travel crystal ball

Start-ups and tech giants have some big edges over today’s travel suppliers in their unceasing efforts to develop comprehensive, personalized solutions to customer pain points during the travel journey.

A new report by Boston Consulting Group shows how innovation is restructuring the travel industry, and new solutions belong to those companies that collect data, manage it effectively, and break down data silos to develop the most comprehensive — and personalized — picture possible of the travel customer.

These innovations that focus on and solve the pain points in travel planning and management are far more likely to be driven by tech companies and venture-backed start-ups than by travel providers. And three areas are especially ripe for innovation and disruption over the next several years:

  • Travel Inspiration
  • Booking Transparency
  • Unmanaged Business Travel

The speed and extent of change in each area will be determined in part by how and how much traditional travel companies, technology companies, and start-ups interact in areas such as sharing data and co-investing in shared infrastructure.

The BCG report bases conclusions on an analysis of venture-capital investment trends in the industry, as well as interviews with more than 30 visionary thinkers (including travel company CEOs and CIOs, start-up CEOs, and others) in North America, Europe, and Asia, and the firm’s own experience with a wide range of global airlines, hotel companies, and other travel suppliers.


“The key question for travel companies is, how can they leverage their strengths to take part in this innovation so they can maintain and strengthen their position in the consumer’s travel experience?” says Raj Ganguly, a coauthor of the report. “Will they be active in creating the exchange platforms that will be necessary to facilitate trading and sharing of consumer and operational data in a controlled environment? Or will they let big technology companies and start-ups fulfill that function? Unless travel suppliers are developing the solutions themselves, or partnering with others that are doing so, they risk losing their place in the value chain.”

Two-thirds of the experts interviewed indicated that within ten years, consumers will be able to source their travel inspiration using tools that provide far more integrated and personalized experiences. Some experts expect that the new tools will be developed by start-ups, but these companies need to capture a significant share of travel search and booking in order to make money, and this model has yet to be proven. The strong advantages of the big tech companies give them a big edge in this area.

More than half of the experts believe that other new tools will be in place in the next ten years, giving consumers far more transparency in the booking process with respect to both price and non-price elements. Some predict that venture capital-backed start-ups will lead this innovation, while others think that technology companies will leverage their strengths to lead in the development of new tools. The ultimate goal is to be able to perform some of the functions travel agents perform now while using predictive analytics to optimize the timing of bookings, and offer greater flexibility to change or cancellation actions to tickets sold as nonrefundable.

Start-ups, which do not have legacy businesses or platforms to protect, are more likely to seek inventive ways to break down and combine data silos. That said, once they mature, start-ups are likely to be acquired by larger technology companies. This represents a significant potential threat to traditional travel suppliers — unless travel companies decide that they, too, want to play in this game and then back that decision with serious financial investment.

“Despite the investment attention that the travel sector attracts — and the number of start-ups it spawns — there is still plenty of opportunity for innovation,” adds Sean Collins, another coauthor of the report. “One is the personalization of travel — providing the ability for customers to customize travel itineraries more easily. We expect that new inspiration and booking sites will marry data with predictive analytics to tailor recommendations and provide concierge-style packages. Another area is better integration across the travel journey. Back-end technology tools will improve integration across modes and providers, creating a more integrated experience for the consumer along every step of the travel journey.”

Similarly, in the business travel space, a third of the experts interviewed felt that new tools will reshape business travel just as profoundly as these will reshape leisure travel in the next ten years. While start-ups are developing new tools that enable business travelers to tailor their travel experiences within price limitations, there is an advantage generated for established technology companies. Travel companies that are deeply embedded with travel enterprises serving today’s business travelers will be a hard space for others to enter and win.

“The key for travel companies is to make sure that they are integral parts of the industry’s evolution in these areas, however it plays out,” said Nicolas Boutin, a BCG partner and third dreport coauthor. “This almost certainly means changing the way they look at the marketplace and approach the consumer. It will require playing offense as well as defense, developing new capabilities, and learning to leverage their strengths to innovate or to work with others. Most of all, it means putting consumers first.”



Consider a vision of the travel experience in the not-too-distant future. Olivia, who is 28 and lives in Seattle, decides to add a few days of pleasure travel to a business trip to Sydney. She asks Travel Dreams on the Fly, one of several new travel-concierge apps that all her friends are using, for suggestions. Travel Dreams knows Olivia’s likes and preferences thoroughly—as well as those of millions of consumers like her. It serves up six suggestions for destinations that combine outdoor activities with good shopping as well as a selection of boutique hotels and seafood restaurants. Olivia explores them all on a virtual-reality headset. It’s a difficult decision, but New Zealand (North Island) edges out Brisbane and the Great Barrier Reef. Travel Dreams provides hotel and transportation options, makes restaurant suggestions, and books tour operators specializing in countryside hiking trips, bike excursions, and Wellington city tours. Olivia can check everything out on her headset as well.

Plans made, Olivia tells Travel Dreams to book her hotel room, two restaurants for dinners, and a full-day hiking trip. She doesn’t worry about flights; she knows that Travel Dreams will reroute her business trip automatically to take in the new destination, explore potential upgrades, and book the seats when prices are expected to be lowest. It will also purchase option tickets at a small fee so she has the flexibility to change her plans, which she often does. She doesn’t think about which airline she will fly or which chain her Wellington hotel belongs to. She is confident that the hotel will live up to its virtual-reality tour and the favorable reviews by previous guests, and she knows she’ll get the loyalty program points—Travel Dreams manages those for her. During the all-important dream, plan, and book phases of the travel journey, Olivia no longer has direct contact with most travel brands, and she doesn’t miss them. Travel Dreams makes the right decisions and takes care of her needs.

In New Zealand, Olivia goes directly to her hotel room, which is preset to her preferred temperature. In the morning, coffee (black with sugar) and fresh grapefruit juice (her favorite) are sent up automatically. The tour company picks her up, and the daylong hike more than lives up to the virtual-reality preview and Travel Dreams’ five-star user rating.

Back at the hotel, Olivia posts photos and reviews so that others can benefit from her experience just as she benefited from theirs in making her decisions and plans. But before bed, she worries that she might be giving New Zealand short shrift—the hike that morning had been more beautiful than she could imagine. She tells Travel Dreams to exercise the option for a flight home two days later, to line up a shopping itinerary for the morning, and to book a bicycle tour the following afternoon. She falls asleep without doubting that when she wakes up, she’ll find everything, along with her coffee and grapefruit juice, done just as she asked.

The question for travel companies is not whether this vision is impractical or too far in the future to think about. It’s neither. As digital technologies, big data, and innovation provide more and more seamless experiences for consumers like Olivia, the real questions that arise—and that we examine here—are these: How can travel suppliers protect their place in the value chain? And how can they leverage their strengths to take part in this innovation so that they can maintain and strengthen their position in the consumer’s travel experience?