built in as of early 2019.

At the same time that voice assistants gained popularity, chatbots became ever more prevalent in consumer-to-business interactions. In 2016, Facebook’s Mark Zuckerberg said, “We will be able to talk to chatbots just as we do with friends” at Facebook’s developer conference, on the back of the company opening its Messenger platform to third-party chatbots. A year later, Facebook announced it had over 100,000 bots on its platform.

Travel players already used chatbots as early as 2008, but the many flaws have only started to be ironed out in the past years as AI capabilities improved. On the back of Facebook’s push, as well as other messaging services like WeChat, chatbots now seem to be everywhere.

Some travel companies have built their own bots, while others use the services of third-party vendors. Booking.com said in 2018 that its proprietary Booking Assistant bot answers half of all enquiries it receives within five minutes. This figure is likely to be even higher today. Accor has invested in Mindsay, a chatbot platform for the travel industry, which competes with similar vendors like Asksuite and Haptik.

Chatbots take away the need for employees to do menial tasks, and can improve consumer communications and response times. As Rashesh Jethi of Amadeus said: “Extending help through a messenger or chatbot channel is very powerful, particularly because combined with machine learning you can automate a lot of routine enquiries, which are harder to do through an IVR [interactive voice response] but much easier through a personalized bot experience.”

Purchasing travel remains out of reach for now
Chatbots are indeed used to answer questions, but also allow for increasingly sophisticated interactions like booking flights and hotels. The booking process remains out of reach for voice assistants as there are issues with privacy, but also because users might not trust voice assistants when making purchases.

Market research company eMarketer downgraded its forecast for purchases made through smart speakers in its latest estimate, saying that “device-makers haven’t fully gained users’ trust.” In the U.S., 18.3 million people made a purchase using a smart speaker, which was just under 10% of all digital purchases made. The study found, as many other studies have, that the vast majority of smart speaker users use them to listen to music, get the news, or ask simple questions.

Booking travel is many degrees more complicated than reordering that detergent that you buy every month, which means that today there is no way for consumers to buy travel through a voice assistant. It will likely come, but for now voice assistants can tell you what time your plane leaves and from which terminal, or give you a general idea of flight times and prices for your next trip.

KLM Airlines, for example, introduced its Travel Guide for Alexa app in June 2019. According to the company, the tool offers “inspiration as well as personal advice in terms of flight duration, budget, travel dates and specifications.” Other companies with Alexa skills include Kayak, Expedia, United Airlines, Air Canada, Qantas, and European low-cost carriers EasyJet and Ryanair, but all with very limited functionalities.

Voice assistants enter the hotel room
Smart speakers, then, might be better suited for other parts of travel than booking. They can, for example, have a greater impact on the in-destination stay, with hotels and vacation rentals increasingly adopting the technology to better serve their guests. Marriott has signed partnerships with Amazon and Alibaba, the proprietor of the leading smart speaker in China, the Tmall Genie, to introduce smart speakers in its hotel rooms. Amazon introduced Alexa for Hospitality in 2018 to better accommodate the needs of hoteliers. The special version of Alexa is customizable, and can perform tasks more suited to hotels, like requesting services.

We have seen a number of startups jump into this space though, as Alexa for Hospitality is far from the polished product. One of those companies is Volara, which produces “brand consistent conversation kits,” which are customized voice messages that align with the hotel brand. Volara’s founder and CEO David Berger spoke to Skift Research in the past about the greater utility of smart speakers in hotels versus the home. “In most people’s homes today, they plug it in, they start talking to it, and there is not a lot of utility. The nice thing about our solution in the hotel [is that] the moment the guest walks into the room, there is no setup, no friction, the utility is there. If you could at home ask your Alexa to make you breakfast, you would probably use it. In the hotel you actually can.”

Larger companies are also looking at the applicability of voice assistants. Oracle acquired startup Speak.ai to better serve its customers with its own voice technology. Carlos Chang, senior principal product marketing director at Oracle explained the company’s move: “There is Siri, Alexa, Google Assistant, they all have their own voice. Oracle invested in voice technology because customers wanted us to guarantee some level of privacy and security for their conversations. To be able to offer that guarantee, you need to be able to stay within the Oracle Cloud, and be able to guarantee that Google or Alexa are not listening in.”

Current shortcomings of voice technology
Chang said that acquiring its own voice technology has further benefited the way Oracle can use voice in its products. Natural language understanding and natural language processing are developing fields, and while machine learning helps voice technology to improve its understanding, there is still a way to go. This is one of the major hurdles that voice technology needs to overcome. As Alexandra Fernandez Ramos, chief product and sales officer at Travelsify pointed out, “right now you can easily ask “what’s the weather?” and easy commands like that. If you want to go the next step and really leverage the technology and not replicate with voice what you can do with your fingers [on a smartphone], if you want to go into the semantic aspect or types of emotions, this is much harder.”

Voice technology needs to be trained to be able to deal with these more advanced requests, as well as industry jargon. “The first time you ask ‘what time is the shuttle bus’ and Alexa hears ‘shutter box’, it may fail,” said Berger. But through advanced training, successful interaction rates with Volara are around 90%, while at home with Alexa this is around 65%. Oracle is able to similarly train its voice technology to its preferred standards. “If you were to ask Siri or Alexa “who is my cat?” it’s not going to know what you mean. But within the context of Oracle, you could ask who is the key account director or KAD for XYZ customer and get your answer. So you can train that voice to understand certain terminology,” said Chang.

