The global travel sector is forecast to rise by 4.2% each year to become 10.3% of the total GDP by 2024, amounting to annual revenue of around $10 trillion – and big data is set to be one of the most influential factors in this.
Big data itself is a general term used to describe the exponential growth and availability of data. In the travel industry the data comes from off-line and online interactions such as customers’ search habits, patterns and conversion rates.
Understanding travel data
Many industries are trying to analyse big data and using business intelligence to help make better business decisions. It is often challenging to effectively manage the large amounts of data as it comes from a vast array of sources and at an ever-increasing rate.
The travel industry brings with it an added layer of complexity due in part to the truly global nature of the data and rapid accumulation. Amadeus alone performs one billion transactions – including airline reservations, hotel bookings and rail purchases – each day, each of which leaves a data trail.
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The data from these transactions, combined with external sources such as reviews, adds up to an enormous amount. However, as other industries are increasingly seeing the benefits that come from using business intelligence, the travel industry is beginning to more actively embrace the opportunities around big data and looking to overcome its challenges.
Traditionally, travel businesses have tracked detailed demographic statistics, bounce rates and conversion funnels, but now they have access to other data, including external information such as from social media or even weather patterns.
Understanding this information – and the array of other data available – is an important factor in creating a personalised travel experience. This is a key part of why travel providers are looking to big data: to deliver a flawless and personalised experience to the customer.
The opportunities of big data
Big data will help travel providers better understand the individual traveller. Analysing data allows travel companies to identify patterns in consumer behaviour to determine preferences and future requests. It can help ensure that the business traveller is offered a seat in the quiet carriage of a train, for example, or suggest a pet-friendly hotel to a traveller who prefers to bring his dog on trips.
While the personalisation element is important, and helps convert potential travellers to customers, business intelligence can also help inform wider business strategy. Data analytics also speaks to wider context around the industry.
Travel providers can gain a clear picture of trends and change their offerings based on these: if more people are looking at travelling to Spain, for example, for a long weekend, a travel agency might decide to launch a promotion to encourage more bookings.
Travel industry players can gain a clear view of new markets they’re considering for expansion. Providers can use outside data sources to enable better future predictions based on weather or other external events. Together, all of these opportunities provide a means for travel providers to differentiate themselves in the growing market.
The challenges of big data
Despite the opportunities afforded by big data, it is not a panacea to all the challenges associated with the growth of the travel industry. With such a large amount of data, travel providers need to understand which is the “right” data and how to use it.
There is also a cost associated with data storage and a need to invest in systems and data scientists who can best make sense of the information. And any time data is used, there are potential privacy concerns – and the regulations governing the use of personal data vary over different regions of the world causing unique issues for each travel business.
Leveraging big data requires working across functions – including IT, finance and marketing – and may mean overcoming organisational challenges as well.
Maintaining competitive advantage requires constant innovation. Ultimately, big data is a tool to be used in collaboration with tactical decision-making and strategic thinking to help organisations improve their business.
Learning from retail
These aren’t challenges unique to the travel industry, however. Other sectors have found ways to use big data despite the challenges – and the travel industry is taking its cues from retailers.
At the forefront of big data use for the retail industry is the tracking and monitoring of social networking sites. The travel industry has begun to follow suit with its use of websites such as Facebook, Twitter, Instagram and Tumblr where topical advertisement is used. Through these sites, travel businesses can gain insight into popular destinations that certain demographics are interested in, thus enabling more specific targeting.
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Another example lead by the retail industry is search analysis and search engine optimisation. Retailers have been able to target customers based on information gleaned from their previous searches.
Travel businesses have been able to translate this to their own sector – for example, proposing journeys based on searches such as ‘best beach vacation’.
In doing this, travel business are optimising the data being created by customers to increase sales and offer more tailored advertisements.
Big data is a veritable gold mine of information with endless opportunities. Retailers have successfully led the field in big data utilisation, and now the travel sector is following suit by employing big data to reach customers and create a personalised experience.
Despite the challenges around using big data it is clear that, with strategic employment, business intelligence provides numerous opportunities for travel providers. Data analytics has the potential to revolutionise the travel sector.
Sourced from Pascal Clement, head of travel intelligence, Amadeus