AI in Travel and Tourism: Use Cases, Benefits and More

What if you could create an AI-powered travel platform that understands traveller preferences and provides personalized recommendations, leveraging AI in travel to suggest optimal timing for attractions and the best destinations near you?

This is now possible thanks to how Artificial Intelligence has transformed the travel industry - from booking flights and accommodations to planning activities, even providing 24/7 assistance when human travel agents aren't available.

This AI evolution makes travel experiences more personalized while providing companies with significant cost-saving benefits.

In this blog, we'll explore AI's current impact on the travel and tourism industry and examine what the future holds 10 to 15 years from now.

Why is AI in Travel Industry a Game Changer?

Just like AI has made its dominance in other industries such as retail, entertainment, and healthcare, so like travel and tourism are no exception. 

Essentially, AI redefines the travel and tourism landscape, and today, companies are using AI-powered technology to enhance the customer experience, streamline their operations, and provide personalized travel recommendations to travellers. 

A study from Precedence Research states that Generative AI technology is making BIG waves in the travel and tourism sector. It’s because of the following reasons- 

• It makes travel services more accessible to consumers.  
• It provides personalized travel recommendations to users when booking flights, hotels, and other services.  
• It smoothens the workflow of travel companies.  

The market size of Generative AI in travel industry was USD 632.18 million in 2022, and it’s continuing to grow by USD 3581.95 million by 2032.  

According to the World Metrics Report, here are a few statistics that highlight how AI revolutionizes the travel and tourism sector-  

• 61% of travel companies plan to integrate AI in the next 3 years in their work processes to enhance customer experience.  
• 83% of travel companies feel that AI is the distinguishing factor that drives innovation in the industry.  
• AI acts as a companion for travel companies, and it’s expected that it’ll increase tourism revenue by 10% and reduce costs by 15%.  
• AI-powered chatbots aren’t mere digital assistants for answering repetitive questions; rather, these are guides for exploring destinations. By employing these chatbots, tourism companies saved around $8 billion annually in 2022.  

Top Use Cases of AI in Travel and Tourism Industry

AI revolutionizes the travel and tourism sector, from creating personalized vacation plans for tourists to rising demand for AI travel agents. 

A McKinsey study states that AI can generate immense value, ranging from nearly $2 trillion to $4 trillion, for travel businesses. 

1. Personalizing Travel Experiences  

One of the major use cases of AI in travel and tourism sector is that it uses machine learning algorithms to store customer preferences such as travel history, browsing behavior and social media activity.  

Then, it suggests personalized recommendations for travellers as per their preferences, such as popular travel destinations, attractions, tourist spots, restaurants, or finding the best hotels along the way.

The whole travel experience becomes smooth, like a breeze, and at the same time,e hospitality companies can get more bookings.

2. Facial Recognition 

Manually verifying the person’s identity can take a huge deal, especially when the hotel is dealing with an insane number of customers.

Deploying Facial recognition systems at airports, hotels, and restaurants can speed up the identity verification process.

Facial recognition is a biometric feature that uses AI to detect human faces and skin textures by comparing them against visual images stored in the database.

Ideally, it takes hours for travellers to wait in the check-in line for identity verification and onboarding processes.

Delta Airlines uses facial recognition technology to do faster security checks at airports. This also provides a smooth and safe check-in experience for passengers.

Such facial recognition systems reduce the waiting time for passengers, and this trend is expected to grow faster in the travel industry.

In fact,

The manager of Munich Airport shares their experience with using facial recognition systems. Passengers are happy when they use the biometric system.

They no longer need to search for boarding passes in their wallets as biometric technology will verify their identity, and they can simply walk through the gate.

3. Automate Customer Service Through AI Powered Travel Chatbots

The traditional travel booking process was a daunting task, as the clients had to contact travel agencies or talk to agents to make a booking. 

However, the introduction of smart booking assistants or AI chatbots eases the booking process. 

Travel chatbots are not merely digital assistants; they’re true companions for guiding travellers from flight bookings to finding a perfect hotel. They provide 24*7 support to travellers, personalise customers’ journeys, and can handle repetitive questions. 

They never get tired, nor do they sleep, unlike human agents. That’s why 37% of users prefer interacting with AI chatbots for comparing travel plans or making bookings hassle-free

Expedia Group, for instance, is the largest online travel platform that uses AI-based chatbots to simplify the travel booking process. They use AI/ML algorithms to assist customers, so they get real-time information about flights, hotels, and fulfil their travel-related needs. 

4. Flight Forecasting 

AI in travel and tourism industry acts as a catalyst for airline companies and helps them with flight forecasting, such as whether there is a delay in flights or if they are cancelled. 

As AI analyzes historical data, it can predict weather conditions and traffic volume. This will help airline companies to schedule the trips, and passengers can manage their trips accordingly. 

