Big Data - Delivering the Big Picture to Drive Competitiveness

What is the big thing about Big Data?

What is the big thing about Big Data?  Everything!  Welcome to the brand new world of data generation and data mining.  Big Data is arguably the biggest opportunity, in a generation, for the travel and tourism industry to embrace the changing structure of data and maximize its use.  We all know that the Internet has changed our businesses tremendously.  How we look, book, pay for and even consume travel services, have changed dramatically.  With that change has come entire new ways of tracking and measuring travellers’ intent, behaviour, thought patterns, sensitivities, sensibilities, desires, fantasies and needs.  This means that, more than ever before, suppliers are better able to understand the behavioural patterns of their customers and competitors.  In addition, these data are easier than ever to produce, capture, collect, analyse, integrate and use.

Big Data heralds a vast opportunity for all travel and tourism entities, equipping them with the tools to improve both the commercial and experiential sides of their businesses. As with any radical shift, however, the opportunities arrive hand-in-hand with the potential for significant challenges—challenges that Tourism Intelligence International (TII) describes as the four Cs: increased Competition, the need for new flows of Creativity and Content as well as the need to better understand and satisfy Customers.

So how can Big Data deliver the big picture to drive travel and tourism competitiveness?  The real gem of Big Data is the competitive power that it gives businesses to push the envelope on understanding consumer behaviour. This in turn creates the ability, par excellence, for businesses to predict, anticipate and exceed customer expectations in order to orchestrate the experience of a lifetime – the true raison détre of the travel and tourism business.

As the amount of data continues to grow exponentially, compounded by a variety of new technologies such as the Internet, social media, cloud computing, mobile devices and the Internet of Things, it poses both a challenge and an opportunity for the travel and tourism sector - how to capture, store, manage and use the ever increasing volume of data being generated. The big question is how organisations in the present can unlock the value of Big Data to deliver a vision into the future to predict and anticipate consumer behaviour.

By using Big Data analytics, businesses and governments alike can analyse huge amounts of data in lightning speed to accurately reveal previously unseen patterns, sentiments and consumer and market trends. This velocity and veracity of data insight, delivered across any device including computers, smart phones and tablets, means that executives in the travel and tourism industry can make better and faster decisions.

The Six Vs of Big Data
Source: Tourism Intelligence International, 2014

META Group. “3D Data Management: Controlling Data Volume, Velocity, and Variety.” February 2001

The benefits for the consumers are also many, from revolutionizing the information available at their fingertips, to taking back control of their own data to understand behavioural patterns such as energy consumption or spending habits. This in turn gives the consumer greater power in the new paradigm (Tourism Intelligence International, The Paradigm Shift in Travel and Tourism, 2013).  And in this new paradigm data is changing the way we think, feel, behave, conduct business, work and live.

In its easy-to-read, down-to-earth and thoroughly researched report, Big Data — Delivering the Big Picture to Drive Competitiveness, Tourism Intelligence International (TII) has created a comprehensive guide to understanding Big Data and how to use it to drive competitiveness.  This report points out that Big Data can be used as a fundamental tool for greater industry-wide innovation. Big Data demands big ideas and the courage to implement them.  Managing and analysing data is no longer an issue for IT departments alone; instead it is driving the travel and tourism industry’s business agenda.  But while the data is big and many large companies are at the forefront of the trend, it can be adopted by small and medium-sized enterprises as well, and in many cases, with little effort or expense.  So Big Data is not just for the big companies.  Big Data is for all of those companies—micro, small, medium, large and mega—and tourism destinations, that would like to understand their customers better, anticipate their needs and help them to deliver memorable and exceptional services.  In other words, it is for those companies that care about their customers and want to be in business for the long term.

This report, Big Data — Delivering the Big Picture to Drive Competitiveness examines a number of companies both within and outside of the travel and tourism industry that are using Big Data in big ways, for example, British Airways, Kayak, Marriott, Macy’s, UPS, adMarketing and ReviewPro.  These examples deliver important insights into the challenges and opportunities in using Big Data to drive competitiveness.

Tourism Intelligence International (TII), is committed to better understanding the impact of major trends in the travel and tourism industry and to facilitate decision-making in those critical areas most likely to deliver change.  Indeed, TII has been tracking trends in travel and tourism for well over 30 years.  This “new” Big Data trend is one of many that will drive businesses to reinvent themselves, as the tour operators and travel agencies have had to do with the dawn of the Internet.  Some will win, but others will go out of business, if they do not adapt to and adopt Big Data.

Tourism Intelligence International has put together twenty (20) winning strategies that could help any organisation of any size to use and benefit from Big Data analytics.  For these strategies and much more, order your copy of TII's report bl clicking on the image below. 

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Diagonal Integration – A New Best Practice for the Services Sector

What is Diagonal Integration?

For centuries, companies have horizontally and vertically integrated, and even diversified their operations, to optimise their production processes and to grow their profits.  Today, the new best practice for travel and tourism suppliers is Diagonal Integration. Diagonal Integration diversification, market segmentation, and total innovation will increasingly become “best practices” for competitiveness.

