Phocuswright’s 2024 guide to travel innovation and tech

“Uncertainty” may be the one word that best captures the continued disruption we’ve experienced over the past few years, from the pandemic to extreme weather events, inflation, high interest rates and geopolitical tensions. In unsettled times, a deeper understanding of important trends becomes all the more critical. While uncertainty in the world may be increasing, it’s clear that several things in travel are certain:

• Travel demand is resilient, having shown it can and will bounce back from even the direst circumstances.
• More than ever, travel businesses that don’t embrace emerging technologies are on a path toward obsolescence.

If 2023 was the year that generative artificial intelligence grabbed all the headlines, 2024 will be the year that companies start operationalizing it. AI has transformed from something esoteric into something nearly everyone has heard of, and every company needs to embrace. And while generative AI may have seemed like the only tech story of late, there are plenty of other developments in travel and technology that will influence how travel businesses operate in the coming years.

Each year, Phocuswright's expert analysts identify the technology and innovation trends that will significantly influence travel distribution and the wider industry in the coming year and beyond. In 2024, of course, we’re giving generative AI the attention it deserves. But we’re also bubbling up underappreciated technologies, preparing for a future of digital identities and currencies, and keeping the focus on sustainability.

This year’s World Economic Forum conference in Davos, Switzerland, convened under the theme of “Rebuilding Trust,” citing the need to address “increasing division and uncertainty that continue to destabilize the world.” While this theme may refer primarily to the political and macroeconomic environment, trust is a crucial theme of ever-increasing importance in travel. Consider these questions:

• Should travel companies trust generative AI to help inform their business decisions?
• Can generative AI companies and platforms be trusted with proprietary business data?
• With rapid advances in digital currency, can travel businesses trust that their financial and payment solutions will continue to be secure, efficient and reliable?
• Do travelers trust the recommendations that generative AI gives them?
• Are travelers willing to hand over their personally identifiable information in exchange for trip personalization?
• Given that what’s good for the environment is not always good for business, can travelers trust the industry to do the right thing when it comes to sustainability?
• Do travelers trust the authenticity of the reviews and other content that suppliers and intermediaries feature on their websites?

Travel can be a powerful force for good, and we can all do our part to rebuild trust where needed, whether between companies and customers, between nations, or between humans and computers. Generative AI has its share of problems that engender a lack of trust, from bias to hallucinations and copyright infringement. Indeed, all nascent technologies struggle with trust-related issues as they make the journey from marginal to mainstream. Keeping abreast of the latest innovations is the bedrock upon which we can understand how to effectively leverage new technologies while establishing and enhancing trust within our ecosystems.

The full report features brief introductions to the six trends that are previewed here. Stay tuned for individual reports on each of those trends.

— Mike Coletta, manager of research and innovation

Underappreciated tech in travel

Travel is at a tipping point, balancing traditional ways of doing business with an exciting future of emerging technologies. The industry, while not a stranger to technological investment, lags other sectors in adopting and integrating new advancements. According to a McKinsey analysis of Phocuswright and Pitchbook data, in the past 15 years, only about 1% of startup funding across industries has flowed into travel and tourism.

The main limiting factors to technology adoption stem from concerns about the costs of integrating new tech, fear of wasting time on fads and not wanting to compromise on travel’s essential human touch.

AI aside, the relative lack of funding points to an underappreciation of new technology in travel, which leads to underutilization in the industry and ultimately to an underwhelming traveler experience.

The full report covers:

• How travel companies can utilize its accumulated customer data effectively for cutting-edge, personalized campaigns
• The main limiting factors to technology adoption
• Balancing tech implementations with genuine human touch
• How the latest consumer wearables presents a massive opportunity for the travel sector to close the tech gap.

—Markus Schreyer, chairman, META Foundation

Who owns the customer profile – the customer?