United Airlines, for instance, uses the AI-driven system to optimize their flight routes and inform the passengers in advance, even if there’s a little delay in flight by a few hours or days. 

These systems are useful for predicting delays because of bad weather conditions or other uncontrollable variables. This way, it doesn’t affect the passenger experience. 

5. Baggage handling processes 

In the travel and tourism sector, AI is immensely valuable for handling baggage processes. Because it uses advanced tracking capabilities, customers don’t need to worry about baggage getting lost or misplaced. 

Initially, the major toll back for air travellers was to find lost or misplaced luggage. Sometimes they have to wait for long hours to get their luggage. As per the US Department of Transportation, US airlines mishandled around 1.6 million bags during 2022

Thus, it not only creates financial losses for passengers and airlines, rather it also increases customer dissatisfaction. It makes them more frustrated than ever.  

For this, AI-powered systems are used for tracking the status and location of bags. Thus, customers won’t feel disappointed with their luggage from check-in to the final stage. At times, it can alert security staff if anything is suspicious. 

6. Self Check-in and Check-out  

Travelling is no longer a boring and time-consuming process; it has become a pleasure for travellers. Hotels use self-check-in and check-out systems where travellers need not wait at the front desk. 

Travellers can now use smartphones to check in /out and complete their formalities.  

The check-in process has become contactless, seamless, and convenient for them. 

Premier luxury hospitality brands such as Marriott, Wyndham, Hyatt, and Hilton use contactless technology. They believe that it has become an important pillar of the hospitality industry.  

7. AI Travel Agents

Initially, it was challenging on the traveller's side as they needed to browse through endless options to make the next booking online. But these autonomous agents personalize your travel journey based on how you like to travel, plan itineraries, and suggest places.

It can even tell you which airline has reduced the costs, and it will do the heavy lifting by researching the best travel options and considering other factors such as weather conditions and flight delays, if any.

The integration of travel agents into booking platforms does not just make travelling easier but also reduces the workload of travel agents. The tool handles everything from making reservations to tracking travel expenses.

HotelPlanner.com introduced an AI booking assistant that solves 10,000 queries a day, sells hotel rooms and takes phone calls. It checks the availability and pricing of each hotel room and can provide detailed responses to traveller queries.

8. Dynamic Pricing

Another application of Generative AI in travel and tourism industry is that it helps companies increase their revenue by adjusting prices dynamically.

It decides the prices based on factors such as competitor prices, seasonality patterns, accommodation, demand patterns, etc.

This means travel and hospitality businesses can optimize their pricing strategies accordingly, especially during peak and off-season, to get more people to use their services.

During high demand, travel companies or hotels can increase their prices, while they can be lower in the low season.

If you travel to the same hotel twice or three times, then hospitality companies know what type of budget you’ve and what your major preferences are, and they tweak their prices accordingly.

Marriott, for instance, sets room prices by considering factors such as demand, seasonality, and competitor prices. Using AI algorithms, hotels can set the optimal price for each room on different days and seasons.

9. Forecast Travel Demand

Artificial Intelligence is used in the travel industry for forecasting travel demand.

It can predict economic conditions, see whether a sporting event is yet to happen, and then companies can allocate their resources and plan their marketing and sales activities to make the travel experience happen.

Through predictive analytics, travel companies can find out that 90% of travellers are interested in visiting a specific place; they can think of selling those travel products and adjusting their pricing strategies accordingly.

Singapore Airlines, for instance, uses Artificial Intelligence to do demand forecasting. Its system analyzed around 1500 variables, including social media sentiments, competitor pricing, historical prices, local events, and other holidays.

10. Sentiment Analysis

Sentiment analysis is a powerful AI in travel industry. These AI tools analyse traveller interactions and feedback in real-time to understand which destinations and experiences interest them most.

Using Natural Language Processing, these systems examine social media reviews and customer feedback to measure satisfaction levels. The AI performs this social listening continuously, categorizing feedback as positive, negative, or neutral without requiring manual intervention.

Without AI, travel companies would need significant time and resources to manually analyze the vast number of comments and reviews across social media platforms to understand their audience.

By leveraging sentiment analysis, travel businesses can create more targeted content and laser-focused marketing campaigns, ultimately driving more online bookings.

TripAdvisor, for instance, uses AI to analyze ratings and reviews, quickly identifying negative feedback so travel companies can address issues and improve their services.

11. Robotic Assistance Systems at Hotels

Artificial Intelligence has become a part of the travel and tourism sector, where robots act as a concierge for guests. Integration of robots at hotels and airports makes the check-in process faster, greets guests, and provides them with multilingual support.

Robots provide unique experiences to travellers, but hoteliers should be mindful of using them, as not every customer is comfortable interacting with them.

