If you're a frequent or even casual traveler, then you've probably played chicken with yourself a time or two. You dare yourself, "Do I book now or come back in an hour, tomorrow, or next week for the chance of a better deal... or crashing and burning on pricing?"
Even if you do manage to best your original pricing, chances are the travel company really hasn't lost out at all. Over the past many years, airlines and hoteliers have proven themselves to be masters of price optimization. Along with their scheduling and route optimization and decades-old loyalty programs, it's one of their analytical specialties.
Price optimization may live on as your nemesis, but is it enough to carry travel companies forward in this day of big-data? Tom Davenport, a visiting professor at Harvard Business School and an author of more than a dozen books on business analytics, suggests not. There are individual exceptions, of course, but for the most part companies in other industries are using data in smarter, more innovative, and more advantageous ways, he said in a recently released report, "At the Big Data Crossroads: Turning Towards a Smarter Travel Experience." This needs to change, he added, given that big-data "could be one of the most influential initiatives since the online reservations system."
In preparing the report, sponsored by Amadeus, a technology solutions provider to the travel industry, Davenport spoke with 21 companies involved in various aspects of the travel business. What he learned about the challenges facing travel companies was not unlike what you would expect to find in any company with big legacy IT operations: "key data is often fragmented across multiple functions and units." He used the situation at airlines as an example:
...airline data on the passenger experience is spread across flight operations, baggage, loyalty programs, complaint databases, and external sources like social media. In order to make effective decisions about how to promote offers to customers and recover from service failures, airlines need to combine all of this information into one data warehouse and one set of algorithms.
Travel companies willing to invest in a big-data architecture and big-data analytics programs will see benefits across major processes. Davenport highlighted several in his report, but I'll focus on just one here -- travel management -- since it touches us as business travelers. Big-data can prove transformative for companies providing booking and other travel management services to businesses. As one senior executive at a global travel management firm told him:
Our most analytical clients are increasingly interested not just in reporting on the past, but on predictive models and forecasts of their employee travel behavior. We’re not sure how
rapidly the adoption of big data will take place, but we see it as essential to the effective management of corporate travel.
Davenport paints a rather compelling picture on his own, one that would have your participation in travel planning limited to conference registration and verification. After you register, all of the logistics -- city, hotel, start and end dates, for example -- would get loaded into your scheduling application and from there into the corporate travel management application. Next thing you know, you've received your travel itinerary comprising:
- A flight on your preferred airline, frequent flyer upgrade accounted for
- A hotel reservation
- A reservation for a self-driving rental car, which the travel management application determined was the most cost-effective option. The travel app also would have had downloaded your destination address, preferred air conditioning temperature, and favorite satellite music station to the car.
- A dinner reservation at your favorite type of restaurant, plus suggestions for dining companions culled from "valued members" of your social network who also are registered for the conference. You would need only touch your tablet screen to extend invites.
And don't worry about squeezing in time to do your expense report once you get back to the office. That would be handled automatically, too.
I don't know about you, but as somebody who still hasn't found time to book planned fall travel or file a travel expense report from last month, big-data's arrival for travel management could come none too soon. I can't foresee travel companies backing off the aggressive price optimization they've gotten so good at, but I do hope they figure out many other ways to tap into big-data and improve my travel experience.
Can you think of innovative ways travel companies can use big-data to improve your next business trip? Share below.