Is the travel industry ready for its technology “leapfrog” moment?

First-time hotelier Ryan Killeen launched The Annex in Canada at the end of 2018.

Business was going well for the boutique hotel located in a leafy neighborhood in downtown Toronto. Then the pandemic arrived.

With his debut, Killeen, who previously worked at Sonder and Airbnb, planned to carve out a space under the “tech-enabled hospitality” banner. He was focused on a cashless property, digital selfies and touchless check-in, with a concierge-ambassador on site.

As it did for many other hotels, COVID transformed The Annex experience, making it even more digitally-focused. It impacted countless other industries, too. According to a 2020 McKinsey Global Survey of Executives, the pandemic accelerated the “digitization of customer and supply-chain interactions, and internal operations” by three to four years.

“In just a few months’ time, the COVID-19 crisis has brought about years of change in the way companies in all sectors and regions do business,” the report stated.

Skipping a beat

Now new players entering travel and tourism are looking to benefit from technology platforms borne out of this digital acceleration and platforms that have been further enhanced by recent developments in artificial intelligence.

“I think we've seen a period of time from COVID to now where we've seen more change than we did in probably the last 40 years,” Killeen said.

Is the travel industry now looking at its own “leapfrog” moment?

In technology terms, leapfrogging relates to when a nation bypasses traditional stages of development to jump directly to the latest technologies. A notable example is mobile payments in Africa, as the continent skipped landline telephony and leapfrogged to mobile. The leap catalyzed rapid impacts beyond telecommunications, including mobile commerce and banking. That in turn created jobs, growth, transparency of markets and pricing.

Within an industry as vast and fragmented as tourism, any leapfrogging will depend on the sector. It’s also important to consider the extent to which travel is built on what many would consider legacy infrastructure.

But The Annex’s story is an increasingly familiar one. Several tech-driven accommodation operators, including Bob W, Landing, Numa Group and Kasa (whose CEO Roman Pedan said “we stand at a watershed moment in the evolution of the hospitality industry) are scaling rapidly. Smaller players are also making their debuts, putting technology to the test.

In search of seamless integration

On a bigger scale, Saudi Arabia's “newest” heritage destination is experimenting with new technology to make a splash on the world stage. The Royal Commission for Alula, set up to transform the desert region into a global tourism destination, kicked off "Forever Revitalizing," its inaugural global brand campaign, in February.

Melanie de Souza, executive director of destination marketing for Alula, likened her marketing role as being “given a blank slate to set up my own marketing team and to inherit the building of the brand of a very special destination.”

The commission has adopted a suite of digital experience platforms, including Adobe Experience, Adobe Campaign and Sprinklr.

“From the start, we recognized that we had to adopt a new, integrated approach that would deliver a scalable campaign capable of creating a powerful first impression,” de Souza said.

“These platforms, newly available in the Kingdom, have yielded tangible benefits: personalized end-to-end customer experiences; improved marketing ROI; data-driven visitor engagement; and a digital experience reflecting AlUla's unique offerings.”

She added the campaign marked the first time the technologies had been weaved together in such a way, marking a milestone in destination marketing for the region. As well as marketing, the commission is working with a range of technology partners across infrastructure, data, and visitor experience.

Alula is also taking a holistic approach to AI through a new long-term partnership with AI consultancy Artefact. It also has an agency partner, Deloitte Digital, to help it stay ahead of the trends and best practices.

“For us, having a clean slate and starting our digital and technology investments from the ground up has presented a unique opportunity — to build robust digital infrastructure and simultaneously shape a visitor experience that can be enhanced through our technology investments,” de Souza said.

In the corporate travel space, pandemic startups such as Spotnana are also looking at things with fresh eyes. “The whole premise is not built on a legacy tech stack,” said co-founder and CEO Sarosh Waghmar at the time of its launch.

Meanwhile airlines such as PLAY believe they have a competitive advantage building from the ground up, as they have fewer legacy technology issues to deal with.

Dealing with debt

However, one of the biggest barriers to starting fresh, regardless of the sector, is that the travel industry is laden with “technology debt” as it strives to modernize itself.

There's a lot of it lying around, according to Timothy O'Neil-Dunne, principal at T2Impact.

“With incremental change, there are lots of problems that need to be resolved,” he said. “One of the things that happens is there's tech debt. People always talk about tech debt. Nobody ever does anything about it. So it just continues to grow.”

This issue was mooted by Travelperk CEO and co-founder Avi Meir on LinkedIn recently. “There's a big opportunity to eat the lunch of 20+ year old companies. Their technical debt is your opportunity,” said Meir, who recently spoke at Phocuswright Europe 2024.

However, O'Neil-Dunne concedes that smart travel organizations are using software to differentiate themselves, using new technology to overlay older infrastructures. There’s a lot of emphasis on API connectivity, open software and systems that can talk to each other.

“That capability is a lot better today than it's been for a long time, because you now have better tools,” he said. 

Max Starkov, a hospitality and travel technology consultant, agreed. “Oracle Hospitality Integration Platform has 3,000 integrations, which was unthinkable even a few years back,” he said. But he points out there is an ever-present “real estate mentality” when it comes to hotel innovation, because banks consider hotels in the same manner as they treat other commercial real estate properties, like office buildings.

“They have hotels. They have shopping plazas, and so forth. And they say, what technology? You have elevators. What else do you need?” he said. 

As a result, some sectors will inevitably remain more ripe for change than others, in particular those without long-term infrastructures. O'Neil-Dunne refers to the tours and activities sector as “open season” with the likes of Octo seeking to create a new framework and consistency to encourage the next wave of innovation.

“Here we are, nearly 30 years after Viator. And has anybody got more than 1% of the marketplace of tours and activities? I would say no,” he said.

As for The Annex, Killeen believes his hotel has served as a blueprint and playground to “discover what works and doesn't work." In October he revealed plans to expand, with his next property under contract in Palm Springs, California.