Diagonal integration is a term coined by Poon in Tourism, Technology and Competitive Strategies to explain the process whereby firms use their information technology platforms to get close to their customers and to systematically combine a range of services required by their carefully-identified target clientele.  For example, American Express produces a range of services – travel, insurance, real estate, financial services, investment services – to their carefully-targeted clients.

Firms diagonally integrate for best productivity and most profits.  As they move into new activities, there are tremendous systems gains, synergies and scope economies to be had from integration. Diagonal integration is a key tool for controlling the process of value creation and will continue to blur the boundaries among industry players.

Competition in the new tourism will not be dominated by full capacity utilization, cost cutting, over-production, price-cutting and mark-downs. 

With Diagonal Integration 2 + 2 = 5 

The purpose of diagonal integration is not to produce a single service and market it to a supermarket of clients.  Rather, the objective is produce a range of services and to sell them to a target group of consumers.  The consumers targeted are expected to simultaneously consume these services at regular intervals over their lifetime (for example, travel + insurance + credit + holiday + personal banking + entertainment + Internet + Radio + TV + Music).

In other words, the benefits of integrating activities are greater than providing each activity separately. 

Diagonal integration is facilitated by new information technologies.  It is the process by which firms use information technologies to logically combine services (for example, financial services and travel agencies) for best productivity and most profits.  One of the key attractions to firms in diagonally integrating is the lower costs of production that comes with it.  This is made possible through the synergies, systems gains and scope economies that firms reap when they use an IT platform to integrate diagonally.  

Diagonal Integration can best be understood by comparing it vertical and horizontal integration and even with diversification.  

The examples would illustrate that the distinguishing feature of diagonal integration is that firms become involved in tightly related activities to reduce costs and to get closer to their consumers through IT. 

What is Horizontal Integration?

Firms integrate horizontally to increase market share.  The key is that firms that integrate are at the same stage of production, producing similar products or in the same market.  For example, Carnival Cruise Lines gobbled up P&O Cruises, Aida Cruises, Cunard and Costa Cruises to become the world’s largest supplier of leisure cruises (Tourism Intelligence International, Successful Hotels and Resorts, 2005).

Horizontal Integration –

Carnival Taking Over A Number Of Cruise Brands

What is Vertical Integration?

Firms vertically integrate to control various stages of production of their products.  Ford, for example, produced its own steel and tyre-manufacturing factories.  The example illustrated in the figure below, shows how Ford and Thomas Cook were able to gain greater control of the entire ‘production’ process by integrating vertically forward and backward.  Ford, for example, not only manufactures cars but they also retail cars as well.  This is an example of forward vertical integration.  They also integrated backwards to control the production of tyres and steel for car parts.  In this way they are in greater control of the cost of production and the supply of raw material.  Similarly, Thomas Cook took control of airline and hotel operations so that they could control their guest expenditure at all levels.  And to ensure that the sale of their packages reached the consumer, they control the travel agency business so well.

Vertical Integration: Cars And Tourism Compared

What is Diversification?

Firms diversify in order to spread risks. The companies acquired need not be in the same industry or at the same stage of production.  A suitable example of diversification is the Phillip Morris Company.  Cigarettes and food are completely disconnected industries and products.  However, Phillip Morris is involved in both.  The main reason was to reduce risk.  Phillip Morris has faced the reality that cigarette consumption in many modern markets will decrease over time as a consequence of anti-smoking campaigns and the banning of smoking in public indoor spaces.  Now the company has delved into other areas including wine, coffee, cereals, confectionary and others.  All under different brand names of course.  Don’t be surprised if they get involved in the supply of outdoor furniture (all smokers smoke outside now).

The Production Focus of Different Forms of Integration

As the chart below illustrates, each form of integration has a different production focus.  Vertical Integration focuses on many stages of production as was illustrated by Ford – automobile production (finished good), steel and tyre production (raw materials).  Horizontal integration, as in the case of Carnival Cruise Lines, focuses on the same stages of production.  Diversification related to many unrelated production processes and activities.  And diagonal integration relates to many tightly-related services catering to a well-identified target market.

Forms Of Integration – Production Focus

Why is Diagonal Integration Different?

Saga, the UK largest dedicated tour operator catering to the Over 50s market, is an excellent example of diagonal integration at work (Tourism Intelligence International, Old but not Out – How to Win, Wow and Woo the Over 50’s Market, 2010).  In operating in the Over 50s market, Saga did not limit their offering to the travel and tourism services. They knew that their customers would need travel insurance or vehicle insurance for long road trips, etc. So they added other services that could either compliment the travel and tourism side of business or stand-alone. 

Diagonal Integration – The Saga Example

Saga had a clear target market – the Over 50s market.  And they systematically identified and provided a cluster of services dedicated to their target market. They provided insurance, personal finance, assisted care, magazines and a radio station, all in addition to holiday and cruises.

Saga’s strategy is clear and dedicated.  They are not catering to a supermarket of clients; they are not trying to be everything to everyone and cover the entire market like Carnival Cruises; they are not trying to control the stages of production (as did Ford); and they are not entering markets ‘willy nilly’.  Saga remains specifically dedicated to their target clientele. 


Diagonal Integration is one of the 26 Strategies (A-Z) identified to help companies and destinations lead and drive the New Travel and Tourism Paradigm.  For more information on the report publication entitled - The PAradigm Shift in Travel and Tourism please click here.

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