How will the Everything as a Service (XaaS) business model transform tourism?

How will the Everything as a Service (XaaS) business model transform tourism?

Every single person reading this line is currently benefiting from the Everything as a Service (XaaS) business model, whether we realise it or not. No one is reading this article in an actual magazine. Everyone is reading it online, using a subscription to broadband brought from a media company who has sold us all access to the internet and storage capacity – as a service. It has been written on a computer with virtually no built in memory – I saved the drafts of this article in the Cloud, paid for as an annual subscription delivering Storage as a Service (SaaS).

Not that long ago my choice of evening movie was defined by the physical DVDs (or tapes) I had at home or could rent from the library. Now I don’t have any DVDs. I have sold all my records. Netflix and Spotify provide me with movies and music as a service.

Everywhere we look, industries are being reinvented, changing what we thought of as products into services. It’s growing so fast, that according to Forbes, “the global XaaS market will grow at a compounded annual growth rate of nearly 40% from 2016 to 2020, with services ranging from storage to pet-sitting to food delivery.”

So what might it mean for tourism – the self-proclaimed world’s largest service industry?

First, it is already here. Arriving in a foreign city, I have no need of hiring a car. Through liftshare companies and on demand car access I can use a car as a service for the few hours I need it, and not have to pay for a physical car for a week and then leave it taking up space and wasting money in the hotel car park. Likewise the service offered by homesharing sites mean we don’t need the physical product of a hotel anymore to provide accommodation.

How about clothing and equipment? Most of those who ski hire ski boots and skis as a service when they go skiing. Sweden’s Rent-a-Plagg has extended the idea, now enabling visitors to hire all the necessary kit. As most people need ski equipment for a week or less each year, such hire schemes maximise the materials’ use.

Similarly, in Amsterdam members of the ‘Fashion Library’ LENA pay a monthly subscription to enable them to borrow vintage and designer clothes. One day soon, such Clothes as a Service (CaaS) libraries will exist and be networked across multiple destinations, so guests could travel with less luggage (making the journey easier and reducing emissions), and enjoy wearing different clothes while on holiday. Hotel chains keen to promote loyalty could offer such a service when you arrive, stocking your wardrobe with clothes you select from an online catalogue. Think it sounds far-fetched? Here’s what LENA’s co-founder Suzanne Smulders says of their vision: “Our dream is to go on holidays with some hand luggage and your library card, and have access to a big LENA wardrobe wherever you are.”

At Belgian hotel chain Martins, winner of an EMAS award in 2017 for its circular economy approach to running its operations, everything from computers and coffee machines, fitness equipment to company cars, are leased, lowering the total cost of ownership. As Cambridge University’s Circular Economy Toolkit explains, this Product as Service model “can allow closer relations with the customer, enhanced product development from closer feedback loops, provide greater business value to both parties and improve customer satisfaction”. An increasing range of products are available this way – for example, the Swiss company Elite leases eco-certified bedding such as mattresses, duvets, sheets and pillows to hotels.

We can go further still. If you have a dark room, you buy a lamp. But what you are really looking for is the light this lamp creates. Phillips now offers Light as a Service (Laas), and recently announced a partnership with Schiphol Airport, where Schiphol pays for the light it uses, while Philips remains the owner of all fixtures and installations. The result is a 50% reduction in electricity consumption over conventional lighting systems. As Jos Nijhuis, CEO and president of Schiphol Group, explains, “It is Schiphol’s ambition to become one of the most sustainable airports in the world. We believe in a circular economy and want to play an active role in its realization.”

When I search the internet to gain information, it is providing me with Knowledge as a Service. A Zipcar used to get from A to B offers Movement as a Service. Phillips offers Light as a Service. So too Rolls Royce now leases jet engines, offering Power as a Service. For each of these, the user experience is what is bought, while the service provider maintains the infrastructure.

Apply this mindset to tourism and we see that what people are really buying are things like Rest as a Service (Raas). Memories as a Service (MaaS). Pleasure as a Service (PaaS). And that likewise our industry’s role is to maintain the infrastructure that provides this – the destinations, the protected areas, the beaches, the forests etc. This means keeping them clean and uncrowded, restoring the biodiversity, and ensuring the local people are still happy to welcome tourists to the place they call home.

Yet too often we continue to focus on flogging products that are delivering a reduced quality of service, pushing them round like a failing vacuum cleaner or a clapped out old motor. We keep hawking icon destinations when off the beaten track places are better offering the services of rest, pleasure and memories that people are looking for. We encourage tourists to fly to the other side of the world when skipping the long haul altogether could actually deliver more of the benefits they seek.

The likes of Phillips and Rolls Royce have rethought their industries, focussing on looking after the resources that deliver the experience the end user needs. The result has been a better experience for their customers, more efficient use of natural resources, and improved financial results for the companies.

When it boils down to it, tourism offers Experiences as a Service (EaaS). Our future success demands we focus on preserving and restoring the destinations that deliver them.

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Jeremy Smith is the editor of sustainable tourism news site Travindy.com. Author of recently published Transforming Travel - realising the potential of sustainable tourism (2018). As well as writing a fortnightly blog for WTM's responsible tourism website, he works with responsible and sustainable travel businesses, developing their communications, brands, marketing and digital & social media strategy. He is co-author of Rough Guides' only guidebook dedicated to responsible tourism, Clean Breaks - 500 New Ways to See the World. Before that he was editor of The Ecologist, the world's longest-running environmental magazine. Travindy - https://www.travindy.com Latest book - cabi.org/bookshop/book/9781786394194

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