Technology has revolutionized the way we operate in the world, how we interact with each other and how we engage with brands. We can’t run away from the fact that it is transforming every sphere of life, and the success of a business depends on how well it adopts technology to cater to the needs of modern consumers.
Pascal Gavotto (Tourism Specialist and Director at Fatumaru Consulting Lanka Ltd) and Naveen Marasinghe (Digital Marketing expert and COO of Antyra Solutions) are members of the panel of experts of the GLX Digital Evolver program, and they share their thoughts on the impact of digital transformation on the tourism sector and the opportunities available for Sri Lanka’s tourism enterprises.
How has the tourism industry been transformed by technology?
The tourism sector has undergone significant change over the past decade and a half, driven primarily by technology. Speaking about this, Pascal says, “Did you imagine ten years ago that you could stand at a hotel reception, check the rate on your mobile phone and book a room online as you got a better tariff through a meta-search engine than the officer could offer? In a short period of time, the Online Travel Agent (OTA) has captured almost 50% of the global market and completely changed the distribution system. Traditional hotel operators were confronted by a new competitor; thousands of vacant apartments and homestays suddenly became available to the tourism market in just a few clicks, thanks to the likes of Airbnb.”
Naveen believes that digitalization has had a massive impact on three key areas of tourism, leading to the democratization of the sector for all types of operators, no matter their size.
Operations - booking engines, online payments, inventory management systems.
Distribution - OTAs such as booking.com and Agoda have a wide reach and allow even small-time operators to reach a much larger audience.
Marketing - Google, Facebook and Instagram have become key platforms to market destinations and hotels to a global audience at a lower cost.
“Today, a small surf school in Arugam Bay can create a profile online to be visible to an audience that’s actively looking for the type of product they are offering. They can create a niche market for themselves, with no intervention from a travel agent or other third party. That’s what technology has made possible,” says Naveen.
Pascal highlights that platforms such as TripAdvisor and Google have also had a significant impact on the sector. With travellers being able to post their experience online for the world to see, tourism is now heavily driven by customer feedback and recommendations. “In my opinion, this is not a transformation; it is a revolution!”
What is the impact on smaller businesses?
Large hotels and tour operators have adopted technology rather quickly, taking advantage of improving their marketing and distribution, and optimizing operations with significant productivity gains. However, the story is a little different for smaller entities, especially here in Sri Lanka.
“Sri Lanka is an emerging economy with advanced telecom infrastructure, very skilled people and IT providers. But the digital gap is growing for Sri Lankan enterprises, many of whom seem to think that being on WhatsApp is sufficient to manage their business,” says Pascal.
“What they need to understand is that the digital revolution offers them the opportunity to use the same tools and systems that may have only been affordable to the big players not long ago. This is the beauty of technology - now smaller tourism enterprises too can compete in the world travel market with the same tools, should they have the skills to use them.”
Opportunities created by digitalization
OTAs allow even smaller businesses to showcase their property and inventory, receive bookings, manage rates, handle cancellations, display customer reviews, etc., which means there is more opportunity for discovery by an interested audience.
From a marketing perspective, social media offers enterprises a massive opportunity to make a noise, engage with potential customers and talk about their product/offering in ways that they never did before.
“Social media has given voice to brands, allowing them to create their profiles and engage with customers using authentic user-generated content. They can even target niche audiences who have more probability of converting to customers. Additionally, operators can run advertising campaigns on their own, using the budgets they have in hand, without the involvement of professionals,” says Naveen.
The emergence of property management systems have clearly had an impact on operational efficiency for larger organizations, and now with scalable cloud-based solutions, even smaller businesses can improve their processes and be more efficient without large budgets.
Challenges posed by increased digitalization
The adoption of tech and certain digital platforms also have the potential to create challenges for smaller organizations. Speaking on this, Pascal states that in Sri Lanka, the ‘booking.com syndrome’ has created an overdependence on one distributor for many businesses.
“Business owners do not always have the skill set necessary to adapt to the new digital context, and many have been outsourcing their marketing to specialized companies. By doing so, they externalize the core know-how and seriously decrease the value of their business. The dependency on OTA and outsourcers weakens them,” he says.
Naveen points out that the implementation and daily running of certain digital systems can be a pain point for most enterprises. They will require expert advice and people with specialized skills to actually benefit from the operational efficiencies that technology can create. Furthermore, he highlights that by not selecting the correct platforms and having the proper workflows in place, business owners can increase customer frustration, instead of increasing efficiency, resulting in loss of business or negative reviews.
This is a key reason that programs such as Digital Evolver by GLX are important because they expose smaller business owners to the myriad opportunities available to them and give them the correct guidance on which type of tools and technologies they should embrace for the success of their business.