Companies like Amazon and Google are betting on companies like Volara and Travelsify to train their voice technology for them. While this obviously offers opportunities for startups, it is also looked at with some suspicion as it will mostly benefit the tech giants, with particularly Google already growing its impact on the travel space. As a response, we see platforms like I.AM+, backed by musician and serial entrepreneur Will.I.Am, attempting to build a more open platform that can be built into any device.

It is doubtful that I.AM+ and similar startups (like Speak.ai before it got acquired by Oracle) could compete with Google or Amazon on a technical level or in terms of customer reach, but they might find a niche amongst concerned travel players, which like Oracle, are not happy with Google and Amazon listening in on all their interactions.

 

Computer Vision — Biometrics and Driverless Cars

Simply put, computer vision refers to techniques which allow machines to see, and subsequently analyze and understand what they see. Computer vision is a subfield of AI and machine learning, and attempts to make use of all the imagery we record today. While humans have a built-in ability to analyze images, and recognize objects and faces from images, this is far more difficult to teach a machine.

Advancements in AI and machine learning, however, mean that we are seeing major leaps being taken in this space. We will focus on two areas which are particularly promising for the travel industry: biometric identification and driverless cars.

 

Biometric Identification

• The impact of particularly facial recognition is felt already today, particularly in airports for security purposes.
• There are major concerns around privacy and data security which will need to be continually addressed by the industry.
• Facial analysis, rather than facial recognition, has strong potential to fundamentally impact the events space.

Widespread use of facial recognition in travel
In the early 1900s, scientists realized that fingerprints are largely unique to each individual. The concept of facial recognition was thought up in the 1960s, as security agencies like the CIA realized the crime-solving capabilities and potential to improve surveillance. We are not talking about new technologies here then, but with improved AI and machine learning, the full capabilities of biometric identification are only really being realized now.

The most obvious case for biometric identification technology to improve the traveler experience is in the airport. Fingerprint scanners used by border agents are today very commonplace, and self-service security gates are becoming more widespread. Many airports are starting to test facial recognition as the next move, with startups like Clear leading the way.

Daxing Airport in Beijing, China is seen as one of the “smartest” airports in operation today. It was opened in September 2019, and has implemented at scale what many airports are still only testing. Passenger verification using facial recognition is the default.

Daxing can do this because China is much further advanced in the capturing of its citizens’ biometric data than other countries. Most nationals have their facial details registered in a national database, and so at Daxing these nationals can verify their identity using self-check kiosks. It is not the perfect system yet, as foreigners still need to see an agent, and passports are still checked by flight crew before entering the plane.

Daxing, however, is showing the next step on the road to a completely seamless boarding process. Even a step further would be to travel without any documentation, which is currently being piloted by the governments of Canada and the Netherlands. A scheme announced in the summer of 2019 allows users to take the data currently held on the chip in a person’s passport and store it on their mobile phone. Using facial recognition and their phone, they can then move through the airport without having to show any documentation. This technology, which also makes use of a blockchain (which we will discuss later in the report), might herald in the future of an improved airport experience.

Other areas in the travel space where facial recognition will increasingly be used are in hotels and at events. Hotels can offer a far more personalized service if a camera captures the guest entering the lobby, so that staff knows the identity of the person checking in without having to ask for identification. Event registration is also increasingly done using facial recognition, where attendees can submit a photo of themselves beforehand, and then use a self-check-in kiosk when arriving at the event. Julius Solaris, editor-in-chief at Event MB, a Skift brand, said that facial recognition would be one of the most promising technological breakthroughs in the events space over the coming years.

Facial analysis shows strong promise
Facial recognition at events has more far-reaching opportunities than just check in. Facial analysis, where cameras are not used to identify a particular person, but instead analyze a group’s sentiment or emotions, offers the opportunity to capture much more performance data. Zenus, an events technology company that focuses on facial recognition and facial analysis software, allows event planners to install a camera facing the crowd, which can “tell how many people are in a room, you can tell if people are looking at the speaker or if they are distracted on their phones or talking to each other, we can do sentiment, so we can tell if people are feeling positive or negative, and we … can classify sex and age demographics of the overall crowd,” said Zenus CEO and Co-Founder Panos Moutafis.

This can provide in-depth insights into event engagement. Moutafis continued, “You can see how people were feeling before they had food and after they had some food. … We can tell you that this session had a low engagement score overall, but with this particular group it did very well. Or we can say the speaker made a joke, but only young women laughed. This is the level of insights we can get.”

Similar technology can be used for other use cases as well. Companies like Crowdvision, Veovo, and Iinside use technologies including computer vision, sensors, and lidar to track passenger movements through airports or at events. Startup Assaia uses computer vision to analyze the unloading and loading of an airplane. Rather than recognizing faces, it recognizes objects and workflows, and proposes ways to make on-the-ground time more efficient and shorter.

Concerns over privacy and data security
Obviously, with this level of detail and advanced gathering of data, concerns around privacy and data security are top of mind. In China, as mentioned before, facial recognition technology has penetrated all areas of society, and the technology is now commonplace in supermarkets, where you can pay for groceries by showing your face, or in banks, where taking out money at an ATM using facial recognition is possible.

However, the technology is also at the forefront of criticism about the increase of the surveillance state. China, for one, has much larger plans than just tracking its citizens’ whereabouts, instead working toward implementing a social credit system (SCS) which functions like a traditional credit rating but is made up from all online and offline activity that is tracked by different governmental and non-governmental organizations.

