Annual analysis of government data reveals growing investment in technology by UK travel firms. Dave Cruickshank, of report sponsor and travel tech specialist Atcore, tells Lee Hayhurst this gives cause for optimism
Last year’s Travel Weekly Insight annual report offered an upbeat assessment of the UK travel sector reflecting “resilience, investment and innovation in uncertain times”.
Uncertain times related to an economy that was stalling, weakening consumer confidence and stagnating real wages, as well as Brexit and concerns over terror and company failure.
However, a resilient sector for holidays saw outbound departure numbers rise 5% in the 12 months to November 2017, according to the Office for National Statistics.
A similar picture of continued growth in adversity is revealed in the Travolution Innovation Report 2018, published today.
Dave Cruickshank, chief executive of Innovation Report sponsor and travel technology specialist Atcore, said there were positive signs for the sector.
“When Brexit was first announced there were a few smaller companies that put some technology decisions on hold for three to six months, but that’s all come and gone now,” he said.
“People are not citing political or economic uncertainty for investment decisions at the moment. We have not seen bookings fall off a cliff; if anything they continue to grow faster than GDP.”
The Travolution Innovation Report analysis shows spending on IT by the UK travel sector grew by 5% last year to just shy of £1.6 billion.
While this growth was down on the 2016 figure of 7% and the lowest since 2012, it matched year-on-year growth in technology spend across all UK industries.
For 2018, the report predicts that growth in spending on IT by travel companies will dip again, to 4%, a rate that would see the sector lag growth across all UK industries for the first time since 2012.
The good news for technology suppliers is that the travel sectors with the biggest budgets – air transport, travel agencies and tour operators – are growing as quickly as at any time in the last decade.
These three sub-sectors of travel account for 78% of annual travel technology spend, with travel agents accounting for 37% and air transport 30%.
The ONS data on travel technology spend reveals 34% of the total was spent in computer services – outsourcing, training and consultancy – in 2017.
However, the next biggest category of IT spend, software, has seen the biggest increases over the last four years, particularly among larger travel agents and operators.
All travel sectors bar hotels, which employs the most number of people, spend well in excess of the £4,671 UK average. Agents spent £8,765 per employee on IT.
In this year’s report, emerging technologies such as artificial intelligence are tipped to enable travel firms to keep pace with changing customer behaviour.
Cruickshank says the shift to voice-enabled devices, natural language, semantic search and more flexible tour operating models will drive innovation.
But he says the onus is on the technology providers to work in partnership with travel clients to ensure they are ready for the future.
“As a travel company you do not necessarily need to be putting half of your development budget into becoming voice-search capable,” Cruickshank said.
“We look at these emerging technologies because we need to make sure our platforms are future-proofed so they can support changes in consumer behaviour.
“Tesla is a good example of this. They are building cars capable of being fully autonomous, but that will only be turned on when the market is ready.
“All travel technology providers are under pressure to continually improve their products because clients expect you to be innovating faster than they could in-house.
“What do [travel companies] need to do themselves to be successful and in what areas are they best using the expertise of a partner to get there faster and more effectively?
“What you have to decide is are you a travel company or are you a technology company?”