This study delves into the innovations brought about by digital transformation in the tourism sector and the impacts of smart tourism on the industry. Digital transformation refers to the integration of technologies such as artificial intelligence (AI), big data, and the internet of things (IoT), which make tourism operations more efficient and personalise customer experiences. These technologies improve destination management, provide a competitive edge, and play a critical role in achieving sustainability goals. AI, in particular, stands out in hotel management and customer service, while big data analytics significantly contributes to understanding customer behaviour and optimising marketing strategies. Smart destination management leverages technologies like IoT and data analytics to enhance visitor experiences, monitor tourist movements through smart traffic management and environmental sensors, optimise energy consumption, and minimise environmental impacts with sustainability practices. The chapter also addresses the use of virtual reality (VR) and augmented reality (AR) technologies in tourism. These technologies facilitate the promotion of destinations through virtual tours and enable tourists to enjoy richer experiences in the places they visit. In conclusion, digital transformation and smart tourism are shaping the future of the tourism industry, providing businesses with both a competitive advantage and support in achieving sustainability objectives.