There is currently no single social credit system in place, with local governments and private corporations, including Tencent (of WeChat fame) and Alibaba (through its affiliate Sesame Credit) introducing their own systems. In general the systems give each individual a score based on their credit history, fulfilment of contract obligations, personal behavior, preferences, and social interactions. This score has a bearing on whether people are “trusted” to use facial recognition check-ins or to book a hotel room without advance payment.

To many this may seem a dystopian overuse of facial recognition and other surveillance methods, but with the technology available, we can expect it to be used more and more. Project Hostile Intent, for example, is an ongoing project by U.S. Homeland Security to assess terrorist threats by analyzing people’s behavior, sweating, heart rate etc.

Because of its increased use by government agencies, and the fear of it creeping into other aspects of society, players in the facial recognition space stress that users need to opt in to any of the features discussed above, and that they do not take any data without prior permission.

Panos Moutafis of Zenus spoke about the three values his company follows. Firstly, event attendees need to provide consent to the use of facial recognition through an email. If they don’t, they will use non-facial recognition fallback check-in services. Secondly, there is a simple process which gives the attendee “the right to be forgotten” and for all data to be erased, and thirdly, the company only stores encrypted information that it actually needs. “The picture is processed and converted into biometric data, this is a very small string of numbers. The picture is then immediately deleted. All we have is a ticket number and biometric data. Seven days after the event is over, everything is automatically deleted,” said Moutafis.

As travelers become more concerned about the amount of personal data that is out there, startups like Verimi, which offers an overview of all shared personal data in a single app, are likely to gain popularity.

Talk about industry-wide standards or guidelines for the storing and sharing of this data is also likely to increase. In a recent conversation with Skift, CEO Barbara Dalibard of the air transport IT company SITA said that “biometrics will be key to passenger experience, but we need to implement some standards and agree to the rules of the game, making sure players can share data in a safe way across borders and systems. … The industry needs to collaborate.”
 

Autonomous Vehicles

• The impact of self-driving cars on the travel industry remains to be seen, although there are foreseeable scenarios with major impacts on travel behavior.
• The technology is moving rapidly, but is not ready for fully autonomous cars today. We expect it will be at least another decade before the full impact will be felt.
• Short-haul flights and tours are set to be impacted most.

Despite great promise, full automation remains elusive
Computer vision and AI are also instrumental to a future with autonomous vehicles, also referred to as CAVs (connected and autonomous vehicles). The collection and analysis of imagery is key for self-driving cars to detect objects, understand traffic signs and signals, and identify lane markings. Tesla, Audi, Volvo, BMW, and other car manufacturers working on self-driving cars use a combination of cameras, radar, lidar, and sensors to acquire the images, and AI to analyze them.

As with AI, autonomy of vehicles is judged with an incremental scale, the International Society of Automotive Engineers’ autonomous taxonomy. Most cars today fall in levels 0 to 3, where level 0 has no automation, level 1 offers driver assistance, and level 2 offers partial automation. Level 2 still relies on the driver to monitor the environment around the vehicle, which at level 3 is done by the vehicle’s onboard systems. This allows for conditional automation like automatic braking. Levels 4 and 5 allow for full automation of driving, but at level 4 the vehicle will determine whether conditions are safe before allowing for full automation. Level 5 is able to drive fully automated, all the time. Theoretically, level 5 cars need no pedals, steering wheel, or brakes, and companies like Tesla, Zoox, and Google’s Waymo are working toward achieving this level.

While fully autonomous vehicles have felt imminent for many years now, they remain elusive and we would expect that general adoption will take at least another decade. Over the past decade, GM, Honda, Toyota, Tesla, and Waymo all said that 2020 would be the year of the self-driving car, but it has become clear that we are just not there yet.

That’s not to say that autonomous vehicles are not being tested or are not in use. In Arizona, Waymo has a fleet of level 4 self-driving cars. Confined roads around airports offer great testbeds, so we are increasingly seeing self-driving cars, like at London’s Heathrow and Gatwick airports.

A big question is whether autonomous vehicles will change car ownership. Companies like General Motors’ Cruise and Google’s Waymo are testing “shared” autonomous vehicles, while Tesla continues to focus predominantly on the buyer’s market. While shared vehicles can greatly reduce the number of cars on the road and the need for parking lots, a future where no one owns a car and instead requests it Uber-style (which is incidentally testing its own self-driving cars) remains uncertain.

There is, however, little doubt that the future is driverless, in whatever form this may come. In a recent report, car rental company Avis Budget Group notes that “many of the largest players in mobility are betting that the future will be autonomous — to the point that their long term business plans depend on a massive reduction in human drivers.”

The potential impact of autonomous vehicles on travel
In an insightful academic paper, Scott Cohen and Debbie Hopkins highlight the future impact autonomous vehicles could have on the tourism industry. The authors note how autonomous vehicles can provide last-mile solutions. Autonomous vehicles are perfectly suited to drive tourists from the airport or train station to their accommodations, but it would result in a backlash from current stakeholders like taxi drivers, and could thwart city planners’ work towards greater use of public transportation solutions.

Autonomous vehicles might also alter the sightseeing and tour sectors, as farther apart destinations can be linked easier, and city tourism might sprawl beyond the city’s core. Sleeping while the car drives might also impact hotel business next to highways, and will likely result in a declining demand for short-haul flights. The authors argue that, therefore, the trend toward low-cost, long-haul flights might continue, as short-haul demand comes under pressure.

