Student whitepaper - The future of travel

Posted by Jenni Armstrong on 27 April 2016

The second of three-part series of high-flying whitepapers from the October 2015 cohort this week, takes a look at the future of the travel industry. Group 18 painted a postcard-perfect vision of how virtual escapism experiences are perfectly suited to the travel industry and could take marketing and travel experiences to a whole new level across the customer journey.

INTRODUCTION

Mtravel1.jpgarriott hotels created a '4-D' experience, and it's one of the latest innovations in virtual reality, delivered via an Oculus Rift headset inside a special Teleporter station. This experience is part of the hotel chain's 'Travel Brilliantly' campaign. You feel as if you’re in a movie playing 360-degrees around you, all above you, underneath your feet. You don’t direct it like a videogame but instead hold on and go for the ride!

ROOM FOR MORE INNOVATION

Recent innovations in VR and AR in tourism gives the possibility to be in places you never thought you would be. Improvements in camera technology mean that virtual 360 degree tours of hotels, beaches, cruise ships and anywhere really can be marketed, with the ‘try before you buy’ incentive for potential customers. The Thomas Cook experience even took home an award for the ‘Most Innovation Development in Entertainment’ category.

This technology can still be experienced at relatively low cost, but naturally not with the same quality, even from a smartphone. You can also use augmented reality, such as actors in period costume spring to life as a visitor views a historic monument via their phone camera. Paper planes coming to life as 3D explorable models is already being used in travel brochures which provide an app and viewing goggles.

A definite gap not currently being filled is the blending of VR and AR into one end-to-end synchronised experience.

A TREND THAT IS HERE TO STAY

travel2.jpgNigel Pocklington (VP Global Marketing & Strategy at Expedia) was recently asked 'Which, according to you, has been the most striking or potentially path-breaking development from the travel sector in the last six months or so?'

His response was '...Virtual Reality is likely to have a big impact on travellers in the near future. This can be anything from translating a menu using Google Goggles to putting the guidebook to one side and using a virtual reality layer on your phone to picture the street in front of you and get links to restaurant reviews or travel information.'

Nigel is referring to both Virtual Reality (VR) and Augmented Reality (AR) in his statement, but it feels like VR’s escapism experience is perfectly suited to the travel industry and is ready to really take off in 2016. AR is further behind in development but forecast to also provide great benefit to the travel industry over the next five years. Over $3.5bn has been invested in VR & AR start-ups in the last 2 years alone.

travel3.jpgDigital Tourism Think Tank has VR as its No.1 trend for the travel industry in 2016 with a number of new devices launching to supplement earlier products such as Samsung’s Gear VR. The travel industry is already and will continue to benefit. A number of travel companies have been offering VR experiences to their customers. Last year Thomas Cook mailed brochures with cardboard VR frames for Smartphones to view VR content via a downloadable App. Qantas are offering their 1st class passengers Samsung Gear VR experiences onboard their flights truly bringing to life the 'destination guide.'

CHOOSING A WINNING STRATEGY

Gartner's Hype Cycle shows that Virtual Reality is now on the ‘Slope of Enlightenment’, meaning this technology is about to mature as the technology will become mainstream. Meanwhile, Augmented Reality seems to be stuck in the ‘Trough of Disillusionment’. Nevertheless, for the travel industry both technologies will provide great synergy in creating an awesome personal and contextual travel experience. Virtual Reality’s attractiveness is ready to hit large audiences and Augmented Reality will benefit by jumping on the bandwagon as the two technologies provide complementary experiences.

travel4.jpgSo, how can the travel industry create a first mover effect with these technologies and benefit from revitalise its business model?

The travel industry should now be focusing on fully understanding how it can revolutionise its product and travel journey, by offering consumers VR-videos to explore each single travel destination. The next step is to enable a fully integrated buying experience based on personal preferences. Consumers can construct their ideal trip by picking and choosing accommodation, related activities and 3rd party services.

When consumers start travelling - the product and service delivery - both Virtual and Augmented Reality tools can be merged to create a personalised virtual guide to the travellers on their trip - preferably in a single app that also holds full end-to-end itinerary details. Travellers can then interact with each other and their surroundings, as well as enjoy hassle-free travelling as all stored itinerary data allows for remote check-in, service information and so on.

