Is the future of travel regulation digital and green?

The travel industry is no stranger to regulatory hurdles. From the granular specifics of passenger rights and hotel classifications to the overarching principles of consumer protection and fair competition, the sector has long had a complex regulatory history. But the digital age and growing environmental concerns have intensified this complexity.

With each passing year, new rules emerge, reshaping the industry and demanding constant vigilance from travel operators. In this analysis, we delve into the key digital and environmental regulations impacting travel companies and explore the challenges they face in navigating this rapidly evolving regulatory terrain.  

There are no overarching global laws governing sustainability or digital services in travel. What exists is more like a dynamic patchwork of regulations, standards and initiatives that emerge at local, national or international levels. Travel companies worldwide, along with other industries, are pushing for harmonization of digital and environmental regulations to reduce compliance costs and facilitate access to international markets.   

Digital regulations 

The travel industry is an ecosystem characterized by digital interactions. From booking to service delivery, travel suppliers and intermediaries engage in countless digital exchanges with customers, partners and government agencies. The proliferation of digital channels has been matched by a surge in related regulations. While several years ago Phocuswright outlined the regulatory landscape for tech giants, the following delves into the evolving regulatory challenges facing the travel sector in six different areas: data privacy, consumer protection, competition, artificial intelligence, marketplace platforms and taxation.   

Major jurisdictions are taking the regulation of digital spaces as a core responsibility for regulators and enforcement agencies. One of the largest efforts is Europe’s “EU Data Package,” composed of five pieces of legislation (Data Governance Act, Digital Services Act, Digital Markets Act, Data Act, and Artificial Intelligence Act) which have rolled out in the last five years. Many countries have issued similarly consequential legislation recently, including the U.S. and China, each with their own specific objectives.   

Data privacy and digital identity  

Travel operators rely extensively on personal data, including sensitive information, throughout the customer journey. From initial booking to post-trip marketing, data is crucial for delivering services and enhancing customer satisfaction. For instance, airlines, hotels and event planners often collect dietary preferences. However, the use of data, such as facial recognition, requires clear justification and user consent. 

Consumer protection  

Historically, consumer protection in travel has centered on clear ticketing information and passenger rights, particularly in cases of service disruptions. The digital age has amplified these issues, with the complexities of online booking and ancillary fees intensifying the debate. 

Competition  

Worldwide, states are trying to translate existing competition policies and regulations to the digital domain. These include those designed to prevent anti-competitive practices, or circumstances involving cartels or collusion, unequitable state aid and mergers.

Anti-competitive investigations also address cases where information is intentionally withheld or obscured from competing online platforms. 

Artificial intelligence and travel security  

Because of its enormous potential, AI has attracted attention from businesses, citizens, governments and, due to the inherent risks of a powerful technology, the interest of regulators.   

Collaborative platforms and marketplaces  

Collaborative platforms have disrupted traditional industries, leaving regulatory frameworks to play catch-up. Consumer protection, including user and provider identification, insurance and dispute resolution, remains key areas of concern. Local authorities also grapple with issues like licensing and tax collection for these platforms.  

Digital economy taxation  

The digital transformation of travel has significant tax implications. As businesses operate across borders, traditional tax models face challenges. Digital platforms often generate value in multiple jurisdictions without a physical presence, complicating tax collection. The OECD's efforts to address this "digital tax challenge" through its two-pillar approach aim to determine where profits should be taxed and how much tax should be paid. 

Environmental regulations 

The past decade witnessed a surge in public environmental consciousness, coinciding with the emergence of tangible climate change impacts, including on the tourism industry. While this initial impetus has been tempered by recent geopolitical and economic challenges, the long-term trajectory of environmental regulations remains uncertain. Currently, a patchwork of mandatory measures around carbon emissions, waste and water management and biodiversity protection is often combined with voluntary certification schemes such as the EU’s EMAS, or standards like ISO 14001 that characterize the industry's approach to sustainability. 

Conclusion 

Navigating a patchwork of regulations across borders is a major challenge for travel businesses. Balancing economic growth with environmental and social responsibility further complicates the picture. However, growing awareness of the importance of sustainability and consumer protections is driving a shift toward more robust and level regulation. International cooperation and proper investment are key to overcoming these hurdles and building a better future for travel.