15  Enabling Technologies

The technologies examined in the previous chapters form the technological hard core that is shaping the Smart Revolution and its potential to bring benefits to tourism firms. These technologies are responsible for acquiring the data, processing it, analyzing it, and converting it into useful knowledge for the firm. However, on many occasions these technologies do not come alone but are part of or integrated with other technologies that connect them with the specific needs of organizations and those of consumers and users. Sometimes even the power of core technologies is substantially enhanced or increased thanks to their integration with so-called enabling technologies, whose growth is exponential. Ultimately, enabling technologies are instrumental in achieving more and improved smart applications that better fit the needs of firms and consumers.

Together core and enabling technologies are powerful tools to generate the competitive advantages that tourism firms seek. In this chapter the main enabling technologies are characterized, more specifically, mobile applications, the combination of robots, AI, and service automation technologies (RAISA), augmented and virtual reality, and blockchain.

15.1 Mobile Applications

The use of smartphones and mobile applications has become a daily habit for most consumers around the world and, by extension, their use for tourism activities is increasing exponentially. In 2021, the number of mobile users worldwide stood at 7.1 billion and is forecast to increase to 7.49 billion by 2025 according to Statista. In line with these figures, it is a proven fact that consumers rely more and more on their mobile applications to travel and make decisions before, during, and after their trip. This means that mobile applications have a very significant influence on the development of smart tourism.

Today there are thousands of online applications available to help tourists plan and organize their tourist activities. There are apps to help tourist find hotels, choose restaurants, check the weather, research a destination, book tickets, check exchange rates, check in for flights, and perform hundreds of other tasks. Mobile applications overcome the barriers associated with navigating websites that are not optimized for mobile use, their use can be personalized, and they allow a higher level of convenience, since consumers can use them to compare prices, obtain discounts, get information about products and services, locate services and places of interest, etc. and everything on the fly. It is estimated that, on average, travelers access about 16 app categories for each trip (TravelPort, 2017).

From a business standpoint, mobile applications can positively impact customer loyalty, increase the effectiveness of trade promotions, and bring mobile users and customers closer anytime, anywhere. Furthermore, the constant development of new mobile information services, such as electronic tourist guides and application-based mobile guides, or payments through near field communication (NFC) technologies, is the consequence of the widespread adoption of mobile technologies by consumers for travel-related purposes. Tourism firms may also take advantage of GPS embedded in mobile apps for location-based marketing (Law et al., 2018). In short, mobile devices and applications have drastically changed consumers’ behaviors and business processes in tourism firms.

15.1.1 Mobile apps and the consumer

The use of mobile phones by consumers for tourism purposes is becoming more and more popular. Data provided by the annual survey of travel retail platform Travelport (2017) seems to prove it: 50% of travelers rely on their smartphones for searching and booking during a trip, 60% say they would be lost without their smartphone and 45% of travelers say they can’t live without a map app when traveling. What’s more, nearly two-thirds of US travelers rely on mobile apps while traveling, 61% have booked and paid for trips through their smartphone in the past year, and 64% use their smartphone en-route to their destination. These figures make clear the enormous potential that the mobile application market represents for both consumers and tourism firms.

The reasons why tourists use mobile applications are many and varied. Consumers are primarily looking to save time, be more efficient and effective in their travels, and deepen their travel experience, but there are also these other benefits.

• Search for and obtain information on tourism products and services and on places.

• Make reservations (e.g., lodging, events, transportation, attractions, restaurants).

• Buy products and services.

• Communicate with friends and family and engage in social activities.

• Find activities and entertainment.

• Locate themselves on the map.

• Feel more secure and be able to solve problems when traveling.

• Keep track of loyalty programs.

• Access digital boarding passes.

• Improve the travel experience at the destination.

In general, the trend is for consumers to adopt mobile technologies and applications when they find them useful, easy to use, and compatible with the other technologies they already use. There is also a direct relationship between consumers’ greater ability to use the internet and their more favorable attitude towards mobile applications and their intention to use them. In addition, the higher the frequency with which consumers use their smartphone at home and the greater the availability of Wi-Fi at the destination, the greater the use they make of mobile applications (Mang et al., 2016). Another key factor is the perceived usefulness of the recommendations obtained through mobile applications, so that the greater this perception, the greater the value and satisfaction that the consumer obtains from the use of mobile applications.

What is needed for consumers to increase the use of mobile applications? It is important that these are easy to access and navigate, that allow consumers to control the navigation and the transactions they carry out and that the purchase environment is reliable and safe. Other very important aspects not to be overlooked are the role of psychological factors such as enjoyment and inspiration when adopting mobile applications, as well as the differences that exist between young and old users, since the latter are less influenced by social media, less dependent on the opinions and advice of others, and less likely to spend time looking for inspiration than the former.

15.1.2 Mobile applications and tourism firms

Mobile applications allow tourism business owners and managers to stay connected with their customers and prospects anytime, anywhere, speeding up the entire service delivery process. Mobile applications are, in short, an important source of competitive advantage (Law et al., 2018). If we pay attention to what some authors say, the introduction of mobile applications in tourism firms can increase the profitability of shareholders up to 1.32% in the case of hotel and airline companies (Adukaite et al., 2013). So, it seems reasonable to think that any tourism firm that wishes to continue improving its competitiveness should take the process of implementing mobile technologies and applications in its business very seriously and do so strategically.

However, there is still not enough insight as to guide tourism firms in the successful implementation of mobile technologies in the organization, nor is the impact that mobile applications have on the organizational and financial performance of the firm well known. What we do know is that the decision of tourism firms to develop a mobile application usually depends on factors such as the degree of compatibility with the systems already in place in the organization, the technological resources available, the marketing objectives pursued, and the expectations of use by users and customers.

A critical aspect to be considered by tourism firms when implementing and adopting mobile applications is that of the functional characteristics that the mobile application must have. Mobile applications for tourism must provide customers and users with reliable and abundant access to information, but also personalized experiences and smartphone-enabled services that are only available on mobile platforms (i.e., route recording in real time, the “shake” function to select restaurants at random). These services must be aimed at providing new experiences to customers that allow them, in turn, to make innovative consumption decisions. In this spirit, context-aware functionalities such as information sharing or geo-tagging of products and services, along with connection to data repositories and data mining capabilities, can substantially increase the value that firms provide consumers and users through mobile applications. Furthermore, by capturing data through mobile applications and analyzing and exploiting it, tourism firms can start thinking about attracting their target consumers in a more informed way and engaging them with increasingly personalized services. However, finding a way to motivate customers to download mobile apps remains a major challenge for tourism firms. This does not only depend on having good promotional information, but also and above all on the information content and services offered by the mobile application. Recent studies reveal that the main reasons why users download mobile applications in the hotel industry are to obtain information about the firm and carry out transactions (i.e., reservations, check-in, payment of services).

15.1.3 Trends related to mobile applications

Tourism firms, together with the mobile technology industry, are continuously innovating and developing new solutions that add value to consumers, either through the development of new technologies or by improving existing ones. This is the case of technologies as popular as quick response (QR) codes, which have been used in the hotel industry to digitize traditional loyalty cards and in augmented reality games to experience tourist places or attractions. Emerging issues that have recently emerged in relation to the use and development of mobile applications and that will affect tourism firms include the following:

• The rapid growth of NFC technology in tourism. NFC technology is a set of protocols that enables communication between two electronic devices at a distance of 4 cm, which facilitates simple and secure communication between them. By integrating NFC technology in mobile phones, users can perform tasks such as transfer photos, videos, or music files, complete purchases and payments, manage their access control identities, or download information (Liebana-Cabanillas et al., 2020).

• The development of mobile applications for disaster situations and crisis management (e.g., earthquakes, COVID-19) is proving very useful to provide relevant and real-time information on evacuation, and mobility, and share security alerts that affect people and tourists.

