MODULE 2

A. Definition and Overview

• The impact of digital technology on the tourism industry

Tourism was one of the first sectors to digitize business processes on a global scale, bringing flight and hotel booking online to become a digital pioneer. As information and communications technology (ICT) became a global phenomenon, tourism was a consistent early adopter of new technologies and platforms. As it is implemented in Introduction ICT offers a wide range of tools and technologies that empower entrepreneurs to enhance their businesses and seize new opportunities. It enables them to leverage digital platforms, such as websites and social media, to market their tourism offerings, engage with customers, and build brand visibility. By incorporating ICT solutions like online booking systems, customer relationship management (CRM) software, and data analytics, entrepreneurs can optimize their operations and gain valuable insights into customer preferences and behaviors. Moreover, ICT plays a vital role in streamlining communication, collaboration, and knowledge sharing among stakeholders in the tourism ecosystem. By adopting digital tools, entrepreneurs can drive innovation, improve efficiency, and create immersive experiences that cater to the evolving needs of modern travelers.

The use of technologies, including the ‘Internet of Things’, location-based services, artificial intelligence, augmented and virtual reality, and blockchain technology has resulted in a more attractive, efficient, inclusive, and economically, socially, and environmentally sustainable tourism offer than its predecessor. It has also facilitated innovation and rethinking of processes, with a view to tackling challenges such as seasonality and overcrowding and developing smarter destinations. Digitalization is as vital in the tourism sector as it is in all other sectors. The effective use of information and communication technologies contributes positively to the sectors.

In addition to that, The Digitization Index (DiGiX) assesses the factors, agents' behavior, and institutions that enable a country to fully leverage Information and Communication Technologies (ICTs) for increased competitiveness and well-being. The Nordic EU countries take top positions in the annual EU digital index. Denmark, Finland and Sweden are the three most-digital EU countries. To increase digitalization, there are some vital points to do country-specific. Some specific points we have given you below should be a continuous improvement by countries.

• Connectivity, dealing with access to and use of broadband.

• Integration of digital technology by businesses, including e-commerce, cloud services, Big Data, etc.

• Digital public services, dealing with eGovernment services, e-prescriptions, Big Data, and AI.

Improving these issues can help foster successful entrepreneurship for the EU and other countries, creating a more connected and digitally advanced landscape for both the tourism industry and broader economic development.

The European Union (EU) is a leader in digital tourism, thanks to its diverse cultural and natural attractions, advanced telecommunications infrastructure, and widespread internet access. EU member states are also at the forefront of technological innovation, making it a fertile ground for developing and adopting cutting-edge digital solutions in the tourism sector. Cross-border collaboration among EU countries enables the development of standardized practices and solutions that can significantly benefit tourists across the region. Despite its strengths, the EU's digital tourism landscape faces some challenges. The digital divide, where disparities in internet access and digital literacy persist, particularly in less economically developed regions, is a notable weakness. The EU has ample opportunities in the digital tourism space. Further digitization and modernization of the tourism sector offer immense potential to enhance tourist experiences through advanced technologies. Embracing digital technologies can align with the EU's sustainability goals by optimizing resource use and reducing the environmental impact of tourism. However, the EU must also consider the threats posed by the increasing digitalization of the tourism sector. Cybersecurity risks, which could negatively impact both tourists and the industry's reputation, are a major concern. Over-tourism, which can lead to environmental damage and strain local resources, is another threat. Economic fluctuations can reduce travel budgets, affecting the tourism industry and its digital initiatives. Overall, the EU is in a strong position to lead the global digital tourism industry. By investing in digital infrastructure and skills, developing innovative technologies and products, and promoting sustainable practices, the EU can create a more attractive and sustainable digital tourism sector that benefits everyone. According to a 2022 report by the European Commission, digital tourism is growing rapidly in the EU.

Some of the most widely used digital tourism tools/apps in the European region are:

Considering the effectiveness and efficiency of the above-mentioned practices, to empower entrepreneurs across and foster a dynamic digital tourism landscape, a multifaceted approach is essential. This approach begins with substantial investments in digital infrastructure, ensuring widespread high-speed internet access and the availability of affordable mobile data plans. These foundational elements lay the groundwork for innovation and connectivity. The promotion of digital tourism products and services is equally crucial.  The development of engaging and informative digital tourism content is pivotal. This includes the creation of websites, mobile apps, and other digital resources that provide in-depth insights into tourist destinations, attractions, and events. Balancing innovation with privacy, creating a supportive regulatory environment for digital tourism is essential. Morever, by sharing best practices and forging joint initiatives, EU nations can collectively elevate the digital tourism landscape, opening doors of opportunity for entrepreneurs to thrive and contribute to the industry's sustained growth. For this, it is essential to master some of the trends that are spreading around the world. Several main tendencies are the key points of the change in the field:

