How AI is changing the face of travel

Having dreamed of a beach getaway for weeks, Sarah was sure it was meant to be when one evening, as she scrolled through her social media feed, she came across an exclusive offer for a tropical resort. Little did she know that this ad was the culmination of a carefully orchestrated AI-generated journey.

Before Sarah saw the ad, a lot had happened in the background. An AI algorithm had been analyzing her online behavior over the last two weeks, noting her searches for the 'best beach getaways,' her likes on tropical photos, and even her visits to shopping websites looking for summer wear. It even noted the images she lingered on and the links she clicked for more information. Gradually, based on her virtual trail — her penchant for boutique hotels, local culture, and organic, vegan food — she had been moved into a specific cohort.

The AI-powered pursuit did not stop with showing Sarah the ad. On the day of her trip, she received a notification from the airline that she had been moved to an earlier flight due to inclement weather. The AI system had detected a potential delay and rebooked her tickets automatically, going so far as to inform the hotel of the change and modifying her shuttle pickup timing!  

Though hypothetical, Sarah's example gives us a fair inkling of how AI is redefining the travel industry. As we've discussed in our articles on genAI and loyalty programs and the Gen Z travel report, the integration of AI in travel is no longer a futuristic concept but a present reality. 

And making possible these seamless, personalized experiences are vast amounts of data powered by AI. 

Existing AI use cases in travel  

Mastercard's iconic “Priceless” campaign of the '90s stated: There are some things that money can't buy; for everything else, there's Mastercard. Today, that might well read, "There are some things only humans can do; for everything else, there's AI."  

And while AI can never really replace the human touch of travel, it can, rather ironically, aid us in our endeavor to capture the human heart and imagination. Here are a few ways in which AI is already changing the face of the industry.

Business insights with data analytics

AI makes it possible to crunch through large volumes of data, revealing patterns and trends to help travel providers make informed decisions about pricing, marketing strategies, and resource allocation. The traveler, in turn, benefits from better service.

However, David Chestler, president of Provision Partners, offers a caveat: "It's critical to have a clear strategy for deploying AI in your commercial environment." Only then will companies be able to include predictive modeling, trend analysis, and real-time decision-making to personalize their offerings at scale.  

Demand forecasting with predictive analytics

AI is also quickly emerging as a go-to forecaster for everything from traveler preferences to potential disruptions. For instance, analyzing how many people will want flights or hotel rooms in the coming months allows providers to plan the number of staff to be scheduled for a certain month, the prices to be set, amenities to stock up on, and so on.

Similarly, AI’s ability to forecast potential disruptions, be it on the weather or political front helps equip travel providers with the necessary information to implement proactive measures.  While for the traveler, this translates to having a seat or room waiting for them in the price range of their choice, for the provider, it means optimized operations, better resource allocation and ultimately, increased profitability.

AI-Powered travel assistants 

Chatbots are one of the most common use cases of AI across industries, including travel. However, travel assistants go beyond chatbots, handling everything from simple bookings to complex itinerary planning. It's almost like having access to a digital travel agent who never sleeps! In February 2018, Skyscanner's bot had exceeded one million traveler interactions.  

Users simply needed to enter their destination and start conversing with the bot, which would draw upon real-time search trends to answer queries. When paired with AI-powered translation tools, they can even break down the language barriers international travelers face. 

Sentiment analysis 

Sophisticated AI algorithms sift through a sea of social media posts, online reviews, and other unstructured data to gauge customer sentiment. This "digital eavesdropping" helps travel companies unearth insights and target customers with tailored offerings. 

For instance, one of the industry's leading AI tools uses pre-built classifiers, algorithms, and machine-learning frameworks to understand what passengers post about their travel partners. It then processes these sentiments, providing the partner with recommendations to resolve these concerns.  

The above are only a few examples of how the travel industry is currently using AI. Still others are leveraging AI for personalized recommendations, dynamic pricing, fraud detection and security, operational efficiency, biometrics and facial recognition, and even robotic assistance (Henn-na Hotel in Nagasaki, Japan, boasts a staff comprised primarily of robots!) 