• Travel recommendation applications that take advantage of the GPS capabilities of smartphones to help tourists discover and select points of interest in a place according to their spatial and temporal preferences. These apps also save them the effort of making decisions and prevent them from being overwhelmed by a barrage of information.

• The impact of mobile technologies and applications on the segmentation of the firm’s customers. Since each segment of mobile app users has different usage patterns and is motivated by different benefits offered to them, this should allow the tourism firm to segment its customers in a precise way.

• The potential to adopt mobile technologies and applications to conduct employee training activities, thereby overcoming the limitations of traditional training methods, and increasing the effectiveness of employee training.

• The perception that employees have about the use of mobile technologies and applications at work. Many employees believe that the use of mobile technologies can increase their self-efficacy and job performance, which in turn can be a factor that contributes to higher levels of job satisfaction and commitment to the organization.

15.1.4 The risks of mobile applications

Perhaps the number one risk faced by users of mobile applications and tourism firms is that related to privacy and the protection of personal data. Mobile applications constantly collect a lot of personal information about the consumer in order to deliver the accurate and personalized information that the consumer wants. At the same time, consumer confidence in the treatment and protection of their personal data through mobile applications is a critical factor that affects their perception of risk in the mobile environment and their intentions to use the applications. These concerns negatively affect consumer travel behavior and lead them to continually weigh the risks and benefits of using mobile apps. In general, it can be said that the risks associated with the lack of privacy and the possibility of theft of personal data is an issue of paramount importance for the tourism firm and of great concern for the development of smart tourism (Dorcic et al., 2019).

Finally, although we live in a world in which being connected with family and friends at all hours and accessing social media is a fairly common habit, if not a necessity for many, in the back of the tourist mind there is still the need to disconnect once in a while and relax by the pool and forget about real life for a moment. Yet, it’s somewhat surprising to see that while 80% of travelers find it important to relax on a trip, an almost identical number (75%) agree that keeping in touch is very important (TravelPort, 2017). With these figures in hand, one wonders about the effects that habits associated with being always connected have on people’s mental health (i.e., feeling like you’re lost without your smartphone, getting anxious when you can’t get online, worrying when technology fails or batteries die) and whether travelers really get to live authentic and real experiences when they are only thinking about the next opportunity they will have to reach for their mobile phone. Without a doubt, this is an issue on which both consumers and tourism firms should continue to reflect and delve into the pros and cons.

15.2 RAISA Technologies

The progressive massive adoption of robots, AI, and service automation RAISA technologies is driving ever-widening layers of society and firms into a new economy, which some call “robotomy”. Robotomy poses a qualitatively different economic scenario than the present one that may lead to greater automation of the production of goods and services, to the point where most goods and services are delivered by RAISA technologies and not by human employees. In this “robonomic society”, some authors believe, RAISA technologies will do most of the work and only a small portion of humans (probably less than 10%) will do any work. Once the need to work is eliminated and a universal basic income is established, people will free up a lot of time that can be used for leisure and recreation. Consequently, the tourism market will expand substantially. It’s also not hard to predict the profound implications this will have for the nature of work, the consumer experience, and customer-business interactions, to name just a few.

Whatever happens in the future, these changes will not be exempt from significant social, economic, and political tensions that will affect developed societies and also those aspiring to become one (Webster & Ivanov, 2020). Developed countries with zero or negative population growth and aging populations may end up accepting RAIA technologies as a potential solution to labor shortages that threaten their ability to grow and well-being. This will most likely alter migration flows, as most industries in developed economies will have been automated. In short, it should not be ruled out that society and business firms are heading towards quite radical changes that will be a consequence of the growing incorporation of smart technologies and that the lower labor needs across all economic activities will accelerate and will have a high impact on tourism firms.

15.2.1 RAISA in tourism

Tourism is no exception to the adoption of RAISA technologies. In many tourism activities, human workers have begun to be replaced by robotic concierges, chatbots, and information assistants, to the point that these new inventions are giving rise to a “robotic tourism” based on a wide variety of devices powered by Big Data, AI algorithms, mobile internet, and IoT technologies, and new models to design and serve human consumers.

Chatbots are already part of the communication between tourism firms and customers. Tourists use chatbots not only to search for travel information and find out about offers, but also to receive service attention and make reservations. They also use virtual reality to see in advance the attractions of the destination and the hotel in which they are going to stay. At the airport, travel is made easier by self-service check-in machines, self-service bag drop, and automated passport control with facial recognition. Tourists can arrive at their hotel in an autonomous vehicle, be greeted on arrival by a robotic doorman, check in at a self-service kiosk, and enter their room using a mobile app on their smartphones. Once inside the room, tourists can control the temperature, the amount of light, and the audiovisual services they prefer through technologies available on their mobile device. They can place their room service order online and have it delivered moments later by a robot knocking on their door. The same robots clean the floors and mow the lawn. And so we could continue describing a good number of radical changes that occur when the tourist decides to go to a restaurant for lunch or go out to visit the attractions of the destination.

Overall, from the consumer’s perspective, all these new technologies contribute to improving their experience due to reduced waiting times, convenience, and ease of use, while improving their overall satisfaction. However, owners and managers must not forget that the use of these technologies by consumers is not guaranteed and that it varies according to the culture, the category of services, and the target market segments. From the perspective of tourism firms, RAISA technologies not only help them reduce costs and improve productivity, but also allow them to streamline operations and design new service experiences, which in turn can have profound implications for their business models (Ivanov & Webster, 2019). By reducing service errors and eliminating unnecessary tasks that entail costs for the firm, RAISA technologies also allow firms to be more efficient and improve their financial results. Notwithstanding all these benefits, before implementing any process of robotization and automation of services, firms should carry out a cost–benefit analysis and evaluate the financial and non-financial consequences of implementing RAISA technologies, as they would with any other technology.

15.2.2 RAISA technologies

RAISA technologies include a wide variety of service automation innovations that enable customers to obtain service without the need to directly involve service employees. Among these technologies there are a long and varied list of technologies, such as check-in and information kiosks (and applications) in hotels, smart tourist offices and transport stations, ticket machines in stations, food and beverage vending machines, bag drop counters, biometric scanners at airports, etc.

A common feature of service automation technologies is that they shift responsibility for service delivery from employees to customers, so that these become prosumers of the service process. Service encounters conform to processes that are predetermined (i.e., the steps that a customer must follow to check into a hotel or check in their luggage at an airport) and are not very flexible to deviations. However, despite the rigidity that characterizes robotic/automated services, they are more efficient and less expensive than those provided by human employees, which explains why they are used to provide fast and cheap services to mass tourism.

While service firms have been using self-service and automation solutions for decades, robots are only now making their first steps in service firms. Robots are programmable mechanisms that can move and manipulate their environment in two or more axes and that have various degrees of autonomy, interactivity, and intelligence to perform some intended tasks. To carry out their tasks, robots have sensors allow them to obtain data from the environment (i.e., for the identification of objects, sounds, distance/ location, pressure, temperature, etc.) and actuators (e.g., motors, lights, speakers, arms, etc.) that allow them to act on their environment. In tourism there is a great variety of robots that are dedicated to very varied tasks, from the most basic in which they practically do not interact with humans (i.e., mowing the lawn, cleaning surfaces), to the most sophisticated in which the robot (with humanoid appearance) can actively communicate with humans (i.e., for room service, robotic waiters).

When deciding what type of robot to use and what tasks it should perform, it is important that tourism firms consider the attitudes that customers will have towards RAISA technologies. Very often these attitudes are shaped by their previous interactions with these technologies and the extent to which robots are involved in the service delivery process. Recent surveys show that the services that customers perceive as most appropriate for the use of robots are those related to the provision of information, the delivery of food and various items, as well as cleaning services; while services that require tourists to entrust their bodies to a robot (i.e., massages, childcare, hairdressing) encounter greater resistance from customers (Ivanov & Webster, 2019).

