Preview: Travel Innovation and Technology Trends 2023

A preview of the most significant innovation trends in travel technology and distribution for 2023

By Phocuswright Research

Introduction

As the world fully reopens in the wake of the COVID-19 pandemic, the travel industry can once again focus its attention squarely on the future. While significant challenges remain (i.e., inflation, recession, staffing, international conflict), it’s a good time to place strategy and competitive edge-building at the forefront. 

Each year, Phocuswright's expert analysts identify the technology and innovation trends that will influence travel significantly in the coming year and beyond. This year, we’re exploring the growing roles of social media and Web3 in travel, addressing the realities of sustainability and our fragmented technology landscape, and pondering the impact of the next game-changing technologies like generative AI and eVTOLs. 

This overview article is a preview of the full report, which features brief introductions to the eight trends that we will cover in the coming months. Stay tuned for each full trend analysis, and for details on a late spring/early summer webinar in which we’ll discuss these trends live. 

The Future of Social Media, Influencers and Social Commerce in Travel

By Robert Cole

Efficient direct-to-consumer marketing has been the goal of travel industry marketers since the dawn of the internet. Intermediaries may create value by cost effectively expanding brand reach, but they rarely enhance the brand-customer relationship in a manner superior to the brand itself. 

According to one projection, U.S. social commerce surpassed $45 billion in 2022 and will reach nearly $80 billion in 2025, growing its share of total e-commerce sales to 5.2%.

Social commerce – in which merchants sell products directly through social media platforms without involving another e-commerce environment – is a key strategy for direct consumer engagement. According to one projection, U.S. social commerce surpassed $45 billion in 2022 and will reach nearly $80 billion in 2025, growing its share of total e-commerce sales to 5.2%.

The forthcoming report will focus on:

  • How influencer-driven social commerce differs from traditional paid advertising
  • Sponsorship and affiliate marketing methods typically employed throughout the social media landscape
  • Influencer communities

The future of influencer-driven social commerce represents a significant opportunity for a travel industry striving to develop direct distribution channels, nurture loyalty and improve marketing efficiency. 

Web3 Is Proving Itself in Travel 

By Norm Rose 

After years of hype surrounding blockchain and Web3 technologies, 2023 promises to be the year when Web3 starts providing measurable value to the travel industry. This is both a revolutionary and evolutionary change that will eventually impact all players in the travel ecosystem. 

The forthcoming report will focus on:

  • Separating the hype from true business impact
  • Reviewing the landscape
  • Adopting Web3 across the industry
  • A closer look at the Web3 startup space and innovative companies, highlighting their unique contributions to the space
  • An evaluation of how traditional industry players are viewing Web3 technologies, with an eye to understanding how the mainstream travel industry will adopt Web3
  • A review of multiple sectors of the industry, including air and hotel distribution, short-term vacation rentals, ride sharing, payment, settlement, social travel and loyalty

The focus will be less on these companies’ future capabilities, and instead evaluate the real-world impact these companies have today. 

Green Travel Innovation Now (Yes, Now!)

By Cathy Schetzina Walsh

Facing mounting pressure to enact measurable change, travel companies must move beyond greenwashing and halfhearted environmental efforts.  

The industry can either accept the challenge to make real change and become more sustainable via innovation – or be forced to do so via crises, regulation and traveler demand.

The forthcoming report will focus on:

  • Several new initiatives launched by travel companies and destinations
  • How individual travel companies are shifting towards renewable energy sources
  • How travelers – particularly younger travelers – increasingly consider environmental impact when making travel plans

Travel companies must innovate now to establish green infrastructure, leverage data and influence traveler behavior to shift the industry towards green energy sources and preserve tourism for future generations. There are many challenges along this path. Stay tuned for more on what’s realistic, what’s not and what needs to happen to effect meaningful change. 

Selling Travel Is Hot Again – Even If You’re Not a Travel Company 

By Lorraine Sileo

Non-travel brands, such as financial institutions, retailers and loyalty clubs must really want to get into the travel business. Over the past 18 months, several have launched travel booking platforms or announced ambitious plans to do so, even though the online travel agency market is already consolidated and highly competitive. Will they succeed? If so, what are their advantages and what will be the impact on the marketplace?  

If travel is best left to the big travel portals, then why are so many other entities jumping in?

If travel is best left to the big travel portals, then why are so many other entities jumping in? First, it’s easy to resell travel, considering the plug-and-play options offered by Expedia for Business, Rocket Travel (Booking.com), Hopper Cloud and others. And though non-travel brands’ travel gross bookings are tiny (earned commissions), the benefits can be big in terms of generating value and customer loyalty (e.g., Costco Travel, BJ’s Travel, AARP Travel Center). 

The forthcoming report will focus on:

  • How these developments put a whole new spin on online travel – creating pockets of loyalty across myriad brands
  • How they compare to giant OTAs
  • How they signal a shift in consumer behavior

Glimpsing the Future: ChatGPT, Generative AI and Travel 

By Cathy Schetzina Walsh

“The travel industry can use generative AI in a variety of ways …” At least according to ChatGPT, the free chatbot from OpenAI that made its public debut in November 2022 (see figure below). Since its launch, ChatGPT has attracted massive attention as the world gets a taste of AI’s creative potential. But while the technology does have applications for travel, it comes with a number of challenges that must be addressed before generative AI can have a substantial impact on the industry. 

