Posted September 9, 2024
The tourism, travel, and hospitality industry has always been dynamic, characterized by rapid changes in consumer behaviour, technology, and market conditions. As these industries continue to evolve, there is a growing interest in leveraging data-driven technologies to enhance operational efficiency and improve customer experiences. Accessing insights into real-time data to visualize and optimize business processes.
While process mining has gained significant traction across many industries, its adoption in our industries has been relatively limited. This slower adoption is largely due to the unique challenges faced by tourism, travel, and hospitality sectors, such as fragmented processes, data silos, and a primary focus on customer experience over efficiency. However, with increased integrations between tech companies, systems providers and operations, the opportunities for process mining implementation becomes significant, especially when our industries are struggling to keep up with increasing costs and new legislations.
Despite the potential benefits, the adoption of process mining in tourism, travel, and hospitality has been slower than in other industries due to several inherent challenges:
a) Fragmented and Diverse Processes
The industry is highly fragmented, with processes that vary significantly across different segments. The diversity in workflows makes it challenging to apply standard process mining techniques across the board, consequently making the value generation part challenging. Additionally, the customer journey involves multiple touchpoints, making it complex to gather and unify the necessary data.
b) Data Silos and Integration Challenges
Operations often operate and rely on multiple disparate systems that do not communicate well with each other, such as Property Management Systems (PMS), Customer Relationship Management (CRM) tools, booking engines, and Point-of-Sale (POS) systems. The lack of data standardization across systems providers poses a significant challenge to obtaining the end-to-end process data required for effective process mining.
c) Focus on Experience Over Efficiency
The primary focus of travel, tourism and hotels industries is on delivering exceptional customer experiences rather than solely optimizing backend processes. Enhancing guest satisfaction and experience as well as our customers’ journeys often requires creativity, flexibility, and personalized service, which are less straightforward to quantify and optimize using process mining.
d) Variability in Customer Interactions
Customer interactions are highly variable, often dependent on external factors such as seasonality, weather, events, and individual preferences, but also legislation changes. This variability makes it difficult to define standard processes that can be analysed using process mining.
e) Complex and Dynamic Supply Chains
The supply chains in tourism, travel, and hospitality are more dynamic compared to other industries. For example, a multi-venue food & beverages operator’s offerings depend on constantly changing availability and pricing from suppliers, products seasonality, delays and shortages. Each venue also has different configurations, storage capacities and equipment, complicating the process of mapping and analysing end-to-end processes.
f) Lack of Awareness and Expertise
There is relatively low awareness and understanding of process mining tools among professionals in these sectors. Traditionally, the industry has been faster to adopt new technologies used for their core operations, such as rostering, customer loyalty, marketing, costs analysis, stock take, however there is limited in-house expertise in IT, integrations and automations, data science and process mining.
g) Investment and Resource Allocation
For many businesses, especially smaller or independent operators, investing in process mining software and the required infrastructure may not be a priority. Investments are often directed towards customer-facing technologies or direct revenue-generating solutions over backend optimization tools.
h) Alternative Tools and Methods
Many companies already use alternative process improvement tools like Lean Management, Six Sigma, or Robotic Process Automation (RPA), which might take precedence over adopting new methodologies like process mining, even though it has proved to be the future of process improvements.
Despite these challenges, we notice significant changes in our industries due to an increasing understanding of data-driven decision-making benefits, and challenging economic environment.
a) Digital Transformation Initiatives
Just in Australia and New Zealand, there is an estimated 450 to 550 tech companies, start-ups and systems providers to choose from for the tourism, travel and hospitality sectors, and this number keeps growing. This shows a particular interest from the industry for technology adoption. As companies embark on digital transformation journeys, there is an increased need for tools that provide a clear, data-driven understanding of their operations. Process mining can help visualize and analyse end-to-end workflows, supporting initiatives aimed at improving efficiency and reducing costs.
