Artificial Intelligence Applications in the Travel Industry
The travel industry, particularly its leisure segment, is ever changing, with new disruptive business models and products entering the market. Matured practices and processes become obsolete in extremely short periods, and the world we live in is becoming a wonderland of innovations, such as smart speakers and self-driving cars. In the coming years, such progress will continue and even accelerate. We will see a significant number of products and business models exiting the market, and consumer behaviors and preferences will drastically change as Generation Z (born 1995–2010) and Generation Alpha (born after 2010) become more relevant to the leisure travel segment. These demographics will be more internet–focused than their predecessors, and they are used to accessing nearly infinite volumes of information at any time. The trend toward online distribution will be fueled and even accelerated by technological developments that incorporate artificial intelligence (AI) methods.
AI is nothing new and, unfortunately, has very little to do with Star Trek and Lieutenant Data. As an academic discipline, the concept goes back to the 1950s. It is commonly defined as a system’s ability to correctly use data generated by a real-world process (e.g., customer interaction), learn certain patterns from those data (e.g., customer reaction to offer), and use the lessons to predict the behavior of formerly unseen situations in the process. The English mathematician Alan Turing, who helped to decode the German Enigma code in the Second World War, was among the first AI pioneers. Today, because of “Big Data”, improvements in computing power and a “democratization” of algorithms through online courses and free software, AI has many feasible applications. As customers are increasingly internet-focused, we can easily collect the data AI techniques require, which means that AI is only as good as the data that fuels it.
Recent Uses in the Travel Industry
In 2019, WestJet launched Juliet, a digital travel assistant that answers customers’ questions. Juliet has quick answers for managing itineraries, travel documents, passport requirements, and how to travel with pets and service animals. With the help of her baggage-size calculator, travelers can determine whether a bag can be carried on or if it needs to be checked. Powered by AI, Juliet keeps learning, which constantly increases her ability to effectively serve customers. Last year, IAG announced that it will review and optimize its customers’ journeys with the help of AI, and SunExpress is among the first airlines to offer flight booking with Amazon’s Alexa, which is also an AI entity. Furthermore, chatbots used in customer service are AI entities, and travel companies are currently testing and applying AI to optimize their process performance and yield.
Consequences for the Travel Industry
AI will kick off another round of disruptive changes in all parts of the travel industry, and these will automate routine processes and create new possibilities for the customer journey. From a commercial perspective, the leisure travel segment is likely to be affected sooner than the corporate travel segment, as younger target groups become more relevant in the near future.
We will see that internet-centric customers will drive a substantial wave of change in the leisure travel segment. In the corporate travel segment, we will have access to a wide range of process optimization opportunities based on AI to drive cost efficiency.