The forthcoming report will focus on:

  • Why generative AI is an area that travel companies should follow closely
  • Why ChatGPT marks a substantial step forward
  • Speed of advancement and potential pitfalls

Regime Change in Digital Hotel Operations  

By Adam Glickman, VP Brand Strategy, Actabl and Dmitry Koltunov, Co-founder, ALICE  

Hoteliers have typically looked at past performance and results to help forecast the future. They painstakingly analyze historical data to develop budgets, plans and goals. It’s been quite a simple approach, really: look back to compare in order to look forward and plan. 

Real-time data is the “beating heart” that forward-looking plans flow through, and which allows hoteliers to maximize profits while optimizing guest experiences.

But as we move on from COVID and “revenge travel” and adapt to changing travel patterns for business, leisure and group, it’s time to consider a new approach in the context of labor shortages and inflationary pressures. It is essential to develop a strategy that puts real-time data analysis at the core of a plan to manage the business. Real-time data is the “beating heart” that forward-looking plans flow through, and which allows hoteliers to maximize profits while optimizing guest experiences. 

The forthcoming report will focus on:

  • Several novel data-centric approaches to optimize operating performance in new and powerful ways
  • Forward-looking demand data that can help enable precise scheduling and staffing
  • How sales pace and sales leader performance data can uncover market-wide trends and individual performance management opportunities
  • Identifying operational functions that can be automated, freeing up team members to deliver more personalized services to more guests
  • Predicting new ancillary revenue sources by evaluating changing guest behavior patterns for each market where hotels operate
  • Reviewing target Hours of labor Per Occupied Room (HPOR) for various segments and providing recommendations for using benchmarks to forecast labor costs

EVTOLs in Travel: Viable Addition or Flights of Fancy? 

By: Hollis Thomases 

EVTOLs, the acronym for Electric Vertical Take Off and Landing aircraft (pronounced “ee-vee-tolls”), have been in development for over a decade. Heralded as a greener solution to fossil fuel-powered short-haul planes, helicopters and roadway-clogging cars, eVTOLs will likely service intracity and city-to-city travel. The ecosystem is commonly referred to as Urban Air Mobility (UAM) or Urban Air Transportation (UAT).  

While the applications of eVTOLs are broad and have previously been categorized into areas such as cargo, emergency medical or inspections, Phocuswright’s forthcoming analysis will focus on passenger transportation.

In the past 18 months, United, American, Virgin Atlantic and Delta have each invested in and/or made deal commitments to one or more eVTOL companies.

The forthcoming report will focus on:

  • Addressing carbon emissions and climate change
  • Collaboration and access to data and technology
  • Improving the passenger/travel experience
  • Mindshare, relevancy and branding
  • Broadening of accessible markets

To flourish, eVTOLs must overcome concerns regarding short-term hindrances. Some of these key pain points include safety issues, significant legal and governing issues, certification of vehicles and pilots, public perception and adoption, sustainability, and infrastructure constraints. 

Super Apps’ Secret Sauce 

By Cathy Schetzina Walsh

What do Google, Meta, Twitter, Hopper, Booking.com, PayPal and Uber have in common? All are Western companies with their sights on becoming super apps in the vein of Asia’s all-in-one mobile powerhouses. Apps like WeChat and AliPay in China, Grab (Singapore), PayTM (India), GoTo (Indonesia), Kakao (South Korea) and AirAsia (Malaysia) have all built addictive multi-service apps that dominate their respective markets. 

While different market conditions from region to region are not replicable, there are strategic lessons to be learned from the apps themselves.  

It remains to be seen whether companies can replicate the level of super app success seen in Asia Pacific (and more recently, in Africa and Latin America) in Western markets like the U.S. and Europe. But you don’t have to build a full-fledged unicorn super app to capture some of the benefits that have made these platforms an essential part of daily life for Asian consumers. 

While different market conditions from region to region are not replicable, there are strategic lessons to be learned from the apps themselves:

  • Multiple services
  • Daily usage
  • Social networking
  • Gamification
  • Fintech

The forthcoming report will focus on:

  • What can be learned from successful super apps to make travel offerings stickier and more appealing
  • Whether a travel company aspires to super app status or not
  • And more

The overview article features full introductions to the eight trends that we will cover in the coming months.

Watch the online event that covered each trend, presented by Phocuswright analysts:

WEEKLY RESEARCH INSIGHTS

We dig deep to give you the data and trends that drive the travel, tourism and hospitality industry.

Get the latest in travel industry highlights with our free weekly research articles and more. Sign up to get the latest delivered directly to your inbox.

FOR MORE INSIGHTS

See all of Phocuswright's free research insights here.

Sign up to get the latest delivered directly to your inbox.

Open Access Research Subscription

Research is our priority. Our Open Access research subscription puts the world’s most comprehensive library of travel research and data visualization at your fingertips.

Clients have relied on Phocuswright's deep industry knowledge for over 25 years to power great decisions, help justify a pitch, build a strategic plan and elevate any presentation through trusted research and data. When companies and executives reference Phocuswright, they gain the trust of an industry keen on data, trends and analytics.

See the full benefits of an Open Access subscription here.

TopBuilt with Shorthand