Although the behavior of robots is perceived by users as a bit clumsy at the moment and many times they create even more work for human employees or cause problems for customers (the Henn na hotel in Japan had to “fire” half of its 243 robots after being declared the first robotic hotel in the world), it is to be expected that advances in robotics and AI will gradually make robots increasingly capable of serving humans and perform, tasks beyond 3D tasks (dirty, dull, and dangerous), so its use by tourism firms will increase.

15.2.3 Adoption of RAISA

The adoption of RAISA technologies in tourism firms is influenced by several macro factors, among which the demographic factor is one of the most important. For the richest and most developed countries in the world, such as European countries, Japan, and South Korea, which have a large aging population and very low birth rates, replacing jobs has become a challenging endeavor with negative impact in the labor market. In other words, in the not too distant future it is very possible that in developed countries there will not be a sufficient number of workers to cover the needs of the productive sectors. Since the solution of “importing people” does not seem feasible, both because of the time it would take to bring in people from abroad, train them, and put them to work in qualified jobs, and because immigration is a source of social tensions in many countries, it seems that the only viable option in the short term is to replace (or reduce) the labor factor. Hence, instead of trying to find more human employees, RAISA technologies can help firms substitute the human factor and thus fill employee shortages through technology. However, as promising as this solution may seem, for RAISA technologies to become increasingly accepted by firms, several conditions must be met (Ivanov & Webster, 2019).

First of all, there must be RAISA technologies that are practical, work well, and are affordable for firms, in other words, that add value to the firm. In the coming years, although the active population will continue to be concerned about how technologies can replace human labor, the need for automation and the greater technical capacity to achieve it will be powerful incentives for tourism firms to automate more tasks and processes.

Second, given the inability of governments to offer long-term solutions to the economic, social, and political puzzle that developed societies face due to the stagnation and aging of their populations, it will be necessary to adopt political measures that consider RAISA technologies as a solution that can help solve the problem and replace many jobs that will hardly be filled in the future.

Third, there is the problem of the speed with which consumers and tourism firms are going to adopt RAISA technologies in the coming years. Consumers will adopt the use of RAISA technologies as long as their problems are solved and they obtain some financial advantage for their use. Initially, it is possible that firms could pass on part of the savings achieved by replacing workers to consumers, which could encourage them to adopt RAISA technologies more quickly. In this initial phase of the process, it will also be important for firms to do a lot of pedagogy, showing consumers the real benefits of using these technologies. Once RAISA technologies are introduced and the benefits of their use become more apparent, consumers are more likely to accept them naturally.

Although firms are still in the early stages of incorporating RAISA technologies, forecasts indicate that there will be a growing use of these technologies in tourism activities. The time is surely not far off when consumers forget what hotels were like when they didn’t have robotic services. However, despite the benefits that these technologies can provide to use human labor more efficiently, there are still many challenges that tourism firms will need to address, such as how they will adapt to the transformation of the labor market, the new profiles of workers that they will demand, and the development of a new work culture.

15.2.4 Impact on business processes

The adoption of RAISA technologies is beginning to have a significant impact on the main business processes of tourism firms and in all functional areas, including operations, human resource management, marketing, and financial management. These impacts are reflected in changes that affect the competitive capacity of firms and their financial performance. Next, some of the most significant impacts that RAISA technologies are having on the key business processes of the firm are examined (Ivanov & Webster, 2019).

15.2.4.1 Operations

Since the use of RAISA technologies implies that a service is provided by a non-human agent (e.g., a robot, a chatbot, a kiosk, a vending machine, etc.) that can serve a large number of customers simultaneously at any time of the day, this allows organizations to have a greater service capacity, which in turn leads to productivity gains. The use of RAISA technologies allows for easier and more efficient programming and planning of operations, given the high availability of these technologies compared to human employees. On the other hand, the lower use of resources by RAISA technologies can contribute to improving the environmental sustainability of operations, since it reduces the production of waste and eliminates unnecessary activities. However, the use of RAISA also has some drawbacks at the operational level. Among them is the decrease in the flexibility of the service delivery system, and the need to create facilities in firms that are friendly to robots and positively reinforce the customer experience. No less important is the reengineering of the service delivery processes that the firm will almost certainly have to carry out when it introduces RAISA technologies and that should be accompanied by new processes for controlling and monitoring activities.

15.2.4.2 Management of human resources

The implementation of RAISA technologies can help save human employees the time they spend performing dirty, dull, and dangerous tasks (3D tasks), i.e., tasks in which the human factor does not provide a differential advantage over machines, such as repetitive tasks in which precision and speed prevail, tasks that pose a risk to the physical and mental integrity of workers, those in which the emotional component is not valued, or in which it is not required to make decisions in a flexible and adaptive manner. Thanks to RAISA technologies, employees can dedicate their time to more creative activities where human intelligence and the emotional component are key, and those that improve the customer experience and create value for the business. RAISA technologies can help make the work that was previously done by humans more efficient, productive, and sustainable, and solve the problem of temporary employment and high churn rate in low-skilled jobs, of great concern to tourism firms.

The introduction of RAISA technologies has opened a highly speculative debate in the business world, and in tourism firms in particular, about what should be the role and capabilities of the human being in business, and if these technologies should focus on improving the work of human employees or simply replace them. Although the debate has defenders on both sides, it is no coincidence that the evolution of the number of human employees in tourism firms follows a downward trend, some experts even assure that we will see hotels with zero employees. Employees are well aware of this situation. Many of them perceive RAISA technologies as a threat to their jobs and turn against the adoption of these technologies. Notwithstanding the foregoing, owners and managers should be aware that RAISA technologies will require reorganizing human resources within the organization, sometimes creating new departments and sometimes new jobs, and that employees will need different skills than those required today.

15.2.4.3 Marketing

When a firm’s competitors use RAISA technologies and this gives them a sustainable competitive advantage over time, the firm has only two choices: either the firm decides to start using RAISA technologies to create similar advantages itself (and evolves towards a high-tech firm) or decides to reposition itself as a “high-touch” firm focused on the personalized relationship with the customer. In the real world, business alternatives are not black and white, but there are various shades of gray in between. Regardless of the path that the firm chooses, what is clear is that it will have important consequences not only on its business model, but also on the way the customer will perceive the quality of the service and on how the firm will communicate and interact with customers.

RAISA technologies can improve the quality of service perceived by the customer through new attractive and interactive ways of providing services, communication, and interaction. For example, robots, chatbots, and service kiosks offer the ability to communicate with customers in different languages 24/7. In many cases, these technologies can create value for customers by making the service delivery process fun and entertaining. These technologies can also affect the pricing of tourism products and services, since they allow discriminating between the prices of mass “high-tech” products (with lower prices) and the prices of personalized/individual “high touch” products (with higher prices). In this “robonomic” future that awaits us, an increasingly smaller segment of tourists will continue to demand “high-touch” service experiences, which will be satisfied through products and services specifically designed for high-level niches. Meanwhile, the rest of the tourists will enjoy a highly automated tourist experience at lower prices. In the latter case, pricing will take into account not only the costs of the product or service, but also the quality perceived by customers of RAISA services and their willingness to pay for tourist services not provided by humans.

Besides discriminating between customer segments, RAISA technologies could allow owners and managers to set prices automatically without human intervention (i.e., based on moment in time, purchase history, degree of loyalty), as well as assign automatically the available capacity by distribution channel, taking advantage of the analytical, predictive, and AI capabilities available through virtual assistants and smart channel managers. The image and positioning of the firm that adopts RAISA technologies would also be impacted. In some cases, the firm would benefit from reinforcing its image as a highly innovative high-tech firm and positive word of mouth, but in other cases, if the firm automates the communication with customers (i.e., through chatbots, voice assistants, or robots) it could suffer negative publicity as it would be perceived as a firm that puts profits before humans.

