The travel industry is an ever-booming business of the modern world. The past decade has experienced the ease of traveling, a better road network, economic flight tickets, and more tourist destinations. Certain factors are the cause of the rise in the return of the travel industry. As published in The Travel & Tourism Competitiveness Report 2019 by the World Tourism Organization the total number of tourist arrivals was 1.4 billion in 2018. The number is expected to reach 1.8 billion by 2030. In 2018 the share of the travel industry in the global GDP was 10.4% and it is assumed that by the coming decade the travel industry will generate 50% of the global GDP. The world’s top economies have the great support of the traveling sector in their GDP.
But like other industries, this industry is also affected by scams and frauds. According to IATA, the airline industry has faced a loss of $118 billion in 2020. The most notable cause for this big loss is payment frauds.
- Growing Competition
The high percentage of profit in the travelling industry indeed attracts people to start this business. Due to this the competition additions and the bargaining capability of customers rises. The trend of new entrants in this business can become the reason for decreasing its revenue. These new entrants have poor risk management and fraud prevention policies.
The other reason is the high ticket price with low margins does not allow businesses to have better fraud prevention policies.
- Increasing Service Offerings
The travel industry is evolving to provide quality customer services. New travel companies are expanding their operations because of high competition in the market. Like hotels have restricted their operations to room reservation, now they offer insurance, tourist points transportation and ride-hailing. Each new service a company offers has a different risk associated with them. But the travel companies do not give more consideration to this phase. These additional services are an easy target for frauds.
- Online Travel Companies and Digital Bookings
The drift of online travel agencies has increased due to the comfort of remote booking. According to the reports of Statista, in 2020 the market size of the online travel agency sector was 595.78 billion US dollar and the number of employees associated with it was 1.2 million. Now tourists use mobile phones or laptops to plan their whole trip. Digital bookings have increased over time, according to the reports of eMarketer the amount of US travel sales through digital means was $219.69 billion in 2017. Now tourists can see pictures, video and reviews of hotels and airlines that give them better decision making sense. Digital platforms are a potential target of scams because cyber crimes are easy to execute and difficult to catch.
- Collecting Information Frictionlessly
Online booking sites have made an easy onboarding procedure to keep engaging customers. Because customers shift to another site if they experience any friction in the onboarding process. But the information that is collected through this method is not enough to have strong prevention of scam. Customers give personal information during ticket booking or hotel reservation. This personal information is useless if the customer is involved in any scam-related activity later.
- Last-Minute Travelling and Flexible Bookings
The period between booking and arrival is decreasing. Most of the travellers plan their time at the last minute. 72% of hotel bookings through mobile is planned before one day of stay. Because of this, the host businesses have very low time to identify any fraudulent activity.
Another problem related to flexible bookings is that tourists can change their plans one day before. Scammers first plan a trip and at last minute change it, for instance, change the arrival ticket of an airline. Through this, they can scam easily because many businesses don’t have a good rescreening method.
All It Sums Up To
All of the above-discussed problems can be solved by having a solid verification process during onboarding. Passport scanners should be implemented at airports to allow only legitimate travelers to travel. The best solution by having Know Your Customer (KYC) screening on digital platforms. Every tourist must be assigned a travel ID based on his passport number. So if he is involved in any scam, he can be caught easily. The verification services are provided by KYC service providers. It does not cover only verification but also performs ongoing monitoring on the customer to mitigate any risk of scam