Automatics and Robotics

Automation and robotics are key trends in tourism, with applications developed for physical tourism businesses as well as online. For instance, many tasks that were once handled by humans are now being taken over by robots or automated systems such as catboats. These have fallen into widespread use across the industry and are designed to help people find and book tours, transport, and accommodation by asking a set of questions. Examples that are more sophisticated might include the robot “staff” used by some hotels to run the reception desk or even serve food and drinks. While robots have advanced in their ability to provide products and services, industry, government, and consumers have not entirely figured out how to integrate them into the economy (Ivanov and Webster, 2019).

Mobile technology/cloud computing. Cloud technologies, Wi-Fi, and international mobile plans make mobile devices increasingly pervasive and important travel aids, including for accessing destination information in real-time, online booking, and mobile payment. Cloud technologies allow SMEs to manage their business from anywhere high-speed internet is available.

Data analytics. In the digital era, consumers and businesses alike are in the perpetual generation of new data. The capacity of businesses to use data drives new business models and productivity. Data analytics can predict customer preferences and channel consumer-purchasing behaviour. It is also used for revenue management and to employ dynamic pricing. Employees of SMEs must develop skills to be part of this data-driven ecosystem, and issues of privacy and data sharing are key concerns of the government.

Artificial Intelligence (AI). Artificial intelligence, catboats, and voice technology enable customers to undertake internet searches, digital check-in, and access digital concierge services, voice assistants, and smart rooms. This technology offers personalized, customized, on-demand service that facilitates seamless travel.

Internet of Things (IoT). IoT can fuel a data-rich tourism sector and support smart tourism by making cities more efficient. The sensors, data, and automation interoperability produce real-time insights and information for marketing and managing tourism, improving visitor experiences, and increasing operational and resource efficiencies while reducing environmental impacts.

Augmented reality/Virtual Reality (AR/VR). Augmented reality systems show virtual objects in the real world. Uses in tourism can include replacing paper-based marketing and advertising materials, gamification and augmented visitor experiences in the destination, and travel assistants that guide users through complex public transport systems in real-time.

Blockchain. Smart contracts, based on blockchain, can be used across the supply chain. Future gains would see user-friendly apps tailored for wide diffusion to tourism businesses of all sizes to enhance end-to-end user transparency.

For example, through the Internet of Things (IoT), you can host your guests in intelligent rooms, able to react to a simple voice gesture of the guest, who, in this way, has at his disposal a real personal virtual assistant able to immediately meet all of his needs and requests. Alternatively, think about the use of Big Data, which is a useful strategic tool for small hotels as well as for airlines and major travel sites alike.

Thanks to Big Data, all these operators can perfectly profile their clients and build a highly personalized offer that aligns with their characteristics and preferences. It is evident that tourists 2.0 (in the digital age), referring to tourists during the digital transformation era, have certain expectations from the companies they engage with. Today’s tourists expect an experience that is unique and personalized, digital and memorable at the same time. 

On closer inspection, digital transformation has not only “changed the tourism business”, introducing tools and technologies useful to those who want to grow and enrich their business, but it has also irreversibly transformed the tourist and, consequently, its priorities.

For one, tourism is no longer only for the wealthy. For another, sharing information about the best accommodations, the best restaurants, the must-see destinations, and the can’t miss experiences is no longer limited to books or simply word of mouth. It’s true that some dynamics of travel have stayed the same-how we prepare for a trip, the fact that we still want recommendations from those in the know and those have also been impacted by technology.

Today, websites such as TripAdvisor, Booking.com, and Expedia are overflowing with useful reviews to guide our choices. There are blogs dedicated to travel (large or small, institutional or independent), there is “user-generated content” (more generally), and marketing based on influencers. There are also a huge number of apps aimed at the sector. In addition, we all have smartphones that allow us to capture memories and take pictures that we can share in near real-time to share with potentially thousands of people on social networks. There are also new frontiers already on the horizon, including wearable devices such as virtual reality experiences, capturing time-lapse with body cameras, etc.

The area of potential is broad and complex, and it is all accelerated thanks to the internet and digital transformation, with no hint of slowing down.

• The concept of digital tourism

Let’s begin with the definition of the topic at hand. What is digital tourism?      