Initially, customers used to wait in a queue, but the deployment of robots can serve many customers quickly. Henn Na Hotel in Nagasaki uses multilingual robots to provide speedy guest service and can ease the check-in and check-out processes.

Of course, human elements are always required in hospitality industries and front-facing roles, but the usage of robotic-assisted systems can reduce labour costs.

Top Travel and Tourism Companies Using AI Solutions 

Let’s discuss a few examples of popular travel and tourism companies that are making strides using Artificial Intelligence –  

1. KAYAK  

KAYAK, being a leading travel company, uses advanced AI/ML algorithms to ease the booking process for travellers. It stores the data of travellers, their preferences, and their past travel history in one place and then suggests personalized travel recommendations.  

Unlike other travel sites, KAYAK experiments a lot with AI to suggest the best hotels, rental cars, and flights to customers at affordable prices. Its powerful AI features guide travellers on when to book a flight ticket or plan their trip and get the most out of it. 

2. Hyatt 

The leading hospitality chain, Hyatt, launched AI-powered beds to provide a quicker and longer sleep experience to guests. 

The bed analyzes temperature, heart, and respiratory rate, stores sleeping patterns, and adjusts temperature per weather conditions to provide a high-quality sleeping experience. 

The focus of the hotel is to improve the overall well-being of guests so that they feel rejuvenated. 

3. Booking.com 

Booking.com is the leading online travel agency that has integrated AI into its platform called the Trip Planner. 

Travellers can ask a series of questions to AI, and it will curate personalized travel plans depending on traveller needs and preferences, demographics, search history, etc. 

The AI-powered algorithms use dynamic pricing strategies considering various factors such as demand, availability, market trends, competitor pricing, etc., so that accommodation providers can maximise their revenue.  

If a traveller is looking to find accommodations at cost-effective rates, the AI will suggest those places that match their preferences. It can even help travellers with last-minute changes in their trip.

4. Airbnb  

Airbnb, a short-term rental company, leverages AI technology to enhance the guest experience.  

The company uses predictive search to provide appropriate rentals by considering traveler preferences, other dates, and past travel history. This way it enhances the customer experience. 

The host side uses AI-powered pricing tools to suggest the best possible price that the host can charge from its guests. It calculates the price of rental based on demand, location, seasonality, competitor prices, and past booking trends. 

Thus, hosts can maximize their earning potential and get more bookings for their accommodation.  

5. TripAdvisor  

TripAdvisor is a travel guidance platform meant to help travellers search for the best accommodation deals, reserve tables, and find better restaurants. Travellers can plan their trip no matter where they wish to go and what type of trip type wish to take. 

The platform uses AI algorithms where users can go on virtual tours to their most loved destinations. They can get immersive experiences while sitting in the comfort of their home. 

As Tripadvisor integrated AI into its platform, it keeps track of user preferences and search history and then comes up with the best suggestions for activities to try when visiting the place, tourist attractions, along famous restaurants.  

Also Read: AR VR in Travel and Tourism

What Are The Benefits of AI in Travel and Tourism Industry?  

AI is a transformative force in the travel industry that offers several advantages to businesses-  

1. Customized Travel Suggestions  

AI algorithms analyze voluminous amounts of travel data and keep an eye on customer preferences and travel trends to provide customized experiences for people. Such personalized recommendations often save time and effort for travellers. 

Moreover, they would be highly satisfied when an AI knows about their preferences inside out that they can’t even imagine. Thus, you can make their journey more comforting. 

For Instance, It can create customized recommendations for travellers about the best restaurant they should visit, help them plan their itineraries, manage their travel journey, and even suggest attractions or cities with low traffic that match the tastes of travellers.  

2. Better Safety and Security 

AI in travel makes travelling more secure. These systems are a game changer for travellers as they can detect suspicious items on the go and alert the concerned authorities.  

Not only that, travel and tourism businesses (airlines, hotels, restaurants) are using facial recognition systems and biometric technology to detect fraudulent customers. 

It’s not confined to improving the operational efficiency of businesses or delighting customers through better customer service; rather, it provides a comforting travel experience to them. 

For travellers’ side, check-in processes become quicker and hassle-free as customers can self-check in without waiting at the front desk. At the same time, hotels and airlines can quickly verify the identities of passengers with zero inconvenience.  

3. Helps in Dynamic Pricing Strategy 

AI helps travel and tourism businesses in setting the optimal pricing strategy that helps them drive in more revenue. 

The advanced AI algorithms enable hoteliers and airlines to adapt their pricing strategies by considering competitor pricing, market trends, current demand, seasonality factors, etc.  

Additionally, they can make the efficient utilization of resources (staff, inventory) by seeing real-time information as to when and in which season demand will be greater. 