b) Need for Operational Efficiency and Cost Reduction
Economic pressures and rising operational costs have prompted companies to seek cost-saving measures. Since 2019 in Australia, the average wage increase was about 2.7%, (+4.5% in 2023) and inflation was also 2.7% (+4% in 2022 and +5.4% in 2023) For New Zealand, over the same period of time, we saw a 3.7% average wage increase (+4% in 2022, +6% in 2023) and a 3.8% average inflation rate (+5.9% in 2022, +6.3% in 2023). Process mining can help identify inefficiencies and redundancies, enabling businesses to streamline processes improve revenues, improve wages ratio and staffing, mitigate cost of goods, and reduce waste.
c) Growing Competition and Customer Expectations
With intense competition and evolving customer expectations for seamless and personalized experiences, process mining can help optimize customer journeys, identify points of friction, and improve service delivery processes. This is mostly attractive for the hotel and tourism industries as customer journeys are easier to trace than a food and beverage operation for example.
d) Integration of RPA and AI
The power of process mining is that it serves as an initial tool to identify the best candidates for automation and measure the effectiveness of implemented RPA and AI solutions, offering a comprehensive approach to process optimization and automation. AI solutions as an example, are only as efficient as the data they learn from.
e) Data Integration and Analytics Maturity
Over the past years, the increase of cloud-based platforms and systems, and development of integration capacities from tech and systems providers allowed tourism, travel and hospitality companies to access better and more reliable data. Thanks to systems integrations and emerging data and business analytics companies across the sectors, it has now become easier to build data pipelines and event logs, which is fundamental for process mining adoption.
f) Compliance and Risk Management Needs
Process mining can help ensure processes adhere to regulatory requirements and identify potential compliance risks, making it valuable for compliance and risk management teams. With increased regulations, constantly changes in policies and procedures, process mining ensures operational processes and compliant and points out variations.
g) Service Standardization Across Chains and Franchises
Large chains and franchises need to maintain consistent service standards across multiple locations. Process mining can help identify variations in processes and service delivery, enabling better standardization. This is particularly interesting for franchise owners together data, develop concepts and provide their franchisees with right insights. Process mining also allows franchises to dig into franchisees operational success and replicate those success across other venues.
h) Focus on Enhancing the Customer Journey
Relevant for the whole industry, but particularly accommodation providers, travel agencies and tour operators, process mining can provide insights into customer behavior and interactions across multiple touchpoints, allowing companies to identify and eliminate pain points and deliver a more personalized experience. It also helps with improving revenue streams, and measure efficiency of third-party companies they rely on for promotion, sales and distribution.
i) Recovery and Resilience Post-COVID-19
The post-pandemic recovery has heightened the focus on building resilient and efficient operations. Process mining can identify areas needing restructuring or improvement as companies adapt to new normal. Few years after, we are now able to understand new consumer behaviour, and consequently redesign our processes to fit the new guests we are facing.
j) Increasing Focus on Sustainability and Green Operations
The tourism, travel, and hospitality industries are increasingly focusing on sustainability and green operations to meet growing consumer expectations, regulatory requirements, and environmental goals. Process mining can play a crucial role in this shift by identifying inefficiencies and waste in energy use, supply chains, and resource management; optimizing waste reduction and recycling efforts; enhancing sustainable customer experiences; ensuring compliance with sustainability regulations; and engaging employees and stakeholders in sustainable practices. By leveraging process mining, businesses can drive significant improvements in operational efficiency and sustainability, providing a competitive edge in a market that is rapidly prioritizing environmental responsibility.
k) Overcoming the ‘Fear of Change’
Process mining allows process owners to discover bottlenecks and inefficiencies, but it also allows users to redesign and test changes in processes withing process mining simulation environments. With building a copy of your processes, alterations can be tested and their success measured before implementation. This reduces drastically risks links to changes and allow only data-driven variations to be made.
Although the tourism, travel, and hospitality industries have been slower to adopt process mining compared to other sectors, the potential for its growth and impact is substantial. As these industries continue to digitize, integrate diverse systems, and expand their use of data analytics, process mining is set to become an essential tool for optimizing operations, improving customer experiences, and advancing sustainable practices. While the path to widespread adoption may be gradual, the possibilities for innovation, enhanced efficiency, and sustainability through process mining are vast and should be explored more across the industry.