2020 travel tech, accommodation, co-living and co-working trends rolled up
Worldwide: T5 Strategies managing director and principal, Sean Worker, provides his second blog ahead of IHM Recharge in Barcelona, with a roll up of travel tech, accommodation, co-living and co-working trends in 2020.
Does everything in travel and accommodation need to be an experience and edgy? During the last month or so, lots of trend lists have hit your news feeds, and candidly, it’s just too much! The T5 Strategies Team and No Vacancy Team are cutting through the clutter to share what you need know to have a go in 2020!
It’s a big travel market out there and getting bigger….
According to Oxford Economics and TripAdvisor, tech or highly tech-enabled companies in the $5.3 trillion travel and accommodation category [of which $1.4 trillion is corporate travel] are now influencing so much of this economic megatrend, it is impossible to ignore. Not only is this sector a major growth employer, it is attracting much attention by investors.
However, here is a quick reality check: 39 per cent of hotel and 22 per cent of air bookings are made on mobile device. Expect it to exponentially grow as 5G expands, more about that later. Is your product ready to be purchased so quickly?
Traveller profiles are evolving.
According to FCM Travel Startups and other sources, Generation Z [born between 1996-2010] will control a $200 billion market, and shape how we sell and communicate. That is because they are digital natives that have a more inherent understanding of utilising technology compared to their older Generation X and Baby Boomer brethren.
This generation is highly focused on work life balance and merge personal and professional time while travelling, adding on both experiences and extra days to their travel. And it seems as if employers are okay with this too as the acceptance of combining business and leisure [bleisure] by employers is accelerating.
As James Foice, CEO of the Association of Service Apartment Providers “ASAP”, noted about work and living: “I see the inexorable and meteoric rise of co-living as potentially having a massive impact on the hospitality industry – including our own serviced apartment sector.
“But schemes I have studied in the US and London are starting to offer co-living with shorter and shorter tenancies – even as short as two weeks. No longer are the only options available between six months and two years – it is a different kettle of fish,” he added.
That means trips of just a few days can tun into five or more nights away, with that repeating every few months. Gen Z and millennials value experiences over possessions and it is a huge potential opportunity for the travel industry as it adapts and evolves.
Are we all on the same page?
Tech and tech-enabled companies are the norm. In fact, we hear from the major hotel companies they perceive themselves now to be tech companies first and foremost. Let’s geek out!
1. Platforms and Marketplaces – Think of a platform as an airport where all the infrastructure is provided for the sellers, enabling them to sell their products in the “marketplace”. For example, third party sellers like airlines, car rental agencies, retailers and restaurants and the like use London Heathrow Airport product and experience selling platform. Fortunately, the travel and accommodation world is adapting rapidly, but still must catch up to other sectors. Amazon and eBay figured this out decades ago while Expedia became an early leader by making it easy to sell hotel rooms online more than 20 years ago.
2. APIs (Automatic Process Interfaces) – This is generally a two-way data delivery highway between platforms and marketplaces where you place your product. For example, marketing your serviced apartment or hotel room is made easier by using direct connections [APIs] to a channel manager [Rentals United / SiteMinder] that distributes your images, price and availability on the platforms [Expedia / Agoda] sought by a brands target customer [marketplace].
3. Micro Service Architecture (MSA) – Services are small in size, messaging-enabled, bounded by contexts, autonomously developed, independently deployable, decentralised and built and released with automated processes interface [API]. Think delivering small data packets of services and product information via an API, then assembling it on the platform [Booking.com] so the stalls in the marketplace have the room with the right image and price. For example, you can update images only [packet] without ever affecting price or availability. As Martin Fowler says: “From a strategy perspective, micro-services architecture
essentially follows the Unix philosophy of “Do one thing and do it well”.
Trends: The News Feed chatter
Nine broader tech drivers
1. Fast Accessibility – It’s arguably much cheaper and easier to access high quality off the shelf tech solutions than ever. Buy or
build or find the way to connect both while delivering your unique value prop efficiently
2. Direct Connect – aka the game changer. It has become so much easier to direct connect – think host to customer [Airbnb] or driver to passenger [Uber]. The days of the middleman are gone!
