How data is rescuing travel

  • Data analytics can boost revenue for travel companies by as much as 6 percentage points
  • Data-driven pricing could be the difference between profit and loss
  • Excellent travel experiences rely on data insights

The accelerated adoption of big data and advanced analytics, as a subset of digital transformation, is a phenomenon that’s been noted across industries, but it’s particularly evident in the travel sector. The industry that suffered so much from COVID-19 is among those leading the way in using data to power its recovery.

Travel companies are steaming ahead with data analytics

Travel stocks are driving investment in data analytics tools and platforms and shifting to a digital-first, data-driven culture. “The most important investments we made,” said United Airlines CEO Scott Kirby, “was just the architecture, the infrastructure and having all the data available in a quick and easy format.”1

We’re seeing travel companies across the industry invest in connecting data sources, removing silos, and adopting user-friendly business intelligence (BI) tools that use machine learning (ML) to crunch enormous datasets and deliver accessible insights in as close to real time as possible.

Accenture analysts report that airlines can boost pre-tax revenue by up to 4-6 percentage points, and hospitality companies can see 3-5 percentage points of uplift, by maximizing data and analytics applications2.

Here are some of the ways that data is saving the day for travel stocks.

1. Enhancing the product offering

Although consumer spending is depressed, people will shell out for transformative travel. As Expedia put it, it’s the year of the GOAT (Greatest Of All Trips)3. But to grab that revenue, travel companies need to deliver customized travel products, which require a better understanding of the destinations, travel experiences, types of transportation, etc. each person is looking for. And that, in turn, relies on big data.

Travel companies need to move beyond internal data like occupancy rates and customer demographics, and start mining external structured and unstructured data. For example, which destinations are generating a buzz on social media, how are visitor numbers in popular destinations fluctuating, and what is the average age at different attractions.

2. Refining travel pricing

Getting the pricing mix right could be the difference between success and failure. Hotels need to combine internal room occupancy data and demographics with flight volume data, school vacation data, and social media interest in their destination, so as to optimize pricing for each season of the year.

Airlines usually make their profit on business travelers, but it could be a while until those customers return, so pricing needs adjustment until that happens. “At the simplest level, lower business-class demand may warrant smaller business-class cabins,” advise McKinsey analysts, adding “Taking this further, products may shift to better cater to premium-leisure passengers, such as growth of premium-economy cabins or development of business-class seats more suitable for traveling as couples or groups.4

3. Improving marketing campaigns

Hand in hand with personalized travel offerings comes the need for personalized marketing messaging. Different travelers are driven by different primary concerns, so you need to be able to swap out your messaging accordingly. E.g. some travelers want to escape from a sense of confinement; others need reassurance about hygiene and safety; and still others are highly budget-conscious.

Once again, understanding what customers are looking for requires advanced use of data, like tapping into search data to discover how travelers react to news about changing regulations and emerging variants.

Roshan Mendis, CCO at Sabre Travel Solutions, observes that “In buying and selling travel, context is incredibly important — if you can understand the context of a person’s travel, your predictability of what they might buy (next) goes up exponentially,” adding that “customers now expect you to know them.”5

4. Raising the bar on travel hygiene

Hygiene and safety require data as well as disinfectant. Tour operators map infection spread, while improved communication allows them to share that information with customers to reassure them that it’s safe to travel.

In locations with heavy foot traffic, like train stations, airports, and theme parks, AI-powered robots and mapping apps can warn people when they are crowded too close together and redirect guests to quieter areas.6 Data from IoT (Internet of Things) devices also reveals which areas need disinfecting, to help optimize cleaning schedules.

5. Improving the travel experience

Travelers want outstanding travel experiences to make the most out of their trips. Connected data and data-driven insights empower travel companies to reduce friction and streamline the entire purchase experience, from research to the return home.

“Contactless” is a key element, and it rests on powerful data management and analytics7. It starts with facial recognition for self-serve check in and baggage drop in airports, allowing passengers to scan digital boarding passes to gain entry. This data is shared automatically with border control, security, duty free stores, boarding gates, lounges, and more, removing the need for travelers to repeatedly prove their identity.8

In 2021, 64% of airports said they aim to roll out self-boarding gates using biometric and ID documentation by 2023, three times as many as in 2020, and 82% of airlines have the same timeframe for self-boarding9.

Digital health passports allow passengers to prove vaccination status and store test results10. Singapore Airlines is piloting a scheme for customers to seamlessly schedule COVID-19 tests after booking a flight, and receive the results in a central online portal11.

Better data collection and sharing also translates into less hassle when plans change. Customer support employees need all the data about a customer’s purchase journey to deliver excellent support when someone needs to change their flight or amend their booking dates. Secure, smart data sharing also allows companies to immediately update travelers about changes to their schedule or entry requirements at their destination.

6. Boosting business strategy

Finally, just like every other industry, companies in the travel sector need to digitally transform to become data-led, so they can more accurately assess risk, spot opportunities when they are still emerging, and remain competitive.

“Data can also enable travel, hospitality and tourism brands to identify and secure new opportunities that are emerging from structural and societal changes the coronavirus have inadvertently brought on,” notes Carolyn Corda, CMO and CCO at ADARA12.

Those travel companies that succeed in a post-covid world will be those who use tech to mine deeper insights faster. “Data-driven brands […] stand to build brand affinity and drive revenue in the mid-term, and eventually gain market share of the emerging recovery in the long run,” says Corda.13

Data could be travel stocks’ magic wand

For investors wondering which travel stocks to buy, tech investment could be one way to make a decision. New technologies like cloud data storage, ML analytics, and intuitive BI portals allow leading airline stocks, hotel stocks, cruise stocks, and other travel stocks to improve their marketing, pricing, customer experience, and safety levels, refine the travel products they offer, and make better data-driven business decisions.

Investing in a travel ETF like CRUZ by Defiance is another way to spread your investment across multiple promising hotel, airline, and travel stocks, leveraging the overall potential that data management is bringing to the sector.

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1 “Contactless travel has arrived: from pandemic experimentation to long-term innovation” May 18, 2021

2 “Travel companies’ top five questions about data” October 27, 2021

3 “The GOAT mindset: Expedia reveals 2022’s biggest travel trend” November 30, 2021

4 “Back to the future? Airline sector poised for change post-COVID-19” April 2, 2021

5 “3 Digital Transformation Strategies for Travel’s Recovery” November 23, 2021

6 “‘Dystopian world’: Singapore patrol robots stoke fears of surveillance state” October 6, 2021 “8 smart technologies to help us get traveling again” February 4, 2021

7  “Contactless travel has arrived: from pandemic experimentation to long-term innovation” May 18, 2021

8  “Contactless travel has arrived: from pandemic experimentation to long-term innovation” May 18, 2021

9  “Contactless travel has arrived: from pandemic experimentation to long-term innovation” May 18, 2021

10 “5 Technologies for Travel and Tourism Industry in Post-COVID Era” March 15, 2021

11 “How Singapore Airlines Uses Tech to Transform Each Step of the Traveler Journey” April 12, 2021