15.2.4.4 Financial management

RAISA technologies can be assimilated to a workforce that works 24 hours a day, 7 days a week and can serve a large number of customers simultaneously. In addition, the firm is not required to review RAISA’s salary every year, nor to pay attention to its working conditions. RAISA allows tourism firms to increase their presence in the market thanks to its 24/7 availability with the same labor costs (or even lower) than before, offering the opportunity to increase sales volume at a very low cost. However, it is not gold everything that shines. RAISA technologies entail significant financial costs associated with the acquisition, installation, maintenance, and updating of hardware and software, as well as costs for the creation of friendly environments and facilities for the use of robots, upskilling, and a long list of other costs associated with robot damage and insurance costs.

15.3 Augmented and Virtual Reality

Augmented Reality (AR) is a technology that allows the superimposition of data and synthetic images generated in 3D by a computer on the real world, interactively, and in real time (Azuma, 1997). AR represents the first step towards the so-called virtuality continuum (VC), at the extremes of which is the virtual reality (VR) on one side and the real environment on the other (Roxo & Brito, 2018). Therefore, AR is a form of Mixed Reality (MR), i.e., a combination of elements from the real world and VR. AR has the potential to expand human perception and quickly adapt to different contexts, giving users greater awareness of their surroundings and making tasks more user-friendly and effective (Wei, 2019). This technology also makes it possible to create more immersive experiences for customers and users, aware of the context and transparent for people and firms. As such, AR is the basis behind new platforms to deliver content and services to a global audience.

On the other hand, VR consists of a computer-generated environment that involves total immersion in the digital world (Guttentag, 2010). VR technology provides unique capabilities to simulate real situations and allow users to navigate in a virtual environment through their senses. Today, there are a wide variety of VR devices and programs, such as wearable head-mounted VR displays and online 3D virtual tours. Although owners and managers should not confuse AR with VR, they can treat them in combination by considering AR a type of VR. Compared to an all-digital and artificial 3D immersive experience such as that provided by VR, AR technology presents virtual information overlaid on the real-world view that users can interact with (i.e., a mobile application that provides overlay of text, audio, 3D animations, or avatars on a real-world environment). This key distinction implies that AR is generally better suited to enhance (and co-create) rather than replace the tourist experience (Neuhofer et al., 2014).

15.3.1 Key elements of Virtual Reality

One of VR’s greatest advantages is its ability to visualize spatial environments. This is especially relevant for tourism products and services which, as we know, cannot be tested by consumers in advance. Putting on a VR headset and being able to compare different destinations or tourism products and services can be of great help to consumers when making informed decisions. The three main elements that characterize VR are the following (Yung & Khoo-Lattimore, 2019):

1. Visualization: or the user’s ability to look around, usually through a head-mounted display, and perceive the “virtual” world around them.

2. Immersion: which consists of imaginatively transferring the user to an artificial representation of the real world or an imaginary world that they can manipulate or interact with. This is made possible by a combination of sights, sounds, and technologies, including gyroscopes and motion sensors, which track the position of the head, body, and hands; small high-definition screens for stereoscopic displays; and computer processors that are small, light, and fast.

3. Interactivity: by allowing the user to have a certain degree of control over the immersive experience provided, generally through the use of sensors and an input device such as a joystick or keyboard.

Two terms that are related to VR and worth explaining are Virtual Environment (VE) and Virtual Worlds (VWs). A VE is a computer-generated environment where the user can move and interact with and modify the digital objects that compose it according to their will and interests. VR itself involves the user’s immersion in a VE. There are three main types of VE used in VR today, each with its own level of immersion and features: non-immersive, semi-immersive, and fully immersive VEs.

Non-immersive VEs are computer-generated environments that allow the user to be aware of and maintain control of their physical environment. Non-immersive technologies include a computer or video game console, a display, and signal input devices such as keyboards, mice, and other controllers.

Semi-immersive VEs are a partially virtual environment where users perceive that they are in a different reality but still connected to their physical environment. Semi-immersive technologies provide realism through 3D graphics and depth of field. This type of VR is often used for educational or training purposes and relies on high-resolution displays, powerful computers, projectors, or simulators that replicate the functionality of real-world working mechanisms, such as a flight simulator.

Fully immersive VEs provide users with the most realistic and comprehensive simulation experience. Users can experience and interact with VR using a high-resolution VR headset with a wide field of view, or a head-mounted display (HMD). The screen is typically split between the user’s eyes, thus creating a stereoscopic 3D effect combined with input tracking to establish an immersive and believable experience. This type of VR is commonly used for gaming and entertainment purposes, although use cases in other sectors such as medicine, education, or tourism are increasing and seem limitless (e.g., Mechdyne CAVE VR system).

On the other hand, VWs are virtual environments open 24 hours a day, 7 days a week, which simulate an artificial world or environment (inspired or not in reality) and that allow people represented by avatars to create, play, and interact with each other and with virtual objects or goods in real time. It is therefore a metaverse, or an environment where humans interact socially and economically as avatars without the limitations of the real world. Today one of the most active VWs in the world is Second Life, a platform founded in 2003 where avatars socialize, interact, and create their own virtual spaces. In 2021, Second Life reported around 64.7 million active users on its platform and since its inception has created an in-game economy valued at approximately US$500 million. The rise in popularity of VWs has not gone unnoticed by the tourism industry and countries like Sweden, the Maldives, Estonia, Kazakhstan, Serbia, and Italy have already created their own virtual embassies in Second Life, as have international hotel brands, such as Starwood, Hyatt, STA, and Crowne Plaza. Popular world tourism attractions such as the Eiffel Tower and the Arc de Triomphe in Paris, and the Maasai Mara villages in Kenya, also have their virtual site in Second Life. In VWs, the social and promotional aspect predominates through virtual marketing, with the avatars being able to travel to these attractions in groups and interact with other avatars present on the site.

15.3.2 Key elements of Augmented Reality

Following the success of the Pokemon Go AR game in 2016, there was a surge in public interest in the use of AR applications, leading the world’s leading destinations and tourism firms to explore the potential of this innovative technology. Advances in mobile computing have accelerated the development of AR applications in tourism, taking advantage of the geolocation capabilities provided by mobile devices to deliver users with additional relevant information about their environment.

For the user, the main difference between AR and VR is the level of immersion. In AR, most of what the user sees belongs to the real world, while with VR the user is completely immersed in an artificial environment. In addition, AR’s geo-location capabilities, personalization, and multilingual capabilities allow for more accurate and personalized marketing messages to be delivered to consumers, fostering a more positive attitude, more trust, and, ultimately, higher purchase intent (Javornik, 2016). AR and VR technologies offer users a realistic pre-experience of the potential destination and of the products and services, which opens the door to new ways of promoting the services of tourism firms. As with mobile applications, to be successful in the development and adoption of AR applications in tourism, it is important to consider not only the utility and ease of use, but firms must also educate internal stakeholders about what implementing AR entails and what the expected results are.

15.3.3 AR/VR applications

AR and VR-based applications are being increasingly adopted and implemented in various areas of tourism and hospitality, such as hotels, tours, museums, attractions, cruises, heritage, and destination marketing. Today there is a wide variety of VR and AR applications that provide tourism firms with innovative ways to revitalize their value offerings, attract more visitors, and improve the service experience through more immersive and interactive environments. AV/VR technologies offer tourism firms the ability to reach a broader audience, influence their customers’ attitudes, experiences, and emotions, as well as consumer purchase intentions and word of mouth. Through AR/VR, tourists can access valuable information and improve their knowledge about tourist products and services and attractions, while enhancing their tourist experience and enjoying higher levels of entertainment in the process (Kounavis et al., 2012). All of the above can be done in a personalized way, delivering services and multimedia content tailored to the needs of users.

