From the political and economic environment to technology, demographics, and consumer behaviors, an array of trends are triggering a transformation. Four scenarios assess what might lie over the horizon.
An almost dizzying pace of technological innovation has produced a wealth of new business opportunities in the global travel ecosystem, both enriching and expanding the world of travel. The race to develop a driverless car, introduce digital assistants into our homes, or make sense of our online data all promise to change the way we travel.
But at the same time, headlines are full of bad omens. From terrorist attacks across Europe and escalating tensions in the South China Sea to the protectionist instincts of a new US administration and the uncharted territory of Brexit, our familiar world, for good or bad, is unraveling.
“Technology has never held more promise for the travel industry,” says Alex Luzarraga, vice president of corporate strategy at Amadeus. “Nevertheless, there is a sense of societies being broken, of unfairness and inequality, and a lack of opportunities for many people. As technology advances, the status quo is being upended. There is mistrust and populism. Things we used to take for granted, such as the right to travel across Europe without passports, may be less likely in the future.”
With an array of new issues on the horizon, Amadeus wanted to identify the trends that could disrupt the travel industry over the next five to seven years. Management consultants A.T. Kearney asked some of the best minds in the technology and travel industries to evaluate the factors that are, or may soon be, transforming the industry. The result is not an attempt to predict the future, but to offer possible scenarios that are the result of a number of factors, including the most relevant global political and economic trends, technological advances, regulation, demographics, social change, and crucially, how they interact. In this paper, we explore these scenarios and discuss the implications for the global travel ecosystem.
To identify the most relevant trends, we conducted dedicated workshops in which we ranked a large set of factors in terms of business impact and level of uncertainty (see sidebar: The Benefits of Scenario Planning for Stress-Testing Company Strategy). Two themes encapsulate many of the industry’s significant trends:
Seamless travel. The first theme is the potential of seamless travel compared with today’s fragmented service. What conditions would bring about a world without border controls, where security concerns are alleviated and travelers benefit from perfect, real-time information? In part, it would be the result of cooperation between governments and information sharing between businesses, from airports and airlines to hotels, restaurants, ground transportation, and other destination services.
Personalized travel. The second theme considers the power of technology to aggregate consumer data and deliver personalized travel experiences. This is not personalization the way we understand it today, which relies heavily on customer segmentation. In the not-too-distant future, personalization will use artificial intelligence to learn from the online behaviors of millions of people, mine data, and meet the needs of each traveler at every moment. The perfectly personalized experience may even be able to preempt a traveler’s wishes and deliver it in a way that is more useful to the traveler.
However, even if technology matures, personalization still faces numerous obstacles. Will governments and regulators allow consumer data to be shared between countries or trading blocs? And if they do, will businesses be prepared to give up their proprietary data for the common good? What if personalized travel offers—which by definition are impossible to reproduce for the mass market—prove too expensive for most customers? Will this put a halt to the onward march of technology giants across the travel world?
This paper reflects the most important insights from our scenario-planning exercise. We hope it helps companies across the travel industry begin their own discussions about how they see their businesses developing.
Our four scenarios shed light on the conditions under which these trends may come about (see figure). One scenario—the combination of seamless travel and perfect personalization—would allow global travelers to embark on journeys in which every detail, from the mode of transportation to the choice of pillow at their destination, would be matched to their preferences by a software program. At the same time, a more interconnected and collaborative travel industry would act on real-time information to optimize pricing and occupancy rates and reroute travelers around traffic gridlock and bad weather to deliver them safely to their destinations.