The very nature of digital identity is changing. Momentum is building to decouple identity from individual vendor-driven profiles by embracing a self-sovereign digital identity (SSI) that is owned and controlled by the individual. This shift would enable travelers to share information as needed with travel vendors while protecting their privacy. While SSI was introduced in 2016 and has gained some momentum over the past few years, it is hardly a universal trend that all have embraced. But the concept is starting to take hold. In the meantime, biometrics are becoming the standard for identifying passengers along the travel journey. How will these two trends work in tandem to remove friction from the travel process? 

Digital identity could play a crucial role in generating more meaningful, personalized quotes from vendors. It also may present an opportunity for forward-thinking businesses to capture market share from competitors.

The full report covers:

• Transforming current silos of customer profiles into a more universal view of the traveler
• How digital identity generates more meaningful, personalized quotes from vendors
• The accelerating pace of AI on digital identity
• Various case studies revealing insights.

—Norm Rose, senior technology and corporate market analyst

How cutting emissions cuts into corporate travel

It’s 2024 and the travel industry is back to normal … or is it? There is one big holdout still hotly debated as the sector that may never fully recover from 2020 – and that, of course, is corporate travel. Not business travel, where entrepreneurs, solo practitioners and small to medium businesses (SMBs) have helped fuel a recent boom. Rather, it’s the large enterprises, particularly the Fortune 500, which are stalling a full recovery.

By understanding how large corporations plan to achieve sustainability targets, we can better predict corporate travel’s recovery.

The full report covers:

• Several reasons for the slower pace of recovery
• Science-based targets initiative (SBTi) and Scope 3 emissions
• Leading methods to achieve targets.

—Lorraine Sileo, senior analyst and founder of Phocuswright Research

Keeping pace with GenAI in travel

Generative AI dominated travel industry conversation in 2023, promising to revolutionize the way we plan, book and experience travel. Across both leisure and corporate travel, the race is on to implement generative AI in everything from consumer interfaces to back-end operations. As the industry moves beyond the initial hype, 2024 will be all about leveraging what has been learned so far to focus on the most beneficial use cases – and avoid wasting resources on those without a clear ROI.

Travel companies in 2024 are expected to accelerate investment in generative AI applications. But separating the winning use cases from the losers will be an ongoing process of trial and error.

The full report covers:

• Separating the winning use cases from the losers
• Back-end applications, advertising and SEO and interface evolution
• Results-based approaches.

—Cathy Schetzina Walsh, senior research analyst, and Mike Coletta, manager of research and innovation

Autonomous agents in travel are coming

Generative AI is more than simply a technology to build a better chatbot. It increasingly enables the autonomous creation of complex types of content in text, audio and even video format. It has already impacted the travel industry significantly since the launch of ChatGPT in late 2022, from itinerary planning to customer service to the optimization of copy and much more. But how will it affect the industry in the long term?

The concept of autonomous agents has the promise of truly automating the travel planning and booking process, but what will that interface look like?

The full report covers:

• How generative AI can be used to conceive, prioritize and complete tasks
• What an interface looks like
• The companies best positioned to create autonomous agents
• Legal and regulatory concerns about the large language models (LLMs).

—Norm Rose, senior technology and corporate market analyst

Get ready to accept the digital euro, rupee and yuan

Many in the travel industry have dismissed cryptocurrency as a passing fad due to the numerous high-profile failures of exchanges and stablecoins, as well as pending governmental regulation designed to limit cryptocurrency growth. As an ancillary result, something that may be going unnoticed by some in the industry is the fact that central banks around the world have begun issuing digital currencies. These Central Bank Digital Currencies (CBDCs) have many characteristics similar to cryptocurrencies, but they are promoted and controlled by existing central banks rather than by companies or decentralized organizations.  

The stated goals of CBDCs are to increase privacy, transferability, convenience, accessibility and security, but the centralized control of CBDCs has sparked major concerns about these same issues.

The full report covers:

• What is needed for suppliers and retailers to accept CBDCs as a form of payment
• The different stages of CBDC development and execution
• The stated goals of CBDCs
• Legal and regulatory concerns about the large language models (LLMs).

—Norm Rose, senior technology and corporate market analyst