September 26, 2021

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A Look at the Convergence of Big Data and Travel

While the travel and tourism industry has taken quite a gut punch over the past...

While the travel and tourism industry has taken quite a gut punch over the past year, there’s hope that things will soon return to normal. And when they do, we’ll get a better taste of the impact big data is having in this space.

What is Big Data?

For 20 years, big data has been widely defined as data that “contains greater variety arriving in increasing volumes with ever-higher velocity.”

“Put simply, big data is larger, more complex data sets, especially from new data sources,” Oracle explains. “These data sets are so voluminous that traditional data processing software just can’t manage them. But these massive volumes of data can be used to address business problems you wouldn’t have been able to tackle before.”

The best way to understand big data is by exploring the “three Vs” mentioned above:

  • Volume. The power of big data lies (at least partially) in the amount of data that’s produced and processed. Not every data point is useful or necessary, but it’s the casting of a wide net that creates powerful opportunities and insights.
  • Velocity. This refers to the speed at which data is received and acted on. High velocity works in tandem with high volume. (If speeds were slow, the volume would bog down the systems and create costly inefficiencies.)
  • Variety. Finally, variety refers to the different types of structured data that exist. This might include text, video, audio, or location-based data.

The tentacles of big data touch every area of our lives. But while we often discuss its impact on science, software, or IT, we rarely dig into the impact it has on fields like travel and tourism. The more we lean into this relationship, the better we’ll understand where the industry is going.

How Big Data is Impacting the Travel Industry

Big data isn’t something most people spend a lot of time thinking about – particularly in the travel and tourism space – but it plays a key role behind the scenes. Here are a few specific ways it’s having an impact:

1. Personalization

The travel and tourism industry is more competitive than it’s ever been. The sheer number of businesses operating within individual niches of the travel industry is mind-boggling. Whether you run a hotel, resort, cruise line, airline, or other tourism business, you can’t expect to stand out without a strategy. And one of the best strategies involves personalization.

Thanks to big data, businesses are able to collect, organize, and leverage thousands of data points on customers to identify and meet the unique needs of their audiences. Whereas businesses were once restricted to targeting very broad groups, big data makes it possible to zero in on very specific subgroups and niches. This leads to hyper-focused messaging, more relevant offers, and improved customer experience.

2. Differentiation

Another related point of emphasis is how big data – and particularly the analysis of the data – empowers these businesses to understand why their customers make the decisions they do. In other words, it helps answer questions like, why did they choose us over the competition? In crowded markets, the answer to this question can create much-needed clarity and serve as the basis for marketing, advertising, and even content strategy.

In a post-COVID world, unique differentiation will prove to be a marker of success for businesses that survive and thrive. Traveler expectations are higher than they’ve ever been, and it’s the businesses that provide clarity and reassurance that will win customers.

3. Security and Vetting

Border security, as it relates to international travel and tourism, has always been an important issue. But it’s become even more critical as it relates to COVID and related health concerns.

For years, developed countries have relied on big data to fuel their border control and immigration systems. Canada, for example, uses an Electronic Travel Authorization (eTA) system that requires travelers to register for entry. This allows the country to collect data on visitors, identify potential threats, and understand when and where people are entering. Most other countries have a similar system in place.

In the coming years, it’s possible that big data will lead to major advances in “Smart Borders” – border security systems that are designed to create safe and cost-effective geographical demarcations that prioritize the safety and well-being of both nationals and travelers.

Smart borders, which rely on a steady influx of big data, allow countries to (1) employ risk-based decision making, (2) enhance standardization through the normalization of data requirements and international partnerships with other nations, (3) improve cost-savings for governments by diminishing the need for resources at the border, and (4) welcome new innovation into this part of the travel ecosystem.

4. Real-Time Travel Assistance

So much of the growth of big data is powered by the evolution of the smartphone. With 81 percent of Americans now owning a smartphone (up from just 35 percent in 2011), nearly every traveler is a walking data point. And while we can talk all about the security concerns of constantly giving out personal information, one of the benefits of this around-the-clock connectivity is the opportunity for real-time travel assistance.

Mobile apps are popular among most travel and tourism companies (including hotels, airlines, tour companies, travel planners, etc.). And many of these apps are able to use location data to make tailored recommendations to travelers. For example, an app notices that a traveler is staying in a hotel that’s located near a popular attraction. A push notification is then sent to the user’s phone for a 20 percent discount on the price of admission. Or, the app – which has been given access to the user’s contact information – sends out an email newsletter with top travel tips for the area.

Some people might find notifications like these to be annoying, but others find them helpful. Companies will have to find the balance between intrusive and helpful. Once they do, the sky becomes the limit.

5. Revenue Management

As much as they may enjoy helping people, every business in the travel and tourism industry has one major goal: drive revenue and maximize profitability. Big data can help in both of these areas.

Take hotels as an example. Hotel managers can use big data to improve revenue management. In particular, they rely on internal data relating to historical occupancy rates, average revenue per room, and guest information (location, return stay frequency, etc.). They can then contrast that internal data with external signals, such as time of year, holidays, and market rates for other nearby hotels. This leads to dynamic pricing strategies that are better able to maximize revenue and drive optimum profitability.

On a related note, big data can also help project demand. This allows hotels, resorts, and even tourist sites to more accurately staff their businesses so that they’re prepared but not over-staffed.

6. Reputation Management

Revenue management is difficult without a proper reputation management strategy. In today’s internet-connected, social media-driven marketplace, you must have a strong reputation to be competitive within your niche. Big data makes it possible for a business to accurately manage its reputation in positive and productive ways.

Take social listening tools as an example. With the right social listening software, businesses can automatically and intuitively listen to what customers (and target customers) are saying on platforms like Facebook, Twitter, Instagram, YouTube, etc. These systems rely on keyword data and sentiment (which can be detected via advanced algorithms) to judge how the marketplace feels about a brand and/or the larger industry. And because this happens in real-time, it’s possible for businesses to then respond with more strategic content and advertising.

7. Market Research

As always, market research plays a catalytic role in business growth. And while most businesses are focused on collecting data for the purposes of understanding their own businesses and customers, there’s something to be said for leveraging big data to study the competition and gather valuable market research on strengths, weaknesses, opportunities, and threats. This often leads to better innovation and more strategic partnerships.

Adding it All Up

Big data is having a noticeable impact on industries far and wide. From product development and predictive maintenance to machine learning and operational efficiency, it’s making its presence known.

From industries like software and IT to ecommerce and tourism, big data is truly living up to its name. And the more we understand what it is and how it’s influencing the world around us, the more opportunities we can leverage in the coming years.

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