3 Reasons Why Travel Industry Cloud Technology Drives Growth

Introduction

The travel industry is a complex and constantly evolving market, with a multitude of players vying for customer attention. Travel companies must be innovative and agile to remain competitive and adapt to the ever-changing demands of the customers. As technology has disrupted traditional business models and upended established players, the importance of digital transformation for travel companies has become increasingly clear.

According to Gartner®: “We predict that by 2025, cloud-native platforms will serve as the foundation for more than 95% of new digital initiatives — up from less than 40% in 2021” (Gartner, Market Share Analysis: Infrastructure Implementation and Managed Services, Worldwide, 2021, Subhransu Sahoo, Hardeep Singh, et al., 15 June 2022).

“Today, with the industry's recovery well underway, a surge in customer demand has gone hand in hand with increased expectations for personalized service. Travel and hospitality businesses that have not initiated their digital transformation are at risk of falling behind,” said Vasily Malinov, Vice President of Travel & Hospitality at DataArt.

Migrating to the cloud is an essential aspect of digital transformation for travel companies. This move off-prem not only allows a decrease in costs and a boost in efficiency but also provides opportunities to offer new and innovative services to customers. In this article, previously featured on PhocusWire, we will delve into the drivers of cloud migration specific to travel and hospitality businesses, as well as the challenges you may encounter during the process.

What Drives Travel Companies to Move to the Cloud?

By migrating some or all of their digital assets to the cloud, businesses can achieve transformational results. You can scale and innovate faster, modernize aging infrastructure, get better insights from your data, and restructure organizational models to create better customer experiences.

Based on our experience, here are the main drivers for travel and hospitality businesses that trigger their moving to the cloud:

1. Cost optimization: We constantly hear how switching to serverless made travel companies more cost-efficient. Even a lift and shift migration to the cloud will unlock savings for travel companies. If you leverage serverless, you are maximizing your savings.
2. Security, privacy, and compliance: Travel and hospitality companies leverage managed services offered by cloud providers to enhance their systems’ security and operational resilience. Transitioning to managed services also reduces undifferentiated heavy lifting related to managing hardware and operating system updates.
3. Legacy technology modernization: Modernizing legacy technology can be a daunting task, especially when dealing with outdated or difficult-to-hire-for systems. With modernization, travel and hospitality companies address the risk of those legacy systems and achieve benefits associated with cloud-native architectures.
4. Enabling innovation: Personalization, AI/ML (Artificial Intelligence / Machine Learning), and omnichannel customer experience — all those initiatives require modern systems and strong data management capabilities. With the recent developments in generative AI, travel companies are looking for a way to accelerate paying off technical debt to leverage it in their applications. 

3 Challenges Travel and Hospitality Companies Face During Cloud Migration

The frameworks for cloud adoption were defined several years ago and have been updated and refined since then. Cloud transformation is not an easy path; it requires strong executive support, systematic planning and execution, and a variety of skills that many travel companies do not have in-house.

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We have observed that travel and hospitality businesses face the following categories of challenges:

1. Lack of capability: Questions like “how to start” and “how to execute” the migration, “how to select” cloud providers options, “how to sequence the work,” and “how to validate assumptions” become stumbling blocks for many travel and hospitality businesses. It is difficult to define a strategy that is uniquely fine-tuned to the organization, as the initiative likely touches on FinOps, Governance, Security, Marketing, and many other areas of the business that are currently not using the cloud as a data center and thus lack experience and the required skill sets.
2. Lack of capacity: Cloud computing is an essential skill that has been in high demand for years. Attracting and hiring top talent is a lengthy and challenging process, given the persistent talent shortage in the IT industry.
3. Planning complexity: When undertaking a cloud transformation, it is important to consider the various challenges that may arise. You must allocate resources for assessment, planning, and actual migration. A well-defined cloud migration strategy should outline its objectives and establish metrics to measure its success. Although the long-term return on investment is substantial, with triple-digit growth projected over five years, which includes cost reduction, decreased outages, accelerated time to market, and improved customer satisfaction, it is crucial to anticipate temporary costs in the short term.

How to Address These Challenges

1. A lack of capability can be addressed with Cloud Adoption Frameworks. Cloud providers have a playbook on how to migrate, providing recommendations and describing best practices to help architects, developers, administrators, and other cloud practitioners design and operate a cloud topology that is secure, efficient, resilient, high-performing, and cost-effective. Cloud Adoption Frameworks from cloud providers drive alignment between technical and business stakeholders and help plan the migration efforts in the most optimal way for each organization.
2. To address the skill gap, travel and hospitality businesses can team up with an experienced technology vendor with deep domain knowledge and a credible portfolio. Working with technology vendors that can leverage both technology and domain experience can help streamline your transition to the cloud. Specialized vendor companies have a dedicated pool of professionals who can be onboarded faster due to their domain experience. In their turn, cloud providers work with technology partners in different industries, proving specific vertical designations and competencies and helping clients access relevant skills within partnership programs.
3. Migrating to the cloud can be complex and time-consuming. To accelerate migration and lower costs, travel and hospitality businesses can use programs created by cloud providers, such as the Amazon Web Services (AWS) Migration Acceleration Program (MAP). This program provides: tools that reduce costs, automate and accelerate execution, tailored training approaches, and credits for AWS Migration Competency Partners.

Embarking on Your Cloud Migration Journey

Starting a migration journey could be difficult for businesses due to a lack of technology experience and increased financial pressure. But the truth is that companies still hesitating about adopting the cloud for their business may struggle to adapt to the market’s constant fluctuations and lose their position.

As a professional services company specializing in system modernization and new system development for the travel and hospitality industry, we have noticed some companies try to reinvent the wheel in their cloud adoption journey while others do not take advantage of the programs available from cloud providers that accelerate the transition to the cloud.

To optimize the migration journey and avoid the most common pitfalls, we recommend turning to a preferred cloud provider and leveraging their recommendations, best practices, and frameworks. By teaming up with an experienced technology vendor, you can add industry expertise and take advantage of dedicated cloud partnership programs, mitigating costs and achieving your cloud transformation goals.

As a certified AWS Travel and Hospitality Competency Partner, DataArt can help your team bridge the skills gap within your timeframe. Our teams assist travel and hospitality businesses worldwide with migration and modernization, covering systematic modernization. If you are interested in learning more, please get in touch with our team for additional details. As a people-first company, we are always here to help you.