Industry leaders weigh in on the real-world potential of GenAI in travel and hospitality
Speculation surrounding the potential of generative AI to ‘revolutionise’ the travel industry was rampant in 2023, yet tangible applications weren’t popping up the way GenAI advocates had hoped they would. As we progress into 2024, questions arise regarding whether this technology will meet expectations or fall short.
Some analysts have already labeled generative AI as ‘overhyped’, anticipating a reality check in 2024 due to unrealistic expectations, high costs, and regulatory hurdles. To gain insight into the actual impact of generative AI on travel this year, Belvera Partners consulted technology experts from various sectors within the industry.
Mike Coletta, Research and Innovation Manager at Phocuswright, opposes the pessimistic outlook, emphasising the immense potential of AI to reshape the travel experience for both travelers and providers. “The travel industry in on the cusp of massive change, and there’s huge potential for AI to transform the travel experience for both travelers and the travel provider ecosystem,” says Coletta.
“Phocuswright research shows that nearly half of travelers in most countries would be extremely or somewhat comfortable using a GenAI tool to help them plan a trip. Between 13-22% of total traveler populations have used GenAI in some capacity. As the industry moves beyond the initial hype, 2024 will be all about leveraging what has been learned so far to focus on the most beneficial use cases – and avoid wasting resources on those without a clear ROI. Travel companies in 2024 are expected to accelerate investment in generative AI applications. But separating the winning use cases from the losers will be an ongoing process of trial and error. At this juncture, a results-based approach is needed to highlight the most relevant and impactful use cases in travel.”
Meanwhile, Haluk Kayhan, CEO & Co-Founder of Bedsopia, highlights the necessity of addressing real operational challenges rather than pursuing solutions for hypothetical problems. Kayhan says, “AI could be hugely transformative for travel in 2024, but the industry needs to work out where it is most needed and avoid trying to solve problems that no one knows they even have. Focus on the real headaches or high-cost / low return areas of your operations like staff shortages, flight disruptions, sudden waves of cancelations, payments processing and operational inefficiencies generally. These are areas where AI could catalyze the most change, most quickly – perhaps even meaningfully in 2024. AI technology needs to be essential at this stage, not just a gimmick. Let’s be realistic – it’s not going to change the whole world overnight – people aren’t ready for that.”
José Arozarena from Tour Review emphasises the pivotal role of data in leveraging AI for travel. He explains, “Companies with the largest amounts of data available – or who offer services to clients who in turn have large data sets – will benefit most and the most quickly too. AI will be able to make sense of that data more effectively, offering insights that result in them making services to travelers better and more personalised. Think of it like the revolution in consumer market research from the 1950s onwards, just happening over a few years and not decades.”
“The travel industry is inherently risk based and that risk extends to consumers paying for goods in advance of service and to financial institutions providing services to travel companies for future delivery products,” says Sami Doyle of TMU Management, as he identifies potential in AI’s ability to mitigate risks associated with financial transactions in the travel industry.
“AI could be a powerful tool to assist financial institutions in providing services such as credit card acquiring and financial protection in a sustainable manner that alerts stakeholders to potential exposures before they happen. This has a knock on effect on the cost of these services and their continued provision to the sector, which would mean lower costs to consumers and comfort that financial protection is in place to cover failures,” Doyle elaborated.
Adam Harris, CEO of Cloudbeds, predicts accelerated efficiency gains for hoteliers through AI-driven solutions. “In a perfect world, advanced AI would fine-tune revenue management for hoteliers and work on their behalf as a 24/7/365 GM. This year that’s the direction we’ll be moving in as forward-thinking vendors like Cloudbeds continue innovating on products that drive and streamline internal efficiencies. Technology companies like ours are already using advanced AI and machine learning to make guest communication tools more intelligent and help hoteliers quickly develop web pages and high-performing ad copy. Over the next year, hoteliers will continue to benefit from intelligent AI solutions that help them make better decisions and execute them.”
Cloud infrastructure has democratized access to AI tools, empowering businesses to harness the power of big data and machine learning for pricing strategies and commercial decision-making.
“Machine Learning techniques have long been used by airlines to forecast demand for Yield Management,” added Sergio Mendoza, CEO of Airnguru, credits cloud technology for catalyzing AI’s impact on the travel industry. He also says, “However, the cloud revolution provided cost-efficient, democratic access to unprecedented, virtually unlimited storage capacity and processing power. The cloud catalyzed the use of big data for improving machine learning models and business intelligence, and the emergence of new breakthroughs such as generative AI. The cloud has empowered us to leverage off-the-shelf AI tools at a scale unimaginable a decade ago. Airlines already rely on artificial intelligence applications in several areas of their business. Generative AI is poised to substantially amplify the breadth of business functions for AI applications, increasing its impact across the enterprise. In particular, this revolution is enabling carriers to improve their pricing and overall commercial strategies substantially, driving revenue growth.”
Finally, Alex Barros, Chief Marketing & Innovation Officer at BEONx, urges caution against overly futuristic ideas, advocating for a focus on practical applications of AI.
“For AI to be transformative in travel, we need to start with how it can be applied to the things we’re already doing. For example, we’re seeing many hotels use it to generate enticing and accurate hotel descriptions, leading to instant increases in conversation rates. This is demonstrating real impact and plays to consumer behaviour; the chances of a hotel offer being purchased will be much higher with AI, as there will be better and more attractive levels of personalisation and engagement.”
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