Thus, they can set competitive prices during the season of highs and lows and can thrive in an ever-changing travel landscape. 

Did you know Airbnb uses AI-powered algorithms to create smart pricing strategies?  

Airbnb is a rental platform that acts as an intermediary between property owners and guests. The company integrated smart pricing functionality into the platform. Now, what does it? 

It calculates the prices of rental properties in real time by considering factors such as seasonality, property location, competitor prices, demand, etc.  

Airbnb states that people who use this AI functionality get more bookings by 4x than those who do not. They experienced an increase in revenue of 12%. 

4. Immersive virtual tours (AR/VR)  

Of course, physical travel is different from experiencing the place through immersive technologies. Travel companies that offer virtual tours to customers add more value to their lives.  

Generally, travellers want to feel the place before visiting; they want to see what the place looks like. That’s possible through virtual travel.  

Hospitality companies like the Maldives wanted more hotel bookings. They used AR/VR technologies to provide a “try before you buy “experience.  

They can highlight some of the best features of their hotel, such as the swimming pool, nearby restaurants, or water park.  

Guests can enjoy the 360-degree view of the hotel and explore the scenic beauty of the place before booking.  

5. Enhances Traveller Experience

Artificial Intelligence enhances customer experience at every step of a traveller's journey, be it from pre-booking to post-trip experience.

Whether deploying facial recognition systems at airports to speed up the check-in process to using robots for cleaning and room service, to AI analysing user behavior and providing personalized recommendations, AI enhances user experience.

For instance, TripGennie, an AI powered assistant that simplifies your travel planning. Under a minute, you will ask it – How do I plan a 3-day trip to Switzerland and it will create personalized itinerary, recommend tourist places, shopping destinations, along with providing booking links.

Result? Better user retention and higher conversion rates

5. Language Translation

As a travel company, you want customers to book tickets or reserve a spot, but what if they want to travel internationally and can't understand the native language of that booking site?

That's why AI should be integrated into booking interfaces to allow international travellers to book their tickets and make reservations on the go.

Think about international guests coming to your hotel who don't understand the native language, the menus, or how to order anything.

That's why AI-driven translation systems and mobile apps translate menus and service descriptions into multiple languages to enhance the guest experience.

6. Fraud Detection Systems

AI-based systems help travel and tourism companies detect fraudulent transactions as they can analyze huge datasets such as booking histories and payment information.

Companies can identify such fraudulent transactions as and when fraudsters make bookings, and the systems can flag them.

Booking.com uses AI algorithms to identify fraudulent bookings, keeping a close eye on transactions. This safeguards travel businesses and customers as well.

What’s The Future of AI in The Travel and Tourism Industry?  

Travel requires a human touch; it’s an altogether different experience. The blend of AI in travel and tourism can be a game changer for tourists and companies in this space. 

The future is looking promising because travelling is always a time-consuming task for travellers when planning for vacations. 

According to Carie Tharp (Vice President of Google Cloud), the next 20 years will not be like the previous 10 years. For travellers, AI has become a source of inspiration that provides personalized travel recommendations. 

The market growth rate of the travel and technology industry was $9.4 billion in 2022, and it’s expected to touch $21 billion in 2032.  

Such impressive growth is due to the advancement of AI and contactless technology.  

Here’s what the future of AI looks like in travel and tourism –  

1. Travel companies will now emphasize deep learning technologies that provide accurate predictions on occupancy. Thus, they can effectively utilize their resources, maximize revenue, and earn more profits. 
2. There will be hype in biometric verification methods such as facial recognition. Airports will be investing more in this technology and will require passengers to go through biometric verification checks. 
3. Travel Companies will invest in GPT technologies or develop their generative AI platform to provide language translation services.  
4. Hyper personalization is on the rise. Companies are using data analytics to analyze complex datasets and create personalized trip suggestions for travellers or help them plan their itineraries. Moreover, they will soon run personalized ads, create customized pricing strategies, and offer insurance support for travellers. 
5. AI will play a great role in sustainable travel as these platforms offer eco-friendly places for travellers to stay in. This reduces the environmental impact and saves logistics costs. AI-based monitoring systems will be deployed in hotels that tell how to make the best use of resources by monitoring energy usage and water levels.

How Can BigOhTech Help You Develop AI-Based Travel Software?

As a leading AI/ML development agency, we know how to transform your business with innovative solutions such as travel booking platforms, travel planning apps, and check-in/check-out systems.

We have a dedicated team of AI engineers who can understand your business requirements and create engaging and high-converting travel app solutions that enhance the traveller's experience.

We worked with a hospitality client who was running different properties and needed help in managing 3000 complaints. Plus, they need help automating hotel operations such as in-room dining, food orders, and room stays.

We created NLP bots for WhatsApp and the web that solved guest queries and reduced their average waiting times by 70%.

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