Passport to the future: digital transformation in the travel industry

Digital transformation in the travel industry

You take your phone, unlock the screen, click on your favourite travel app and buy flight tickets for your next summer holiday.

It’s automatic. But it wasn’t always that easy to travel the world.

Thanks to the digital transformation in the travel industry from the early 2000s until today,   anyone can book tickets and accommodation online in just a few clicks.

Digitalisation has reshaped travel and tourism for both travellers and businesses in the industry: it’s faster for passengers to organise trips and for organisations to track people’s preferences and personalise offers for an enhanced experience.

What does the future hold for this growing industry?

In this article, we’ll explore what we know about digital transformation in tourism, key statistics, present and future perspectives and upcoming trends in the sector.

May the journey begin!

What’s digital transformation in the travel industry?

Digital transformation in the travel industry refers to using technology to modernise and revolutionise how travel businesses operate and interact with customers.

For example, the adoption of mobile check-in apps allowing passengers to onboard flights easily or the implementation of AI-powered chatbots to answer travellers’ questions on autopilot.

Digital transformation in tourism in numbers

As a result of digitalisation, the travel and tourism industry has experienced unprecedented growth this century. Although the coronavirus pandemic threatened its acceleration, today, a sense of optimism prevails among travellers and organisations.

Indeed, over 70% of travellers are either ‘really excited to travel’ or ‘happy to travel’, according to a 2023 IPSOS survey.

These encouraging statistics, sourced from recent Statista reports, show the state of the travel industry and its increasing modernisation:

  • The online travel market size worldwide is worth €432 billion.
  • In 2017, online sales channels contributed about 60% of global travel and tourism market revenue. By the end of 2023, this figure is expected to rise to 69%.
  • In 2022, the United Kingdom had the highest share of digital advertising spending in the travel and leisure industry among selected global countries, with nearly 12% of spending. The US sits at 7%.
  • ​​In 2023, the global revenue of travel apps is projected to increase by 17% compared to the previous year, reaching nearly €364 million.
  • Over 50% of travellers expect to rely on travel apps offering all the services needed to plan a trip in 2023.
Travel industry worldwide

How does digital transformation affect the travel industry?

To explain how technology affects travel, put yourself into perspective.

Fifteen to twenty years ago, your phone was just a device to call people, a map was a piece of paper, and travel agents were like wizards who knew everything about your dream destination. Going on holidays felt like embarking on an Indiana Jones-style adventure.

Today, you can access thousands of travel deals with just a few clicks or taps on your smartphone or any other electronic device connected to the internet.

From communication to marketing, from travel experience to operations, technology has changed (and keeps changing) travelling, reshaping how we move around the globe.

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  • Mobile apps for bookings, reservations, and real-time updates.
  • Advanced travel search engine websites for easy planning and purchasing.
  • AI-powered chatbots for instant customer support and personalised recommendations.
  • Social media engagement and instant messaging for customer feedback, reviews, and personalised assistance.

Marketing and personalisation:

  • Targeted marketing campaigns to offer relevant travel deals based on customer preferences, location data, and user behaviour.
  • Personalised loyalty programs, exclusive perks and rewards for frequent travellers.

Travel experience:

  • Smart devices in hotels and airports to enhance convenience and efficiency.
  • Digital tour guides with local recommendations to help travellers enjoy the most out of their trip.
  • Contactless payment options to offer smoother transactions and increased safety during travel.

Operations and efficiency:

  • Automated check-in and self-service kiosks, reducing queues and wait times.
  • Advanced analytics to optimise pricing, resource management, and demand forecasting.
  • Predictive analytics to forecast travel demand, optimise routes, and improve resource allocation.

The shift of the travel and tourism industry into a 100% customer-centric model is evident now more than ever.

As shown in the infographic below, travel business professionals’ top digital transformation priorities are improving their customer experience and marketing and sales capabilities.

Transformation priorities

Now that we’ve covered the key areas where technology has made significant advancements in the travel industry, it’s time to delve into the three key trends shaping its future.