All of these consequences are currently still predictions, made with a high degree of uncertainty. But while it is unlikely that autonomous vehicles will have a fundamental impact on the travel industry in the coming decade, there is no question that they will indeed become more prevalent and eventually might be the prime mode of transportation. How the travel industry and city planners start preparing for this today, will have a big impact on the final outcomes in years to come.
 

Hyperconnectivity

“There are more smartphones than toothbrushes in the world.” This is one of those one-liners you hear at every conference to shock attendees, and to highlight the hyper-connected times we live in. No doubt, we live in a world where connectivity defines us.

According to data from The World Bank, in 2017 just under 50% of the global population used the internet, with uptake growing at an increasing rate. Similarly, in 2018 there were 7.7 billion mobile cellular subscriptions (mobile phones connected to a cellular network), which equals an average of 104 subscriptions per 100 people.

Smartphones and apps are undoubtedly changing the way people travel and experience their surroundings. Skift has reported before on the growing impact of Google Maps on the travel space, with the tool turning into a superapp, in effect an umbrella app that offers a portal to other apps. At the CES conference in Las Vegas, Delta Airlines announced that it is working on an airline superapp, where the company wants to integrate all the tools a traveler needs to have the most seamless experience, from preflight to post-landing. Ideas include integrations with Lyft, traffic information, weather forecasts, TSA waiting times, and more.

While the smartphone is the quintessential device that has transformed the “consumer” into the “connected consumer,” there are other technologies that are having a major impact on connectivity in the business world. We will discuss cloud computing, 5G, and the internet of things.
 

Cloud Computing

• The impact of cloud computing is widespread and throughout all travel verticals
• Cloud is a technology that has been emerging for many years, but uptake in the travel industry is only now starting to pick up.
• Impact of greater connectivity for hotel and airline tech is one of most exciting parts of the move toward cloud

Is cloud really an emerging tech?
Terms like infrastructure as a service (IaaS), platform as a service (PaaS), and software as a service (SaaS) have penetrated all aspects of business. These terms refer to cloud offerings, where rather than needing to purchase expensive mainframes and servers — as was normal only a decade ago — vendors offer companies the opportunity to buy a subscription to their product or service which is hosted offsite and “in the cloud.” Many companies — 85% of major enterprises according to an IBM study — use more than one of these cloud subscriptions, which is referred to as a multicloud environment, with the benefit that expenditure historically written off as capital expenditure can instead be written up as an operational expense.

You might be wondering why cloud computing is part of an emerging tech report. The concept has been around since the late 1990s and has seen strong uptake since the mid-2000s. In the travel industry, however, there are still many players that are only just starting to look at moving toward cloud solutions. A recent Skift Research report about the hotel property management systems landscape showed the sector’s continuing reliance on on-premise servers, with the largest player Oracle Hospitality struggling to move its 38,000 customers onto its Oracle Cloud product.

So we will treat cloud as an emerging technology for travel, albeit one that has been “emerging” for a while. The cloud comes in different shapes and sizes. Cloud infrastructure offered by third-party vendors are called public clouds, where a company like Amazon or Microsoft own, manage, and maintain all the hardware and software used to run the cloud, with access to the cloud via a web browser. Private clouds, contrastingly, are networks and related infrastructure which are used by a single organization. The hardware for private clouds can be on the organization’s premises, or hosted by third-party vendors. Hybrid clouds mix public and private clouds to take advantage of the flexibility and advanced security of private clouds, and the lower costs and greater scalability of public clouds.

Cloud is big business
A few tech companies have bet big on selling public cloud infrastructure to businesses, and are now reaping the benefits. According to Gartner, public cloud services will total $266.4 billion in 2020, a growth of 17% compared to 2019. The leading player is Amazon, with Amazon Web Services (AWS), followed by Microsoft with its Azure product.

Net sales of AWS topped $35 billion in 2019, and the IaaS product now accounts for over 12% of Amazon’s total net sales. Microsoft is taking a different path and offers cloud infrastructure Azure as part of a broader commercial SaaS package, which also includes Office 365 Commercial, and the commercial part of LinkedIn Professional amongst other cloud products. This complete segment generated revenues of $38.1 billion in 2019.

Behind AWS and Azure are many other players that look to benefit with their own mix of IaaS and SaaS solutions, including Google Cloud, Alibaba Cloud, IBM, Salesforce, Oracle, and SAP.

Benefits of cloud in travel
Cloud improves online performance, and offers the ability to deploy big data solutions at a far more affordable price. Processes can run easier, which offers advanced opportunities to target and re-target consumers, and to analyze feedback quicker. As discussed above, AI and machine learning can improve personalization, but to do this the machine needs to be trained. Data is needed to do this, and lots of it. Cloud infrastructure helps companies to pull data from different areas of the business together and analyze it in one place.

Cloud has also allowed smaller players and startups to push the travel industry forward. Travel startups are able to disrupt incumbent players, and existing structures and frameworks, because of the abilities that cloud provides.

Alexandra Fernandez Ramos explained the difference cloud makes to Travelsify: “I like AWS a lot, because these cloud services enabled startups to get into cloud computing very easily and at a very affordable price. We can process very large datasets in a way that is unprecedented in the industry. Ten years ago with the computing power available, we could have done it, but not at the same price and not at the same speed. … [Cloud] is really computing power on demand.”

