Big data is arguably the biggest opportunity in a generation for travel businesses to embrace the changing structure of data and maximize its use.
It offers the potential for a vast shift for all travel companies, empowering them to enhance both the business and experience of travel.
As with any generational shift in technology, however, the opportunities arrive hand in hand with the potential for significant disruption, which naturally bring many challenges – competitive and creative – for our industry to consider.
Here Breaking Travel News sits down with report author Thomas Davenport and Amadeus head of travel intelligence Pascal Clement to discuss the industry changing potential of big data.
Breaking Travel News: Pascal, perhaps you could just tell us a little about the motivation behind the report; why now?
Pascal Clement: As a facilitator to the travel industry we took it as our role to start a discussion on big date and its possible impact on the sector.
The exercise is designed to generate a debate on the issues surrounding this area, to generate interest inside the travel industry.
BTN: In what ways does big data differ from the more traditional information gathered by the travel sector?
Thomas Davenport: When we consider big data there is certainly a volume issue. The travel industry, up until now, amasses a great deal of data as it is, and this is a continuation of that.
What distinguishes big data from the past is its lack of structure. This means you have data like text from social media sites, images, video, and even voice in some cases. None of is this data fits into the rows or columns of more traditional data sets.
A second criterion would be that big data arrives continuously and rapidly; the velocity of it is unusual as well. People talk about the ‘three Vs’: Volume, Variety and Velocity.
In order to get any value from this data you have analyse and interpret it in new ways; certainly if you are using the data for the purposes of decision making.
One can also use the data to develop new products and services for customers. Amadeus has looked at this with its Extreme Search, for example, or the predictive price forecast engine from KAYAK. These are examples of products, rather than insight.
PC: This is not about meaning something different. It is more about the approach to big data that is different from what we could call the classic business intelligence field. With business intelligence we know what we want to find. With big data we do not know this; we look at the data to tell us what we need to know. This can be considered one of the main differences.
However, big data is more than this. Big data comes with a new set of technologies which allow us to approach the classic business intelligence in a very different way. This is a revolution which is taking place.
It is not about having a big data bubble somewhere. Big data embraces all types of data, while we propose an approach to utilise it.
BTN: How aware is the travel sector of the potential of big data?
TD: It differs by sub-sector. Anybody with a very high online component to their business has to be aware of it. Web clickstreams, for example, generate a huge amount of data. Even the idea of online web services – search, aggregation, and so on – involve a massive amount of data.
I would say there is less awareness on the airline side, or certainly less action, who knows if there is awareness for sure? There is relatively low adoption in this sector.
It is perhaps a bit higher in hotels. But, again, this is nothing compared to the adoption on the online side.
BTN: Does the adoption of big data favour the larger companies in the industry?
TD: That is an interesting question. Historically that was the situation for traditional data and analytics; the big companies were the early adopters and most aggressive users.
Now, to some degree, the advantage has shifted to the start ups, those which do not have this legacy technology to wrestle with. A lot of the software for big data is also free, it is open source. A lot of the hardware is also low cost, coming through the cloud; buy it ‘by the drink’ if you will.
The real gating factor is awareness of the possibilities of big data. If you have people who can help you do this work, then everything else is relatively inexpensive.
That does not seem to point toward an advantage for large companies anymore.
PC: We have found a similar pattern; companies which do not have a legacy are best placed to see the situation with totally new eyes.
We see these smaller players move faster than the bigger companies.
BTN: The report describes the tourism industry as being ‘at a crossroads’ when it comes to big data. What are the pitfalls of a failure to adopt?
TD: People are going to travel in any case, but there is a chance fewer will if it does not become a more pleasant experience.
Early adopters of big data stand to gain a competitive advantage, including those we identified in the report.
It is also conceivable a competitor from outside the industry could come in and change the game. Existing travel industry players need to step up and invest more, pay more attention to the potential we have here.
BTN: In what ways will the consumer benefit from a successful adoption of big data?
TD: In a variety of ways. The travel experience right now for most people, especially on airlines, is not a particularly pleasant one, so the industry could work to understand what individual preferences are.
There is also scope to understand what recent experiences the consumer has had, with a particular airline for example.
This is true for the loyal, big spending consumer particularly. It is unlikely very low-budget airlines will be able to use big data to dramatically transform their travel experiences; it is much more likely to happen at the higher end of the market.
Another area could also be offers; presenting offers people really want almost seems inconceivable at present. But we are starting to see this in the retail space.
Companies like Tesco, for example, know if you bought Thai green curry paste chances are you are an adventurous eater, and can offer you other adventurous foods. In the same sense, big data can tell us if a traveller is adventurous or conservative, or goes to a few select destinations repeatedly, and tailor an offer to this information.
PC: If we look at the overall situation we are considering the whole travel experience – door-to-door. Even if you look at a low-cost traveller there are things we can do to help.
One of the key points is for us to offer a much better connection between the various travel providers. For example, letting an airline know where a passenger is going after. How can they help with that?
BTN: Are we likely to see more concerns raised over the invasion of privacy as the use of big data expands?
TD: This is certainly an evolving domain, but academic research suggests that, while people are concerned in principal about the abuse of their personal data, they do not mind at all if it is used to give them valuable products at a discount or for free.
For example, we talk about Caesars in the report, a gaming chain which knows a huge amount about its customers, but has not registered a single complaint. This is because they use the data they have to provide services to their customers.
This is likely to be true of Tesco as well.
What we have not done in many cases is established a good exchange with customers. We collect their data and try to use it, but fail to offer them suitable offers in return.
PC: This is something very serious; privacy needs to be respected. This is not something we can move away from.
But it is up to the consumer what he wants to happen. For example, I would love to drive to the airport and have my phone check me in to my flight when I am ten miles away, for example.
However, I know other people would not like this service. There are lots of things which can be done to make privacy levels acceptable to all.
Interview: Chris O’Toole