How Technological Evolution is Shaping the Future of the Travel Industry

When we talk about the changes in the travel industry, particularly where accommodation is concerned, Airbnb is the first name that comes up in the conversation as a disruptor. And why not? It have over 1.5 million vacation rental listings across he globe. The largest hotel chain in the world has less than half that number of total hotel rooms worldwide. 

Vacation Rental and Home Stay are concepts that are not new. When Database Systems and the internet converged to bring about the birth of Social Networking (read Facebook), everything started becoming social online. When Vacation Rental and Home Stay started to become social online, the old models were reborn for phenomenal success with the advent of companies like Airbnb, Couchsurfing, HomeAway and Nightswapping. Initially, these Sharing Economy accommodation models are they are categorised, in convergence with the maturing of the budget airline industry, opened up options for travel to those from income groups that would otherwise not choose to travel considering cost of premier air tickets and hotel room rates.  As these Sharing Economy models gradually converge with other developments also driven by technological evolution, they will very much impact the way the conventional hospitality industry players will have to do business.

The advent of the internet itself has shaped an entire generation; The Millennial Generation born from 1980 to 2000. The internet's advent has meant that this generation has grown up with unprecedented access to information on an unprecedented scale. It has also brought down all barriers to connection and interaction across borders and countless ways. Effectively, this is a generation that has come to expect much (and it knows much) as a result of the growing experience, like that of none of the generations before, with the access available to it. Along with the internet's advent, the generation has grown up with the advent of mobile and Smart devices. For the millennial, the laptop, the tablet, the Smartphone and Wearables are like additional body parts. And they expect these "body parts" to be able to function wherever they go, so as to optimally utilise them for efficiencies. They have also grown to expect, instant access, to pretty much everything.

With the advent of Virtual Reality Headsets made for the common consumer, the average first world citizen will be able to walk through far off places, without stepping out of their homes or offices. The world, will visually come home, to the VR user. You will not have to travel to India to see the Taj Mahal and you will not have to travel to China to see the Great Wall. In effect, there will no longer be an incentive to travel for visual stimulation. That does not mean, that people will not want to travel. 

In fact, because of the access that internet today affords, there is increasing hungers amongst people all over the world, to experience the world, to know it, through multi-sensory experience. While they may not want to travel to countries in the future, to simply see landmarks and monuments or to take pictures, increasingly, they will want to travel, to experience new locations, through senses for which Virtual Reality can provide no substitute for Actual Reality. Especially, through wining and dining. 

With the convergence of technologies that did not even exist up until the 2010s, telepresence is ever becoming a mainstay feature of the world of work. We are seeing the advent of telepresence robots on the horizon with possibility of 4D Virtual Reality experience for the users. And rather than being science fiction, this is a reality likely to see mainstreaming by 2025. This frees people up from being physically confined to workspaces. Even if a worker's experience does not get that hi-tech, it is possible today, to work remotely, with a laptop from anywhere where there is WiFi connection. This means, people can travel without taking leave from work, planning their days abroad, along lines of time differences to manage both work and pleasure.

While with flexibility, with changes to the way work can be organised or done thanks to technological changes, people may travel more frequently, how and where they choose to go will also likely see drastic change. As I mentioned earlier, visual stimulation will not be a driver. The destinations, for leisure travel at least, will be decided upon more, for what there is to experience, that cannot be experienced through high definition visuals, Virtual Reality or Augmented Reality, staying home. 

The Sharing Economy Travel Accommodation Business Models such as Airbnb will likely grow in numbers, with the increase in numbers of travellers and tourist arrivals. Their numerical growth does not necessarily have to be the end of the hotels, and certainly they will not be. That is because every traveller has different needs and wants, and the future as can be foreseen as of now, does not seem like one in which that will change. In fact, models like Airbnb and Nightswapping likely will never take a comparable share of the travel accommodation market, away from the hotels and resorts. They certainly though, will impact their pricing, because of some degree of competition along those lines, depending on the branding and positioning of hotel competitors.

A greater impact though, in terms of pricing, for hotels, is coming not from the Sharing Economy Travel Accommodation Business Models at all, but rather from dynamic packaging travel sites made possible with advanced database systems online. These are sites, that provide instant on-the-go travel options to consumers, to virtually any destination that significantly counts, with unlimited comparisons (with social review options) and combinations of tailored packages including air tickets, hotel accommodation, taxi service, insurance and so on. While these are great platforms for accommodation providers to reach consumers in the most cost effective ways, these are also platforms that in recent years have created downward bidding wars to woo travellers (both airlines and hotels). And they are also displacing the conventional or traditional travel agent that is not jumping onto the online dynamic packaging bandwagon.

Harish Shah is Singapore's first local born Professional Futurist and a Management Strategy Consultant. He runs Stratserv Consultancy. His areas of consulting include Strategic Foresight, Systems Thinking and Organisational Future Proofing. He was the opening Keynote Speaker at the Hotel Management Summit Singapore 2015.