Cloud has also ushered in an era of easier connectivity between vendors. With data more accessible in the cloud, it is easier for vendors to connect to one another and grant access to this data. There is a host of startups that are facilitating the flow of information between different systems.

In the airline industry, startups like Duffel, Kyte, Flyinn, PKFare, Sqiva, and Verteil are all attempting to build the pipes between airlines and third-party distributors. Their systems allow travel agents to connect directly with the airlines’ reservation systems, and get access to real-time information on seat availability and ancillaries.

Similarly, in the hotel industry, middleware startups include Impala, Hapi, SiteMinder Exchange, and Channex. These companies help different hotel technology vendors to connect to each other better and easier.

One reason these players are doing well today is because many systems in the travel industry are not yet on the cloud. It is harder and more costly for companies to connect to each other when they need to deal with physical servers in airline data centers or hotel basements. The continuing move to cloud, however, will not make these startups’ services obsolete.

Speaking to Skift Research for the property management systems landscape report, Impala CEO Ben Stephenson said that more open and accessible property management systems would actually only increase the demand for connectivity in the sector. “I would love it if Oracle was the most open PMS in the world tomorrow, because it would make our job to connect to Oracle easier, but still wouldn’t change the value proposition to our customers which is you don’t have to maintain [many] different connections.”

The cloud encourages connectivity, and players like Impala and Duffel are ready to help travel companies achieve it.
 

5G

• 5G will transform consumers’ and travelers’ expectations around connectivity.
• In conjunction with other technologies like cloud and the internet of things, 5G will allow for much greater data collection and utilization.
• Hotels should start thinking about the impact 5G could have on their Wi-Fi offering.

The far-reaching impact of 5G
According to market intelligence firm IDC, by 2025, globally, 463 exabytes of data will be created each day. An exabyte is one quintillion bytes. Yes, that is a lot. It is hard to fathom this, but with the rise of cloud computing and 5G, the infrastructure will be able to support the ramping up of data sharing to unprecedented levels.

The first sizable iteration of 5G, the fifth generation wireless network, was achieved during the 2018 Pyeongchang Winter Olympics in South Korea, and since then, pretty much every major telecommunication service provider in the developed world is ramping up its efforts to deploy 5G soon. It has also led to controversy, with countries like the U.S. and UK looking suspiciously at Chinese telecoms giant Huawei, which is vying for 5G infrastructure contracts around the world.

The impact of 5G on the travel industry can be far reaching, as it will improve connectivity of travelers, together with services like electronic SIM cards provided by startups like Airalo. 5G could also boost the uptake of virtual reality and augmented reality tools (more on these later), and the improved capacity and speed of the network will allow businesses to better capture and utilize data.

While 4G made travelers less dependent on printed boarding passes and city maps, 5G will allow travelers to connect to every electronic device and appliance around them and in the cloud. It will allow for self-driving cars, but also for better conference calling. With the coronavirus currently impacting travel and work behaviors, the 5G network could contribute to a sustainable shift toward more virtual meetings. And with the increase in data captured, advancements in what is called ‘tiny AI’ will see smartphones become AI-driven supercomputers.

Travel players need to get ready
For travel companies, 5G offers opportunities and challenges. The indoor performance of 5G — the penetration through walls and windows — has been shown to be worse for 5G than 4G, so this might increase the need for hotels and airports to install cell towers on property to ensure performance.

For many hotels, access to Wi-Fi remains a paid service, but if guests can utilize the 5G network on their phone or laptop, they no longer need this service, impacting earning potential for the hotel. Hotel management will have to start making decisions on whether to upgrade outdated Wi-Fi infrastructure today, or wait for 5G to be switched on.

It can, however, also benefit hotels. Hotel technology is often outdated and remains on-premise as especially in remote locations, Wi-Fi connectivity is not reliable enough to run hotel operations. As 5G availability improves, this could boost the move to cloud, and could revolutionize how hotel technology is used, making it far more mobile and voice-enabled. Disparate systems can be connected far more effectively, with access to essential data provided to whomever needs it.
 

Internet of Things

• The advent of 5G will allow the internet of things to reach its full potential.
• Being able to connect to nearly any device or sensor will have strong implications for travelers and operations alike.
• Startups are doing some interesting things around baggage tracking which shows the potential of this technology for the travel industry.

5G and cloud unlock IoT’s full potential
One area where 5G will contribute tremendously is by connecting every device and appliance to a network, which is referred to as the internet of things (IoT). IoT, in conjunction with 5G, the cloud, and voice assistants is set to change how we interact with devices around us.

The technology has been around for a few years now, and in terms of consumer-facing technology we can now buy fridges, thermostats, alarm systems, televisions, and so forth that connect to a network using the IoT technology. This further boosts the power of smartphones (and potentially voice assistants), which become the de facto operating hubs to control all these devices and appliances.

From ‘connected rooms’ to ‘connected everything’
In travel, 2017/18 seemed to be the year of hotel ‘smart rooms,’ with every major hotel launching a prototype of its AI and IoT-powered rooms of the future. Marriott announced a partnership with Samsung and Legrand in November 2017 to launch its IoT hotel room at its headquarters. A month later, Hilton followed with its ‘Connected Room.’ Early 2018 Accor launched its ‘Smart Room’ with an increased focus on using tech to enhance accessibility, and in July of that year, IHG put into practice its ‘Artificial Intelligence rooms’ in China, partnering with Baidu.