3. IOT – Internet of Things – Our micro-connected world is just revealing itself as personal buying and use patterns are revealed by your Samsung fridge, Ring, Nest or NoiseAware products, and of course Alexa and other similar personal digital assistants. Still, travel is front and centre as households start utilising PAs from Amazon, Google and Apple rather than online surfing on Expedia or Bookings. Be careful what you reveal, it could hit a hashtag near you, with hi-res pics!
4. 5G – Mobile is becoming more personal and 5G [once the infrastructure catches up] is set to completely reinvent the way in which customers and brands interact. It is the next big unchartered territory. Expect active personal recommendations that pop-up and tease you as you travel… by foot, car, train or jetpack!
5. VR/ Machine learning – This is not new anymore and will contribute more than $15 trillion globally. What is new? Consumer expectation to virtually tour vacation rentals, hostels, homes hotels and more is growing. It is a new look before you book ethos that will transform through machine learning that builds on personal preferences while “learning” and “talking” to you as the company learns your buying habits on a whole new level.
6. Face Recognition – Already widely used outside the USA and Europe and will likely become increasingly controversial. Check out the use cases at TENCENT.
7. Workplace culture and jobs – Workplace change is accelerating dramatically and will increase more during the next five years. Think of the evolution of WeWork, Uber and Airbnb. Employees are demanding more transparency about where they work and expect the companies, they work for to be socially and environmentally conscious. Also, low-skilled tasks such as booking travel will be taken over by your electronic personal assistants.
8. Blockchain – Imagine secure and fully transparent fair-trade tracking of each component of your favourite products? You choose what brands to support that conform to your view of “fair”, while also allowing the reconciliation of purchases. In November 2019, German airline Hahn Air became the first carrier to fly an individual with a blockchain-powered ticket as reported by ZDNet.
9. Known traveller digital identity [KTDI] – According to CTM, “KTDI provides a frictionless travel experience for passengers while allowing them to have greater control over their personal data using biometrics, the data is checked at every leg of the journey until arrival at the destination, without the need for a physical passport”. Imagine how this translates through the entire travel experience.
International Hospitality Media [ShortTermRentalz, Serviced Apartment Summit, Recharge and Urban Living Festival] founder and CEO, Piers Brown, take on the trends are thought-provoking: “I think some type of decentralised internet will start to emerge providing increased transparency across the value chain, led by the growth of blockchain and decentralised consumer travel and hospitality apps which will be slow to take hold.
“The biggest consumer technology successes will be in how privacy v identity manifests itself on / offline e.g. the known travel identity you refer to and has ramifications for social media as we know it,” he added.
Overwhelming or Exhilarating?
Travel tech is HOT and woven into the fabric of our life ecosystems. We will all face real conflicts balancing how we will allow our
personal data to be used. This data could be the future currency that we trade versus cash as my colleague Bob Hecht [senior advisor T5 Strategies] is predicting. If personal data is the new currency, then any business could have access to highly qualified consumers. Imagine how that may feel? Is it positive or negative? And how does a Generation Z feel compared to a baby boomer regarding exchanging privacy for convenience and experience?
Nearly every conference or event that we speak at examines distribution fees charged by companies like Expedia or Booking Holdings. We expect the love/ hate relationship to continue between the OTAs the major brands such Hilton, Marrriott, United and others. Distribution specialists [channel managers] such as Rentals United or SiteMinder have evolved to tackle this complexity.
The age of specialisation and the smart use of resources is the burden of business leaders. One observation is relatively certain, connecting to platform, putting your product on a marketplace is extremely time sapping. Who and how many employees / suppliers do you need to create virtual reality “VR” tours of your vacation rental / serviced apartment, hotel room or cooking school experience, while continuing to manage your social media and product distribution partners, other sales and marketing tasks, and of course delivering the operational side of promise? That is more juggling than at a Cirque du Soleil show.