When analysing how digitalisation has changed other industries, like the digital transformation in the healthcare industry, we’ve seen how portable gadgets and new technologies have been at the forefront of innovation.

The travel industry is likewise embracing this trend.

Big data to improve personalisation

When you open a travel app or visit a travel search engine, you get special offers and recommendations tailored to your needs. It’s as if they were reading your mind. How is that even possible?

The answer is big data and analytics.

Travel organisations use large sets of information from various sources, such as online bookings and social media interaction, to personalise your search experience. So, the next time you enter their site, you’ll receive unique and appealing deals.

An excellent example of a company leveraging big data and analytics is Airbnb. The data science team at Airbnb analyses over 11 petabytes of data to predict host-guest matches and improve service levels.

They consider factors like behavioural aspects or sentiment to provide customised search results and build a top customer experience.

Internet of Things (IoT) to allow seamless travel

IoT is a system of connected devices with unique identifiers that transfer data over a network. Smart travelling wallets, contactless payment wearables and portable Wi-Fi hotspots are all part of it.

These devices share and transfer data for achieving different goals, such as data collection, predictive maintenance, tracking, and automation.

An example of IoT implementation in the travel industry is smart luggage. You may have never heard about it, but it’s an evolving trend in the sector: the global market for smart luggage is expected to grow at a CAGR of 21.2% between 2023 and 2028.

Smart suitcases incorporate long-life batteries, built-in trackers, and biometric locks, among other features. Travellers can track their luggage in real-time via a mobile app or web interface and lock or unlock it remotely.

IOT applications

Artificial intelligence (AI) for revolutionising journey planning

AI is taking over the world by storm, and the travel and tourism industry is no exception.

According to a TIME article, more and more people are trusting their travel experiences to a chatbot, no other than the most popular AI tool ever: ChatGPT.

Travellers are asking the chatbot for places to go on holiday and what to do in those destinations. What used to be a quick Google search is now an AI-powered conversation.

Even companies have fallen for this trend. Expedia introduced earlier this year a ChatGPT plugin, allowing travellers to chat on the platform and seamlessly book trips through the company’s website.

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Virtual reality (VR) for enhanced experiences

VR technology, contrary to AI, is moving slowly. Big tech companies are investing less in it due to the increasing popularity of AI, and, as a result, the travel industry has seen fewer notable VR projects in recent years.

For instance, the ‘VRoom Service’, implemented in 2015 by Marriot Hotels, is one of the sector’s most successful VR product launches. The experience featured 360 VR visits to destinations like the Andes Mountains and Beijing, enhancing the in-room guest stay through storytelling and technology.

Despite the lack of interest and investment, the global VR and augmented reality (AR) market in the tourism industry is expected to reach $9.6 billion by 2025. If growth predictions are accurate, we’ll see more VR technology projects transforming the travel industry in the upcoming years.

The launch of Apple VisionPro, Apple’s first spatial computer, and Quest 3, Meta’s next-generation virtual and mixed reality headset, are a glimpse of what’s to come.

In summary

Over the past two decades, the travel industry has undergone a profound evolution, showing no signs of slowing down.

Looking ahead into the future, embracing innovation and staying agile will be essential for travel business leaders to navigate the transformative path that lies ahead.

Digital transformation has revolutionised travel, making booking and organising trips easier than ever.
The travel industry has experienced significant growth due to digitalisation. The online travel market size worldwide is worth €432 billion.
Technology has improved communication, marketing, travel experiences, and operational efficiency.
Customer-centricity is a top priority for industry professionals, focusing on improving customer experience and marketing capabilities.
Key future trends include big data for personalisation, IoT for seamless travel, and AI/VR for enhanced experiences.

The travel and tourism industry is moving fast, adopting new technologies along the way. Is your company ready to thrive in an ever-changing landscape?

At The Scalers, we build dedicated development teams in Bangalore, India, to empower businesses like yours in driving innovation and providing improved travel experiences.
Contact us, tell us about your needs and preferences and let’s start creating a world-class tech team together!