However, before end-users can experience these tangible benefits, what goes on behind the scenes? What are the technologies that travel providers must invest in to make the most of AI-powered travel? 

Cloud and data: The twin engines behind AI-powered travel 

McKinsey notes that travel will grow at an average of 5.8% a year through 2032—more than double the expected growth rate of the overall economy (at 2. % annually). While this upswing was initially attributed to post-pandemic "revenge travel," the continued momentum indicates that increased travel is here to stay.  

However, in the post-COVID world, travel providers have become extremely wary of disruptions. Apart from health or geopolitical upsets, the growing demand for dynamic pricing and personalization also requires them to move from traditional on-premises architectures. Increasingly, there is a greater understanding of how cloud architectures are better adapted to handle change. 

One report indicates that cloud investment by travel and leisure companies could reach $18 billion in 2026, up from $8.6 billion in 2022. The cloud's innate infrastructure allows companies to scale back operations during times of low demand and develop new products as market opportunities develop. Further, with a staggering 181 zettabytes of data being generated by 2024-2025, powerful cloud-based systems are seen as the way forward to make sense of the ongoing data deluge.  

With cloud infrastructure and advanced data management evolving from being IT buzzwords to becoming the engines that drive the next generation of travel, AI-powered travel will continue to grow. Travel companies that want to make a mark in this AI-driven future will benefit immensely from partnering with a cloud and data services provider.

Why partner with a cloud and data services provider? 

Most companies today understand that data is critical to truly understanding their customers. However, without the right tools, data is only noise. This is where cloud-based systems make a difference. With their exceptional processing power and storage capacity, they turn information overload into actionable insights, empowering companies to make informed decisions about pricing, marketing, and resource allocation. The flexibility to shift gears in real time helps them stay one step ahead of their customers whether it is to adjust pricing strategies based on demand or to offer personalized recommendations based on browsing patterns.  

By cutting through data silos and creating unified data ecosystems, cloud platforms integrate customer interactions, booking patterns, and operational metrics—all of which are possible without the burden of heavy infrastructure investments. 

Case study: Switchfly's success

Leading travel e-commerce company Switchfly is a perfect example of how cloud and data services work together to serve both the customer and the provider. The company uses AI for various recommender systems, both for customer-facing applications and back-end operations. For example, their 'similar hotel recommender system' uses AI to analyze property information and present unbiased recommendations to users.

Behind the scenes, this hotel unification process involves matching hotel data from various suppliers to ensure that the same property listed by different providers is correctly identified and linked. Using AI to automate this task allows Switchfly to enhance the overall booking experience while optimizing its own operations. 

Ravneet Ghuman, head of data science and machine learning at Switchfly notes that "Users who interact with these recommendations convert, on an average, 20% higher than users who do not use these recommendations."

The road ahead

In the new AI-powered era, embracing AI and cloud technologies is no longer an option but a necessity. Gartner predicts that in the short term, Industry Cloud Platforms (ICPs) could emerge as the next evolution of cloud computing.

Essentially, ICPs are industry-specific, modular, and composable solutions that function very much like building blocks. Travel companies can pick and choose the services they need to address their unique challenges without putting together the entire infrastructure from scratch. For instance, if a travel company wants to implement an AI-driven personalization system with an ICP, they can quickly access pre-built AI models to analyze customer behavior, combine this information with real-time data processing, and integrate the findings with their existing booking systems.

By facilitating better collaboration within the travel ecosystem, multiple vendors—from AI specialists to data analytics firms—can offer their services through these platforms. It would also help establish a rich solutions marketplace where travel companies can remain relevant without massive in-house development efforts.

Rodrigo Vargas, vice president of generative AI at Encora, envisions a future where all these technological advancements create a seamless travel experience: "When silos are broken and there's a cohesive experience both in terms of data and access to technology, we will see the industry evolving to the extent that every traveler experiences the destination in entirely different ways. This could re-define travel the way we understand it currently.”