Among the factors that influence the user experience and are useful in predicting the degree of satisfaction with AR/VR applications are the advantages/benefits perceived by the user, the functional and practical attributes that the applications have, the perceived enjoyment, and the degree of emotional involvement of users. Another important element that influences the experience is the aesthetics and the visual appeal of AR/VR applications (Roxo & Brito, 2018). The Boston Consulting Group (BCG) has estimated that more than 80 million US citizens use AR, meaning that about one-third of smartphone users use AR technology at least once a month, and many firms are convinced that AR applications will begin to affect sales, purchase intent, and customer engagement within two years. All the above are arguments that can make business owners and managers consider the implementation of AR/VR technologies in their operational and business plans. Some of the AR/VR applications that are expected to have the greatest potential for tourism firms are presented below.

15.3.3.1 Marketing

Technological advances in AR and VR are transforming the way tourism firms and destination marketing organizations (DMOs) communicate, deliver content, and interact with consumers and suppliers. AR/VR applications are used to influence tourists’ positive attitude towards products and services and places, reinforce the brand, and as an innovative means of developing interactive advertising to increase the number of customers. In essence, AR/VR applications allow consumers to learn about and experience products and places in new ways (Wei, 2019). Regardless of the type of AR/VR application in question, one of its greatest strengths is the ability to visualize spatial environments and provide rich and enhanced information to users during the planning stage of their trips. AR/VR offers an indirect experience to users by allowing them to experience sensory and even spatial aspects of the destination without actually being there. This makes advertising through VR/AR more effective when compared to other media (i.e., brochures), given the greater richness and interactivity of the information delivered.

Destination organizations such as Tourism Australia (http://www.australia.com/, accessed September 2022) and Destination BC in Canada (https://www.hellobc.com/, accessed September 2022) have launched interactive VR experiences through their websites. In other cases, cities have been recreated, such as the case of Valladolid in Spain, which allow the user to tour the city on the Second Life platform and learn about it in a virtual context. These initiatives can be very useful in the initial phases of the consumer decision process, since tourism products are intangible and consumers cannot try them in advance. At the same time, several studies have found that those users who interact with AR and VR manage to feel a greater degree of commitment and participation, and this contributes to generate greater positive feelings towards tourism firms and places (Yung & Khoo-Lattimore, 2019). Although much remains to be learned and researched, it should not be ruled out that AR and VR technologies could become tools that allow marketers to revolutionize interaction with customers through information.

15.3.3.2 Meetings, Incentives, Conferences, and Exhibitions

The ongoing transition of the Meetings, Incentives, Conferences, and Exhibitions (MICE) industry to virtual mode, recently accelerated by the COVID-19 pandemic, is having important implications for the roles of event organizers and travel managers, as well as for the global business travel market. The substitution of many business trips for virtual events is nothing new as this need began to arise to save time and money and feel more secure. However, this trend is now transforming the business strategies of the main players in the MICE industry and readjusting the contractual conditions with travel agencies and the relationships with customers. Faced with this reality, AR/VR technologies emerge as tools with the potential to provide innovative solutions that strengthen the competitive capacity and growth of firms in this industry. Although the capabilities provided by AR/VR technologies may still seem insufficient to justify their widespread adoption in the industry, their use has begun to attract the interest of many of the industry leaders. AR/VR technologies offer new and innovative ways to show customers previews of an event hall set up for trade shows, or social events. Moreover, creating VR experiences in virtual events is a way to provide attendees with engaging and immersive experiences to make them feel more involved and engaged. Therefore, it would not be surprising if its adoption became widespread in the coming years in specific niches of the MICE industry where the replacement of face-to-face events with virtual ones makes more sense (i.e., in professional events, product demonstrations, brand presentations, networking meetings, etc.).

15.3.3.3 Gamification in museums and attractions

Gamification is an effective strategy that uses game mechanics, such as points, leaderboard rankings, achievements/badges, levels, stories/themes, objectives, feedback, and rewards, etc., to influence user behavior and affect user engagement, loyalty, and satisfaction (Pasca et al., 2021). The implementation of gamification in digital platforms can help to attract and retain certain types of visitors, making available a large amount of data to service providers on the preferences, perceptions, opinions, and itineraries of these tourists. With the exponential growth of digital platforms, social media, and mobile technologies, gamification has become a pervasive innovative tool in service design. It is increasingly used by tourism firms to promote consumer interaction and participation in the co-creation of experiences and services. Gamification has also spread to other contexts not strictly related to games, such as in firms that are looking for new tools to create more meaningful connections with users and influence and improve their behavior and that of their employees.

One of the applications of AR technology that is gaining more and more ground is as a tool for disseminating information and as an interactive guide in museums, attractions, art galleries, and heritage sites. Its use is justified by the more mobile nature of AR compared to VR (the latter requires the user to be static in one place and more processing power). The use of AR in contexts where it is necessary to disseminate large amounts of information is an opportunity to improve the tourist experience before, during, and after the visit. Since AR is also a technology that is easy to use and very convenient for the average user of a mobile phone, it makes it possible to incorporate game elements in mobile applications that serve as an incentive for the public to have fun and improve their knowledge and perception of places and history (Jingen Liang & Elliot, 2021; Pasca et al., 2021). For many specialists, this combination of AR technologies with gamification has important practical implications and represents one of the opportunities with the greatest potential to attract heritage tourists.

Additionally, the idea of socializing the experience when visiting heritage sites (i.e., sharing opinions, scoring points, badges, etc.) can also contribute to the joint creation of business-to-consumer (B2C) and consumer-to-consumer (C2C) value, since it motivates visitors to return attracted by new challenges. As a next step, visitors could create their own “treasure hunts” in venues, museums, and attractions to be solved by other visitors (Jung & tom Dieck, 2017), thus becoming co-creators of content and activities in the AR environment. However, given that AR environments and experiences are computer-generated reconstructions, it is not uncommon to find managers of heritage sites who feel that the use of these technologies undermines the objective authenticity of the sites and trivializes them, so they are not willing to accept the use of AR or gamification. These attitudes can be expected to change as the benefits (and limitations) of using AR technologies become more apparent to users and organizations over time.

15.3.3.4 Mobile AR tour guides

AR mobile tour guides can display on-demand content as tourists travel through the city, exploring the cityscape or visiting points of interest. These applications allow adding new layers of information and knowledge to the real world, delivering new, more interactive, and dynamic experiences. In addition, since most users access these applications through smart mobile devices with GPS, tourists can take advantage of the benefits of geographical positioning.

Information within AR mobile apps is delivered in various media formats, from images, videos, and sounds, to 3D models and hyperlinks that can direct the user outside of the app. This combination of AR technology with multimedia content and the careful design of the functionalities of the mobile application allows tourists, for example, to create lists of favorite points of interest linked to a map. Since AR mobile apps can work like a tour guide that provide layered and on-demand information, the effect of information overload can be minimized. Each user can be given information according to the level of knowledge and interest they have and personalize their tour or visit, thus resulting in a much more memorable experience (Kounavis et al., 2012). Furthermore, users of mobile applications can take advantage of the capabilities provided by mobile devices and mobility, and use AR/VR technologies as social media and interact with the rest of the users who access them. Tourists can instantly exchange information and tips, or share their opinions with others inside and outside the app. Eventually, tourism firms can use this information to profile the wishes and expectations of tourists and personalize their visits.

