Amidst concerns of unmet expectations, soaring costs, and regulatory hurdles, some industry analysts are already labeling the technology as “overhyped,” predicting a reality check in 2024.
As the travel industry navigates through 2024, the buzz surrounding generative AI (Gen-AI) continues to spark debates: is it a game-changer or merely hype? Reflecting on the speculation that dominated 2023, it’s evident that while discussions on the transformative potential of generative AI were abundant, tangible real-world applications remained scarce.
In a bid to unravel the truth behind the hype, technology experts across the travel sector share their insights on whether Gen-AI will indeed revolutionize the travel experience this year or if the excitement is premature.
Mike Coletta, Research and Innovation Manager at Phocuswright, challenges the pessimistic outlook, citing substantial potential for AI to reshape travel for both travelers and industry stakeholders. Coletta emphasizes the importance of focusing on impactful use cases and prudent investment strategies to harness Gen-AI’s full potential. “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. 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.”
Haluk Kayhan, CEO & Co-Founder of Bedsopia, echoes the sentiment, emphasizing the need to address genuine operational challenges rather than chasing elusive problems. Kayhan stresses the importance of AI’s essential role in addressing critical pain points such as staff shortages, flight disruptions, and operational inefficiencies. He 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.”
Data accessibility emerges as a pivotal factor in realizing AI’s impact on travel, according to José Arozarena from Tour Review. Arozarena highlights the significance of leveraging AI to derive actionable insights from vast datasets, enabling personalized and enhanced services for travelers. “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.”
Sami Doyle from TMU Management foresees AI revolutionizing financial services within the travel sector, particularly in risk management and financial protection. Doyle underscores AI’s potential to optimize services and reduce costs, ultimately benefiting consumers and ensuring financial stability. “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. 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.”
Adam Harris, CEO of Cloudbeds, predicts accelerated efficiencies in hotel operations through AI-driven solutions. Harris envisions AI transforming revenue management and enhancing guest communication tools, streamlining operations and decision-making processes for hoteliers. 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.”
Sergio Mendoza, CEO of Airnguru, credits cloud technology as a catalyst for AI innovation in travel. Mendoza emphasizes the transformative impact of cloud-based AI applications, particularly in pricing strategies and commercial optimization for airlines. He says, “Machine Learning techniques have long been used by airlines to forecast demand for Yield Management. 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.”
However, amidst the excitement, Alex Barros, Chief Marketing & Innovation Officer at BEONx, cautions against overlooking practical applications of AI. Barros advocates for a pragmatic approach, focusing on leveraging AI to enhance existing processes and deliver tangible benefits, such as personalized hotel descriptions leading to increased conversion rates. “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” he says.
As the debate over Gen-AI’s potential rages on, 2024 promises to be a pivotal year for the travel industry, with stakeholders navigating the delicate balance between innovation and practicality in harnessing the power of AI to shape the future of travel.
Vicky is the co-founder of TravelDailyNews Media Network where she is the Editor-in Chief. She is also responsible for the daily operation and the financial policy. She holds a Bachelor's degree in Tourism Business Administration from the Technical University of Athens and a Master in Business Administration (MBA) from the University of Wales.
She has many years of both academic and industrial experience within the travel industry. She has written/edited numerous articles in various tourism magazines.