By turning the whole travel journey into a personalised, integrated travel experience based in one single app, the travel agency will become a travel architect with exciting new business models. The personalised buying and service delivery process has huge possibilities for (sponsored) brand enhancement, advertising and selling 3rd party product and services. Additionally, the virtual travel guide will hold plenty of local commercial opportunities for geo-targeted advertising on-the-go. Think local restaurants, shops, as well as tickets for activities and transportation services.

Finally, travellers can be incentivised to create and post content on their social networks, not only creating content to continuously enrich the whole travel experience but also providing a foundation for superb native advertising targeted at similar audiences throughout social networks. A smart acquisition strategy that will reduce the spend on advertising tremendously.

BENEFITS, RISKS AND CHALLENGES

The ability to create influential and powerful emotive connections with customers through story telling is a real benefit of VR.

'For consumers looking for inspiration, there’s nothing more powerful than transporting you there. Pictures don’t do locations justice.' Says Resh Sidhu, Director at VR specialists Framestore. Thomas Cook’s recent use of VR showed views from the top of the Rockefeller Centre to customers, stating that over three months, the revenue for New York excursions was up by 190 percent.

travel5.jpgRedefining the meaning of 'experience' will be a key risk in the growth of virtual reality. Any industry that effectively sells experiences and not services or products could be threatened by the implementations. Social and technological issues need to be addressed such as privacy concerns surrounding the likes of Google Glass’s and gaining permission for the companies to capture and monitor information, as well as ensuring it is securely protected.

With strong growth in mobile phone usage and the aligned growth of VR, compatibility of phones will be a key challenge to overcome for future success. If content is downloaded, it requires vast storage. In the VRSE app library, for example, 'Walking New York' is 700mb which could be problematic when syncing between camera technology, quality of content and internet speeds. However, the continued growth in sales of large data bundles and broadband access (e.g. 95% superfast broadband in UK by 2017) is alleviating this challenge. Alongside developments in mobile internet and the introduction of 5G (predicted to launch in 2020) and continuous improvements in phone capability, these issues should not act as a long-term barrier.

Investing in research and development for VR will be pivotal to keeping up with advancements and privacy concerns in the industry. With companies such as Thomas Cook and Marriott already trialling the use of VR to educate and excite customers about their experiences, ignoring recommendations could lead to a stunting of sales and customer growth. With VR and AR forecast to generate revenues of almost 150 billion USD by 2020, investing in VR will be key to maintaining a share of the 2 trillion USD global tourism industry.

REGULATORY IMPLICATIONS

A major challenge in use of virtual reality for marketing is respecting user privacy and gaining permission for the companies to capture and monitor this information, as well as ensuring it is securely protected. This is urged by the CAP 6.1 privacy code in the UK (largely adopted globally). Like any other commercial video production, ownership the intellectual property rights require the payment of any actors and production company.

Full written permission must be given by any member of the public who is filmed in preparation for a VR application; this may prove difficult in outdoor scenes (although if a person’s face is part of a crowd scene this is usually considered unnecessary). Many brands are using agencies to produce VR productions but there are companies like JUMP for DIY VR. Agencies should consider a number of techniques to build privacy protections into the technology: replacing individual faces from a stock of high resolution facial images; this could also be done with license plate numbers.

Announcing the presence and schedule of cameras in areas to be filmed is recommended, as well as clearly publicised policies on the preservation and destruction of photos. This is relatively cheap to do and will earn trust and avoid complaints.

Marketers must take particular care not to include in their VR campaigns, visual effects or techniques that are likely to adversely affect members of the public with photosensitive epilepsy (CAP 4.7).

Walli Raja, Intellectual Property Law candidate at UNH Law, pointed out: 'there are legal issues relating Intellectual Property rights that Virtual Reality will bring for VR agencies, brands and platforms.' Ownership of Intellectual Property is not so clear in VR, where agencies direct creation but the computer code, virtual property, or other content is controlled by the platform. To avoid disputes, there must be strict legal agreements that clearly state the ways in which the platform’s intellectual property might be used by the agency and the brand.

Travel agencies who invest in these technologies in 2016 are well prepared to hit the new sweet spot of travel architects, where emerging business models will provide huge financial benefits.

Find out more about Squared Online: you can give us a ring on +44 (0) 20 7173 5938, or download the brochure to read about the course and the Squared experience.

Topics: Digital marketing, Whitepaper, Squared Network