15.3.4 Challenges of AR/VR

Tourism firms can reach out to new markets and create a competitive edge by implementing AR/VR technologies. However, there are a good number of challenges that affect both users and firms and on which the promised benefits depend. From the users’ perspective, the main challenges lie, as with other smart technologies, in the effort required to learn how to use them, in the compatibility of the applications with the devices that are already being used, and in the cost of use. AR/VR applications often require an internet connection, but not every city or location is fully covered with Wi-Fi networks that offer free internet and 4G connection. Furthermore, data roaming charges remain a considerable expense for many tourists, especially younger ones. Ease of use, simplicity, accessibility, and app functionality continue to be major challenges faced by AR/VR app developers and firms. It is key to ensure that users have a positive experience and that tourists do not feel overwhelmed when using unknown technologies (Yin et al., 2021). Users also expect AR/VR apps to help them with post-trip retrospection by providing functionalities related to remembering, taking photos, and recording. It is therefore important that there is an interaction between application developers and tourists and that the former take into account the needs of the latter when developing and implementing AR/VR and guarantee the creation of value for the tourist.

For many tourism firms, the development of AR/VR applications is perceived as very risky, especially when a reliable proof of concept is not previously available. AR/VR content development, device provisioning, and, in some cases, 3D printer purchases require significant investment and, as the pace of AR/VR adoption accelerates, smaller firms are afraid of making large investments in these technologies. Additionally, there is still the issue of a lack of interoperability between mobile platforms, which means that most AR/VR apps cannot be used on all operating systems, increasing development costs for firms. Despite the pitfalls, the widespread use of smartphones allows tourism firms to offer basic applications for visitors’ own devices, with very little investment, and thus providing an interactive experience to their customers and users.

15.4 Blockchain

Blockchain is one of the 21st-century technologies with the potential to change the way tourism business is done, payments are made, and management processes are executed. Based on the Distributed Ledger Technology (DLT), blockchain applications provide innovative solutions based on the security they provide to the actors of the network, the efficiency in the maintenance of records and transactions, and the automation in the execution of contracts when certain conditions are met (smart contracts). Although most of the literature on blockchain focuses on the financial industry and cryptocurrencies, interest is growing in how this technology can be applied in other industries and management processes, including tourism. Blockchain can radically disrupt current business models in tourism and tourism marketing. Not surprisingly, many leading tourism firms have already announced their intention to test and adopt blockchain technology in their booking and payment systems.

15.4.1 How it works

The blockchain is an open source software that allows the creation of a distributed database of records (ledger) organized in a block structure, which is decentralized and securely records all the transactions that take place between the participating members of the blockchain. The goal of the blockchain is to ensure that digital information is securely recorded and distributed, but not edited. Hence, the blockchain is the perfect basis for recording transactions that should not be modified or deleted.

Unlike a typical database, transactions on the blockchain are collected in groups called blocks. When these blocks are filled, they are closed and linked to the previously filled block, thus forming a chain of data known as a blockchain. Blocks are chained together with cryptographic hashes, so that each block (except the first) contains the hash of the previous block. The blockchain ensures integrity by chaining blocks of transactions in such a way that altering any one block breaks the link to the next block. Furthermore, all the blocks together form a ledger which is an auditable record of all transaction history. In the ledger, each transaction has a specific user code or pseudonym attached. The blockchain allows all actors to maintain their own copy of the ledger, which can be decentralized and replicated without any central institution maintaining a single authoritative record.

A ledger is stored in a distributed system made up of nodes on a computer network. Nodes are the infrastructure of the blockchain and can be any type of device, from a laptop, a desktop computer, to even larger and more powerful servers. All nodes in a blockchain are connected to each other and constantly exchange the latest blockchain data so that everyone is up to date. Blockchain nodes can be regular (i.e., only interact with the blockchain), and complete (i.e., contain a complete copy of the blockchain transaction history and validate transactions). A third type of node present in many blockchains is the blockchain miner, whose mission is to create new transaction blocks from full nodes.

The blockchain can be public or private. The former is also known as open or permissionless blockchain, and anyone can freely join and establish a node. As it is open, this blockchain must be protected with cryptography and a consensus system, such as proof of work (PoW). Private or permissioned blockchain requires that each node must be approved before joining, so the security layers do not need to be as strong as in the public blockchain.

Blockchain technology has six main characteristics that make it suitable for a number of applications in the field of tourism, these are: decentralized nature and operation, transparency of data records, open source access, autonomy and trust, immutability, and anonymity (Antoniadis et al., 2020). These features provide greater security and auditability to the transaction recording system, while the absence of intermediaries builds trust in the system, reduces the costs of transactions and the maintenance of a central database, and mitigates the risks of network collapse from malicious attacks.

15.4.2 Applications

Blockchain applications can change the way tourism firms interact with customers in a secure environment and validate the content they generate about their products and services (i.e., fake reviews on social media). Token-based loyalty programs can change the experience offered to customers of a hotel or a destination and make it much easier to manage these types of programs. Digital payments with customers (B2C) and with suppliers (B2B) can be greatly facilitated through cryptocurrencies, and when combined with smart contracts, operations can be made more agile and secure, which generates more trust between the participating parties (Antoniadis et al., 2020). Figure 15.1 shows some of the main applications that blockchain can have in tourism.

Fig. 15.1. Main applications of blockchain in tourism. Source: own elaboration based on Antoniadis et al. (2020)

15.4.2.1 Cryptocurrencies

The growth of blockchain technologies and the emergence of new applications are largely due to the success of the Bitcoin cryptocurrency. Bitcoin was one of the first applications of DLT technology to emerge as a peer-to-peer cryptographic payment system in response to a lack of trust in global finance created after the 2008 financial crisis. In the Bitcoin ecosystem, any digital interaction can be tracked through a transparent and secure structure that is also resistant to both external and internal hacking attacks. Although there are many different types of cryptocurrencies today, the most important in terms of transaction volume and recognition are the following (Çapar, 2020):

Bitcoin: It is the most popular of all cryptocurrencies. Released in 2008 by an unknown person using the pseudonym Satoshi Nakamoto, it can be traded like a physical currency. In January 2021, 400,000 daily Bitcoin transactions were reached.

Altcoins: These are alternative cryptocurrencies to Bitcoin, of which there are currently more than 10,000 on the market (e.g., Ethereum, Ripple, Litecoin, Cardano, Dogecoin, etc.), 200 of which support active trading between customers. Although most are different versions of Bitcoin, some are actually quite different, since they use very different algorithms from Bitcoin (e.g., Factom). According to the “dominance ratio”, which measures how strong Bitcoin is compared to the rest of the “altcoins”, the Bitcoin market was slightly above 50% at the beginning of 2021.

Tokens: They are quite different from the other two types of cryptocurrencies, as they do not have their own blockchains. Tokens are used with DApp applications, usually to buy a product or get a discount.

Like other new technologies, the adoption of cryptocurrencies depends on the acceptance by consumers, after all tourism firms will not see compelling reasons to invest in Bitcoin if they do not find a critical mass of consumers who use them (Ozdemir et al., 2020). Among the factors that may explain consumers’ reluctance to accept cryptocurrencies are lack of knowledge about cryptocurrencies, the low number of retailers that accept them, as well as lack of trust and the high risk of losing value of the cryptocurrency. On the contrary, consumers value the advantages of paying with cryptocurrency, such as flexibility, convenience, and anonymity, compared to their traditional counterparts. As credit card fraud continues to increase at a high rate and this negatively affects the development of electronic commerce in the world, the use of cryptocurrencies and bitcoin in particular, appears as an emerging technology that is gaining more acceptance every day.

Some recent statistics show that in post-COVID-19 times there is a strong appetite for spending more on travel from US travelers with 22% planning to use crypto to pay for part of their trip (prnewswire.com, 2021). Of those people planning to use cryptocurrencies, 70% choose Bitcoin, 45% USDT, 37% Ethereum, and 35% AVA. These estimates show a record in the intention to use cryptocurrencies to make travel reservations and payments. It is also worth noting that the prices reached by Bitcoin and Ethereum are at an all-time high, with the total market value of cryptocurrencies exceeding US$2 trillion, and that the estimated number of people who have any cryptocurrency in the world has reached 106 million.