At the 2017 Skift Global Forum, Hilton CEO Christopher Nassetta said about their connected room: “Imagine a world where the room knows you, and you know your room. Imagine a world where you walk in, the TV says, ‘How are you doing, John? Nice to see you,’ and all of your stuff is preloaded and not only preloaded, but the only thing you ever need to touch to control in the room is in the palm of your hand,” referring to the connectivity with a guest’s smartphone.

Meanwhile, in aviation, IoT is increasingly used on planes by adding sensors to seats, which allow airlines to analyze passenger behavior. In baggage handling, IoT can have a major impact as it allows for much better tracking. Startup Sigfox uses low-energy and low-cost sensors on a pre-cellular 0G network in baggage tags. Unicoaero, another startup, connects all aspects of baggage management to offer end-to-end baggage tracing.

Rashesh Jethi of Amadeus said his company is piloting some of these systems: “[It] works very similarly to Harry Potter’s Marauder’s Map where Harry can see where his friends are at any point in time. Once you tag your bag, you can see on your phone exactly where your bag is. … While it’s an interesting experience for the traveler, it offers a lot of operational benefits to the airline as well. We worry about our luggage being lost, but for the airlines it is hard money.”
 

Spatial Computing

We can’t have a report on emerging technologies and not talk about virtual reality (VR) and augmented reality (AR). Together, with mixed reality, these technologies are generally bucketed under the umbrella term “spatial computing.” Simon Greenwold, an MIT graduate, coined the term spatial computing, and defined it as “human interaction with a machine in which the machine retains and manipulates referents to real objects and spaces.” Most of us know it as the slightly uncomfortable goggles at trade shows and from playing Pokemon Go.

A major issue with the uptake of advanced spatial computing is the need to purchase special goggles, and this has just never caught on. Google had an uncharacteristic dud with its Google Glass. But today there are some truly impressive devices and accompanying software produced by Microsoft HoloLens and Magic Leap, to name just two companies, which in theory could wipe out the need for face-to-face meetings. However, the devices are expensive and have shortcomings, with a critical mass hard to reach. The impact on the travel industry seems extremely limited.
 

Virtual Reality

• Virtual reality has transformed gaming, but has struggled to find applications in other areas, including travel.
• There might be some small impacts on the booking experience or training practices, but none of this is fundamentally going to change the industry.

Virtual reality has been a feature of the gaming world for over two decades, and it has arguably transformed the space. The same, however, cannot be said about any area beyond gaming. Despite major expectations, virtual reality goggles have so far not caught on, and their transformative potential in the travel industry remains elusive.

At trade exhibitions or in travel agencies, they can be used to offer visitors a view of a destination or a hotel before booking. This is a sound function of VR, but a limited function at best.

Myriam El Harraq of Accor highlighted the training capabilities that VR offers. She said, “We are now using VR to train people in the hotels. Then you have a concrete use case where you have to train 1,000 people throughout the world. Through a VR headset they can access the training.” Again, VR shows true potential here, but it is far from transformational.

SkyLights, a startup offering inflight entertainment through VR headsets, offers an interesting case, as it takes away the need for consumers to purchase the headset. In a confined space, with a near-captive audience, SkyLights can offer a service which today is still seen as special, and the company is seeing an average use time of three hours per user. This is impressive, but unquestionably a first- and business-class offering which is unlikely to find its way down the cabin to the economy seats, and will therefore continue to be a niche product. It is hard to see how VR will transform the travel industry any time soon.
 

Augmented Reality

• Unlike virtual reality, augmented reality has greater potential to impact the travel industry.
• As most smartphones have AR-capabilities, uptake potential is high, but smartphones have shortcomings in usability.
• Tours and activities could be particularly enhanced with AR provisions.

The potential of AR
In contrast to virtual reality, augmented reality seems to have greater potential. According to McNeel Keenan of Cvent, VR has a clearer use case today, but AR has the greater potential to disrupt event technology. El Harraq of Accor agreed that also for the hotel industry, AR offers “more direct use cases” than VR. Similarly, in airports, and as part of tours and activities, AR can have far-reaching impacts.

Simply put, AR is putting a virtual layer over the real world. This is where it differs from VR, which completely closes the user off from the world around them. While there are special goggles for this, the potential of AR mainly comes from the fact that most smartphones today have AR functionalities built in. Through tools like Google Lens, augmented reality is available to almost every consumer through their smartphone camera.

This offers travel and event companies opportunities which are far greater than those offered by VR. Signage for events, whether it is paper or on screens, is expensive, but AR can make this much more affordable for event planners as it becomes unnecessary to have almost any screens. It opens up opportunities for spaces that are not traditionally perceived as event venues, and can aid the venue sales process by visualizing room setups.

Restaurants can provide menus in different languages and provide additional information for travelers with special needs. Hotels can provide information about the amenities in hotel rooms using AR.

In Barcelona, a pilot is underway with a tour bus with AR-enabled windows offering additional information about the city’s landmarks to passengers. And in China, AR has penetrated much further into all aspects of tours and activities. These cases show how the future of tours will be impacted by a combination of AR and 5G.

The shortcomings of AR
AR remains in its early stages though, and still has its shortcomings it will have to overcome. Raj Singh of JetBlue Technology Ventures talked about the potential — and shortcomings — of using AR at the operational side of aircraft maintenance, saying that the idea that maintenance staff can wear a headset which overlays their work with schematics of the part they are working on sounds great. But “when we dug in, what we found was that battery life was really limited, the headsets were bulky and heavy, and the ability to take those technical manuals and diagrams and put them into the system was really lacking.”