Digital tourism can be defined in many ways. The term “digital tourism” refers to how we use digital tools to organize, manage and even enjoy the travel experience. The integration of new technologies in the tourism sector, an economically relevant sector, but also a new paradigm that changes not only the rules of the game but also tourists themselves and how they think about travel.

Tourism is one of the fundamental sectors of the economy of many countries. One way to improve it and make it more productive is to expose it to digital transformation. Today, digitization is an unavoidable choice, not only for increasing the number of people traveling and moving, but also for improving the overall quality of the experience, leaving a lasting impression on all tourists, both domestic and foreign.

When we talk about digital tourism, it is easy to make the mistake of believing that the digital component plays a role only in the booking and payment of a trip, accommodation, or transportation. On the contrary, digital transformation manifests itself along all phases of the journey, following the path the tourist takes in his customer experience step by step.

The internet is now an essential component of the experience that every tourist makes when he or she decides to travel. From searching to purchasing, from writing reviews to publishing them: at least one of these actions is carried out online by any tourist during their vacation period. As a tourist yourself, you can just imagine how pervasive and influential the digital component can be when it comes to all these activities.

In other words, what was once the old analog word of mouth has been replaced by digital word of mouth, which is in some ways much more effective. In fact, as shown by the University of Oxford’s Oxford Economics research company, TripAdvisor (the most famous restaurant and hotel review platform) can influence most of the activities that travelers undertake. Already in 2017, this platform played a key role in increasing the number of trips, pushing tourists to spend 15% more, thus moving an amount equal to $80 billion to the sector, until today that counts almost more than a million reviews.

On the other hand, local governments and destination management organisations (DMOs) see digitalization as a way to help destinations integrate arrivals smoothly and sustainably by reducing the impact of seasonal flows on local resources, infrastructures, transport systems, and services. For the development of rural and remote locations and ecosystems, this may be especially crucial. Additionally, it can aid in improving measurability and tracking trends, which could fundamentally alter local, regional, national, and EU-level sustainable tourism initiatives.

The evolution of digital tourism

The majority of industries around the world have experienced an increase in digitalization during the past three decades. With the growth of the Internet travel market and rising customer demand for digital travel services, the travel and tourism sector is no exception. 

Online bookings and online reviews

The usage of digital tools by tourists during their entire trip experience is referred to as "digital travel" or "digital tourism."

The online travel market is made up of businesses like online travel agencies (OTAs) like Booking and Expedia, which let visitors purchase travel services independently online, and travel websites like TripAdvisor, which offer reviews and travel booking choices. Customers are also searching for more digital experiences while traveling at the same time. As well as mobile travel, solutions like using an app to find new tourist attractions or check into a hotel room can include choices like virtual tours of a chosen location or lodging.

The impact of social media on travel. Digital Tourism influences analogue tourism

Today there are so many examples that we can make to understand that digital tourism’s relevance is not limited to the economic aspect. On the contrary, digital tourism is even able to change and influence the geography and routes of even “analogue” tourism. One of the most enlightening cases is that of Instagram.

Social media websites now play a significant role in the travel sector, as consumers use them to share travel-related content online and businesses and influencers use them as a marketing tool to promote travel-related services and holiday destinations. In 2022, it was discovered that the travel industry exhibited a higher average engagement rate with brand posts on Instagram compared to the fashion industry. Moreover, in October of the same year, social media marketing emerged as the most crucial digital transformation topic for hotels in Europe.

Posting pictures, selfies, and stories from trips and vacations has turned into a summer ritual that few people are able to avoid these days. What was once just a way for people to share their experiences with friends has evolved over time into something more: Instagram has actually developed into a travel "catalogue" with a variety of options. It is, among other things, a catalogue with a powerful capacity to sway users' decisions about their upcoming travel plans.

Research commissioned by EasyJet of tourists between 18 and 68 years old found that 55% of respondents made all of their travel decisions based solely on Instagram images. More than 30% of the more than 2,000 people surveyed claimed that they picked their travel destination in part because of the so-called "photo opportunity," or the chance to share beautiful photos on social media. As a result, some previously regarded "off the beaten path" locations are now highly sought-after spots for mass tourism.

A good example of this application is what happened to Trolltunga, a rock formation in Norway that was largely unknown to most people until recently. In 2009, only 1,000 people had flown over this remote, but after a burgeoning photographic echo on Instagram, by 2019 there were more than 100,000 photos using the Trolltunga hashtag. 

This means that a small number of popular images can influence the travel plans of thousands of people, with all the implications this has for business.