A large part of the tourist products and services marketed in the world involves the transfer of money between people and firms located in different countries. This requires the intervention of trusted intermediaries to carry out the transactions and the payment of additional high commissions – just think about the 10–25% commission that Booking.com charges hoteliers – and that logically affects the price paid by the final consumer. However, by using cryptocurrencies it is possible to ensure money transactions without intermediaries.

One of the fastest-growing tourism activities in the adoption of cryptocurrencies is medical tourism. Many medical tourism operators use high-quality medical care as a competitive weapon, and also that safe, transparent, and quick in response. On the other hand, patients (medical tourists) prefer to minimize risks in the medical care process and carry out as few transactions as possible. By using a cryptocurrency, patients do not transfer any medical information to third parties, thus maintaining confidentiality in the provision of medical services (Barkan & Tapliashvili, 2018). This has led many clinics and hospitals to accept cryptocurrencies as a means of payment for their services, especially from their international customers.

There are many experts who believe that cryptocurrencies will change the way in which tourists and firms exchange money, thus avoiding the intermediation of third parties in transactions and reducing costs. The high level of anonymity provided by cryptocurrencies such as Bitcoin is another reason for optimism, as “user wallets” are not directly connected to their owners through shared personal data, meaning that the chain does not require personal data to register an address.

15.4.2.2 Smart contracts

Another key feature of blockchain technology that has become very popular since Nick Szabo introduced in 1998 the idea of a decentralized mechanism to create a digital currency called “bit gold” and later the open source platform Ethereum was created in 2015 by Vitálik Buterin, are smart contracts. Smart contracts are programs written in a programming language that are registered in a blockchain and automatically executed when there is a consensus between the parties involved that predetermined conditions are met (Caddeo & Pinna, 2021). When the automated procedure is activated in the block chain, the intervention of intermediaries is not necessary, thus reducing the costs of the transaction and reinforcing the trust between the parties involved.

The programmability of smart contracts and their automated execution without human intervention opens up a field of great opportunities for tourism firms. For example, transactions could be paid through instant payment systems, which would improve collaboration between accommodations and travel agencies; in hotels, rooms assignment to guests upon arrival could be done through digital keys in the block chain; and in airlines, in the case of delay or cancellation, smart contracts could automatically settle the compensation provided for as established in the insurance. By eliminating the need for intermediaries to establish contracts between the parties, new opportunities are also created for tourism SMEs. Larger firms, such as big tour operators and hotel groups (and even consumers), may be interested in diversifying their supplier networks and focusing more on smaller firms as transaction costs fall and confidence is strengthened (Antoniadis et al., 2020).

15.4.2.3 IoT

One of the key challenges for smart tourism firms is the growing number of devices connected to the internet through IoT systems and the need to have an infrastructure that provides security against the multiple threats affecting the layers of the IoT architecture. As the number of connected devices increases, so does the number of devices with outdated or inconsistent firmware versions, the amount of corrupted or compromised data, and the number of fake integrations. These risks are compounded by the increasing volume and variety of data, and the different types of infrastructure and users that are connected to the internet. The key question that arises here is whether it is possible to develop a data management platform in the context of smart firms, based on a generic data model and using reliable technology.

The decentralized nature of blockchain technology could help minimize the risks of fraud and manipulation by participants, by effectively managing identities through immutable block-based access systems. Therefore, the IoT could use blockchain to secure many of its applications and devices by publishing and storing data in the form of a public ledger that cannot be changed, as each user or node in the network maintains the same ledger as everyone else (Lee, 2019). Hence, some of the key challenges related to IoT security could be addressed. However, while blockchain technology provides decentralized privacy and security capabilities, it also comes with high power consumption, delays, and heavy workloads for computational resources that are still not suitable for most resource-constrained IoT devices. To overcome these barriers, several alternative implementation studies are underway, such as dividing the IoT network into several levels and adopting blockchain technology in each of them to provide security; or creating a distributed cloud infrastructure that reduces response time, while still achieving high-performance and economical computing to respond to attacks in real time on the IoT network (Brandão et al., 2018).

15.4.2.4 DApps

Decentralized applications (DApps) are applications or programs created to run on a network of blockchain computers. DApps are outside the reach and control of any single authority and are often created through the Ethereum platform for a variety of purposes, including gaming, finance, and social media. For example, a developer can create a DApp similar to Instagram or Twitter and put it on a blockchain where any user can post messages. Once there, no one, not even the creators of the app, can delete the messages. DApps allow users to interact with blockchain technologies in a regular and “friendly” way through smartphones and web browsers. As DApp developers seek to make blockchain technology easy to use, new consumer-oriented business models are emerging from them. For tourism firms, this means they can develop their own DApps to better connect and engage with their customers. At the moment, there are several smart tourism DApps in the works focused on online review systems, trip planning, direct communication with owners, personalized marketing, etc. Some examples are Nocturus (a blockchain-based hotel reservation firm that offers direct-to-customer hotel reservations as well as sales channel consolidation for hotels), and Further Network (a blockchain-based P2P network to help airlines and the travel industry to complete the billing, settlement, and payment (BSP) process in real time).

15.4.2.5 Airlines

In airlines, the blockchain can be used to carry out authentication and identity management, allowing the identity of a person to be unequivocally determined. For example, biometric information, such as fingerprints and facial recognition can be added to the traveler’s registered information, thus simplifying the work of hotels, which would only have to register the arrival and departure dates of the guests in the blockchain. Tests are being carried out with the virtual (digital) passport, which uses a unique token that contains biometric data and other personal information stored on mobile devices to reduce the control of documents during trips. Blockchain technology is also being used to enhance customer loyalty programs, such as to automatically connect the digital identity of travelers with loyalty programs and hotel reservations (i.e., for flight crews). These use cases often require the integration of multiple actors into a single system, and since there is no middleman, the system needs to establish trust between the multitude of nodes that are part of the blockchain network, in addition to complying with privacy and security. Other use cases in airlines include: the implementation of tokens for payments (replacement of credit cards); the tracking and monitoring of baggage at key points (ensuring the security of the data of all the actors involved in the service, including passengers, airlines, airports, and insurance companies); and automated compensation through smart contracts.

15.4.2.6 Hospitality

The blockchain can be used to keep track of guest check-ins and run loyalty programs that issue tokens as rewards to travelers and even connect with credit cards. For a blockchain implementation to be successful, customer privacy must be always guaranteed. For example, the start-up firm Loyyal (https://loyyal.com/, accessed September 2022) uses proprietary blockchain technology and smart contracts for businesses to manage their loyalty programs by offering various types of reward systems. Blockchain technology can also be used in inventory management systems (i.e., available rooms in hotels, or the number of seats available on airplanes) to provide information on availability and coverage rate, thus replacing Property Management Systems (PMSs) and getting rid of intermediation costs.

Disintermediation not only concerns monetary transactions, but also directly affects the delivery of tourism products/services. Examples of these applications are the WindingTree platform (https://windingtree.com/, accessed September 2022), which allows hoteliers and airlines to list their availability and tourists to book it; and the BedSwap project, from the tour operator TUI, which allows firms to assess demand and move inventories between different points of sale in real time, making sales margins more flexible based on demand.

Blockchain can have an impact on the structure of online travel platforms, which may shift from relying on centralized intermediaries to having decentralized governance (Calvaresi et al., 2019). This would mean creating new business-to-consumer (B2C) or consumer-to-consumer (C2C) markets for tourism products and services through the adoption of blockchain and cryptocurrencies. An example is the TripEcoSys project (https://www.tripecosys.com, accessed September 2022), which aims to be a decentralized travel ecosystem based on the Ethereum blockchain, through which to find all travel service providers, from flights, to accommodation and excursions, and where the traveler can earn cryptocurrencies and rewards by sharing his or her own experiences.