Consumers having AR capabilities on their smartphones sounds great, but as Keenan of Cvent pointed out, this also comes with its practical limitations. “Leveraging AR for indoor wayfinding is an interesting concept that we’re looking at, but it’s a delicate balance between determining what is helpful and what is a distraction. If you have 10,000 attendees walking around looking through their phone they will run into each other. You can’t have experiences that are designed to be consumed while walking. So, how do we address that?”

So while some barriers need to be overcome, we believe that we will increasingly see a mix of spatial computing with AI, computer vision, motion detectors, and IoT to offer multisensory digital experiences. Gamification, the potential of which the immensely popular Pokemon Go showed, will likely play a growing role.

In the hotel industry we already see steps being taken in this direction, with the Marriott Renaissance Midtown New York hotel pioneering a ‘living hotel’ concept. While the stay is fundamentally unchanged, the hotel sets itself apart by offering a virtual concierge and art that changes based on the person interacting with it.

Will the next step be brain wearables which not only process data from our movements or actions, but also our thoughts? It might be closer than you think.
 

Distributed Ledger Technology

• There is major buzz around blockchain, but also much misunderstanding.
• While there are theoretically strong use cases for distributed ledger and smart contract technology, these are largely unproven in travel and have shortcomings.
• Vested interests might be the greatest barrier to be overcome for distributed ledger technology to make a transformative impact on the travel industry and beyond.

Distributed ledger technology explained
In October 2008, Satoshi Nakamoto (claiming to be a 37-year-old Japanese man) published a paper titled ‘Bitcoin: A Peer-to-Peer Electronic Cash System’ in an obscure mailing list. A few months later in January 2009, Nakamoto released the first 50 bitcoins, starting off the cryptocurrency and blockchain craze. Bitcoin, or cryptocurrencies more generally, are often seen as the face of this emerging technology, but the technologies reliant on the blockchain also includes distributed ledgers and smart contracts, which arguably have more far-reaching impacts on the travel industry.

So what is the blockchain? The main reason for Nakamoto to introduce bitcoin was to cut out the middleman when transferring assets. He (or she, or they — the identity of Nakamoto remains a mystery) envisaged a peer-to-peer system without a central authority like a bank taking a cut of each transaction. Bitcoins do not physically move around, but are instead digital tokens that move between users using wallet IDs. To reduce the chance of fraud, Nakamoto introduced the blockchain. This is a shared digital ledger (it’s publicly available to see here), where every transaction is recorded publicly. The ledger is replicated on computers around the world, which makes the record theoretically immutable and irreversible.

Today there is not just the original bitcoin blockchain that was created by Nakamoto, but many other distributed database platforms. One of the most popular alternatives to the bitcoin blockchain is the ethereum blockchain with a currency called ether, created by Vitalik Buterin in 2013. Ethereum attempts to solve two of the main (intentional) shortcomings of bitcoin. Firstly, bitcoin blocks are capped at a maximum size of one megabyte which can be added to the blockchain every 10 minutes. This means that the bitcoin blockchain can handle around five transactions per second, much less than the capacity of, for example, financial company Visa, which processes around 1,700 transactions per second. Secondly, bitcoins were created as a way to store and transfer value only. Ethereum can store more information, and allows developers to build decentralized apps on top of the blockchain technology. Ethereum can therefore transfer assets, but also track supply chains, and store digital agreements known as smart contracts.

How might blockchain impact travel?
This is already being put into action at a small scale. For example, a consortium of airplane maintenance companies launched the MRO Blockchain Alliance, piloting the use of distributed ledgers and smart contracts to track aircraft parts.

While the blockchain was originally thought up as completely decentralized, a host of private blockchains, with a central controlling party, have sprouted up. European tour operator TUI hit the headlines a few years back when it introduced a private blockchain to increase efficiencies and create a single database of its hotels across all countries. The interesting part of this is the theoretical future potential of this undertaking. If TUI decides to open up its platform, in effect decentralizing it, and enough other players join, this could lead to a data commons of all accommodations available without the need for middlemen like Expedia or Booking.com to reach the customer.

Talk about the potential negative impact this can have on online travel agencies (OTAs) assumes that these major OTAs work in a static vacuum, which is obviously far from the truth. If TUI’s blockchain evolves as explained above and starts to get legs, Booking and Expedia will undoubtedly respond in kind. Meanwhile, decentralizing accommodation stock and getting all major players on board in a highly fragmented market is easier said than done.

You only need to speak to some of the startups that have been at it for years. Early waves in travel blockchain were made by Winding Tree, backed by players like Lufthansa, Air France/KLM, and Nordic Choice Hotels. The startup looks to cut out the middlemen and connect consumers and travel suppliers directly. This is a similar mission as another startup, Arise. Getting buy-in from big players, and enough players, however, has been hard for these players, stumping real progress.

There are also major vested interests in the status quo that these players are trying to break down. Winding Tree co-founder Maksim Izmaylov previously told Skift that “a lot of people are asking me whether the online booking sites or GDSs [global distribution systems] have to go, and the answer is no. … What has to go is the rent-seeking business models, the abuse of power that they’re exercising and that they are able to exercise today.”