Blockchain technology can also revolutionize the quality of online customer reviews through reliable systems for evaluating tourism products and services (e.g., hotels, restaurants, flights, events, etc.). Its true potential extends to the possibility of certifying that user opinions are original and that they cannot be manipulated by tourism firms or by consumers. Blockchain-based evaluation systems would ensure people have identities that are traceable by unique private keys, thus avoiding manipulation in reviews and making them more reliable. A decentralized, impartial, and transparent system could be created that would guarantee that the opinions are authentic and reliable and that once entered into the blockchain it would no longer be possible to modify or eliminate them. In such a system, the privacy of users would be guaranteed. Furthermore, users would surely be more willing to do reviews in exchange for financial rewards in the form of tokens or cryptocurrencies (Caddeo & Pinna, 2021).

15.4.2.7 Restaurants

In restaurants and food and beverage firms, food traceability is of the utmost importance. It is also for consumers, as 33% of US consumers place trust among the three main drivers for the purchase of food/meals (Accenture, 2017). Through blockchain, consumers can know everything about the ingredients that are part of a menu and what its status is, from the origin until the dish is served on the table. This brings transparency to the process and increases consumer confidence in the food supply chain, which in turn helps reduce unnecessary waste and prevents costly reputational damage to restaurants. For example, the Foodchain platform (https://food-chain.it/, accessed September 2022) uses blockchain and the IoT to track food products from origin to the final consumer, making all information accessible through a dedicated QR code on the product packaging (Grecuccio et al., 2020).

15.4.3 Benefits

Tourism is one of the industries leading the investment in blockchain and its growth is expected to continue to be very high in the coming years (PWC, 2017).However, while blockchain has garnered global attention and its promises have captivated many, tourism firms are still struggling to understand what blockchain can do for them. Tourism products and services are intangible services that rely heavily on trust and reputation management, which is traditionally centralized and delegated to trusted third parties. Since the strengthening of trust is one of the potential benefits of the application of blockchain in tourism, blockchain can mean a leap forward for tourism firms, especially in a period of great uncertainty such as the one we are currently experiencing (Caddeo & Pinna, 2021).

For example, renting a room on an online platform requires multiple levels of trust. On the host side there is the issue of trust in the guests. On the guest side, it is key to trust the host and the accommodation, as well as the services they offer. Both parties must trust the ability and integrity of the platform to handle the booking and payment processes. In a scenario like this, the online platform is, in addition to the provider of the technical infrastructure, the user interfaces, and the reservation process, responsible for establishing and maintaining trust between users (Calvaresi et al., 2019). Unfortunately, current technologies cannot prevent malicious behavior or misleading information, therefore neither a centralized organization nor an intermediary can address these issues. This is exactly where blockchain technology can unfold its full potential.

Blockchain has the potential to transform the tourism value network into a well-coordinated, self-contained, distributed network, thereby providing an enhanced experience for tourists. Likewise, blockchain technology has the potential to cause substantial changes in the business models of tourism firms in three main ways.

• Blockchain helps build trust between contracting and transacting parties by providing a trusted platform through which traded goods/services are authenticated and transactions validated. Blockchain technology enables the adoption of cryptocurrencies and tokens by tourists and firms, and help improve the tourist experience by simplifying transaction processes through smart contracts.

• Blockchain can increase direct access to markets for both tourism firms and consumers, limiting the need for intermediaries. This could lead to changes in the structure of many markets in the tourism industry.

• Finally, blockchain can improve operational efficiency and help reduce costs for tourism firms, thanks to the greater speed, elimination of errors, and organizational agility achieved.

All the above, however, will only be possible if tourists understand how blockchain works and consciously perceive the benefits that its use brings. It will also be necessary that the local tourism actors accept it and avoid limiting its use to a restricted group of experienced users. Furthermore, full blockchain implementation will require not only to create interoperable networks within the different tourism activities, but to create and integrate those networks with other tourism-related industries. Initiatives such as this require a substantial level of collaboration between tourism stakeholders (e.g., tourists, firms, government, destination marketing organizations) to innovate and reinvent the tourism experience. The good news is that they can also provide a competitive edge to the actors who decide to take the step forward.

15.4.4 Challenges

Despite the growing interest in the use of blockchain technology and the great benefits it promises to tourism firms, it can be said that owners and managers are mostly unaware of how it works and in which cases blockchain solutions can lead to real improvements in their businesses. In addition, the technology is still at a very early stage of development, which means that there are still important challenges ahead before achieving its massive implementation in tourism firms. The mechanisms for creating new blocks require a large computational capacity, which entails high energy consumption and creates difficulties in scaling to a large number of transactions per second. Blockchain mining requires complex algorithms to be solved that consume a lot of computing power, so more and more electricity is going to be needed. Today, blockchain miners are using 0.5% of the total electricity consumed in the world (New York Times, 2021), but if the blockchain continues to grow at the current rate, this could mean that miners would need more energy than the world can produce. Also, as the number of users on the network increases, transactions take longer to process, and the number of users on the network is restricted. Processing an entire transaction could take days, significantly reducing the benefits that blockchain adoption brings to firms and consumers. For example, a long period of time is required to confirm financial transactions with Bitcoin, in addition to a great deal of computing power. Some alternatives based on a peer-to-peer network of virtual machines to create and run smart contracts and decentralized applications, such as Ethereum, are complex and very difficult to implement (Brandão et al., 2018).

In the context of tourism firms, the problem of scalability and the lower speed of transactions due to the high consumption of processing resources are the most important challenges. If we compare the number of transactions carried out with a centralized system with conventional standards and those of an equivalent blockchain solution, the number of transactions of the latter is usually exceeded by the former. Furthermore, the benefits and effectiveness of implementing a blockchain solution still depend on the adoption of the main players in the tourism industry and a standard is not yet available (Calvaresi et al., 2019).

The evolution of the blockchain from version 1.0 (mainly used to send and receive value transactions and with the capacity to process 5 transactions per second) to version 2.0 (which incorporates smart contracts and the capacity develop DApps and with a capacity of 25 transactions per second), and version 3.0 (aimed at the scalability of applications and with a capacity to process between 2000 and 4000 operations per second) have specifically sought to overcome some of the original limitations of the blockchain. The number of transactions per second has been increased along with the possibility of combining various types of records and native exchange with different types of currency. However, there are still key legal aspects that require attention, especially those related to privacy and data security, and the authentication of people’s digital identity. Moreover, there are challenges related to the investments that need to be made to implement a technology that is still very complex. Many firms, especially SMEs, may not have the necessary financial resources and knowledge to properly exploit blockchain technologies. This may lead many owners and managers to think that blockchain technology is for now a tool that can only add value to those firms that are in a position to exploit it for their own benefit (Caddeo & Pinna, 2021), and that they are still far from being able to do so.

15.5 Discussion Questions

• What impact can the technologies described in this chapter have on the skills and abilities of future employees of tourism firms?

• Which of the technologies described will most influence the customer experience? How will these technologies affect the design of tourism service delivery processes?

• What is the relationship between the technologies focused on data management and exploitation and the technologies focused on increasing interaction and commitment with the customer? Can they work separately?

• To what extent is the customer experience affected by the use of RAISA technologies? Are they having an effect on the reach of tourism products and services?

• What variables are decisive for generating trust between firms, and between firms and consumers in the tourism ecosystem?

• To what extent can the role of large online platforms be threatened by the adoption of blockchain technologies?

• How can the tourism firm meet the financing needs arising from the implementation of new smart technologies and infrastructure?