Similarly, CEO and co-founder of Arise Nadim El Manawy said in previous conversations with Skift Research that his company is looking to “bring way more transparency into the data flow from the moment it leaves the hotel system up to the point of sale. Today hotels have zero control. Intermediaries that currently control distribution can do whatever they want with the [hotel] data. OTAs can cut their own commissions, resulting in issues of rate parity; wholesalers can leak wholesaler rates wherever they want. There is no transparency or accountability. Our technology can bring way more transparency, trust and control back to the hoteliers. … Over time we are looking to replace the global distribution systems and the wholesalers, both which have different users, but both are a black box running on old tech.”

Another area where blockchain could have an impact is in travel loyalty, and the increasingly convoluted system of loyalty points. Startups like M2O and Loyyal are attempting to shake up the loyalty game by converting points from a host of different travel providers and retailers into a single digital wallet. According to an article in the Harvard Business Review, the future of loyalty schemes will exist asfour to six major schemes which have one major player like an airline or hotel, and many other smaller players attached to it. Consumers can collect and spend rewards with all retailers attached to the scheme. Blockchain can play an important role here.

Blockchain as pet projects
All companies mentioned above are having some success, but their mission is far reaching, and they are boxing up against some of the biggest players in the industry. There are many doubters about whether the future envisaged by blockchain startups will ever materialize.

The major hype around blockchain does not alleviate these worries, and might actually increase them. In their article for the Harvard Business Review, David Furlonger and Christophe Uzureau warn that many current blockchain initiatives piloted and implemented by companies are ‘FOMO Solutions.’ Fear of Missing Out Solutions “usually come about because the company wants to be seen as innovative, but hasn’t fully considered how the blockchain will add value.”

This sentiment was echoed by Rashesh Jethi of Amadeus, as he referred to blockchain as “a solution looking for a problem.” Raj Singh of JetBlue Technology Ventures also highlighted the drawbacks of using blockchain: “If you have lots of different parties, all of whom need to find a version of the truth that they don’t necessarily want to take as gospel from one of the partners, then blockchain is interesting. The issue for us in the travel world is that the velocity of transactions is fairly high. Blockchain has a lot of issues in achieving that transaction speed, so you end up making compromises as to how you work and the use case doesn’t work. There isn’t really yet much evidence in the field that you can make it work.”

The promise of stablecoin
One example of a blockchain initiative that seems doomed before it has even launched is Facebook’s Libra digital currency. The idea was announced with much fanfare, with many major backers including MasterCard, Visa, Paypal, Booking Holdings, Uber, Lyft, and Spotify, among others.

On paper the idea is good. Assuming a 1% credit card fee, Booking Holdings pays over $200 million on credit card fees annually. Alternative digital currencies that cut these costs are therefore of interest to many companies. While a digital currency backed by some of the biggest financial players will not shake up the financial system as was envisaged by Nakamoto when introducing bitcoin, it does resolve one of the major issues with cryptocurrencies: fluctuation. While one bitcoin was worth less than $1,000 at the beginning of 2017, it then shot up to $20,000 at the end of 2017, and today it trades around the $9,000 mark. With travel, which is generally booked in advance, this fluctuation is a major issue.

The solution put forward is a stablecoin, which “take[s] advantage of the so-called distributed ledger technology behind cryptocurrencies like bitcoin but that are tied to major currencies like the dollar, euro, or yuan for more stability,” wrote Sean O’Neill, senior travel tech editor at Skift in the Travel Megatrends 2020 report. Similarly, MIT has picked digital currencies, and particularly stablecoin, as one of the 10 breakthrough technologies of 2020).

So why has Libra, a type of stablecoin, seen such a turbulent start in life? Before any concrete steps were taken, many of the founding members including Booking Holdings dropped out. Regulators have argued that Libra could contribute to undermining the global economic system. The Information recently reported that Facebook is moving forward with Libra, but that it has provided U.S. regulators assurances that it will offer digital versions of government-backed currencies like the U.S. dollar and euro, in addition to its Libra currency, on its platform.

So the controversy and barriers for Libra have actually little to do with the technology itself. In fact, as a response to Libra, which will be backed by a reserve that will be mostly U.S. dollars, the Chinese central bank started working on its own stablecoin. So as this fight has moved into the geopolitical echelons, it is hard to say how this will play out.

The impact of Libra or other stablecoins on the travel industry remains to be seen. Similarly, while there are seemingly strong use cases for distributed ledgers and smart contract technologies in areas like airline and hotel distribution, or supply chain tracking, these are as of yet largely unproven, marred with shortcomings, and unlikely to shake up the status quo or incumbent players any time soon.
 

Conclusions

In this report we have set out four technology buckets with the greatest buzz in the travel industry. There is no question that AI has the most transformative impact across all travel verticals. AI encapsulates such a diverse set of technologies that some are already used extensively, while others are only just emerging. AI also underbuilds and powers other emerging technologies, with for example, the combination of AI and advances in cloud computing offering strong potential for improved data management and innovation.

Cloud computing, while maybe not as ‘emerging’ as some of the other technologies discussed in this report, continues to transform the industry, and with the future potential of 5G, will completely change the capability and capacity of data collection, storing, and dissemination.

Other technologies, which arguably hog more of the limelight than AI and cloud, but have a far lower likelihood of impacting the travel industry are spatial computing and distributed ledger technology. Virtual reality, augmented reality, and the blockchain are hyped, and have real potential in other industries, but in travel are showing major shortcomings.

Further Reading