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Is AI the Savior for the Tourism Industry?

The pandemic deeply affected the travel and tourism industry with travel bans and massive job losses for staff. Whilst there was hope for 2023 to lead to a worldwide recovery to pre-2019 levels, the data reveals the ongoing war in Russia and Ukraine and China’s zero-covid strategy have dampened those hopes (Binggeli et al. 2023); 2022). This shows the fragility of the industry to conflicts and other disruptions. For now, studies reveal 2024 to be the year of full recovery for the travel and tourism industry (2022). In 2022, Statista reported the travel and tourism industry was 23% lowers than 2019, contributing to “7.6% to global GDP”, which shows recovery is underway with Europe taking the lead and reaching 595 million international arrivals that year (Travel & Tourism Economic Impact; Travel and Tourism: Contribution to Global GDP 2023; International Tourist Arrivals 2023).


For better or for worse, the pandemic helped thought leaders re-imagine the tourism industry by embracing a digital future. For many years, as is the case with many service industries, this industry has involved high numbers of employees to deliver quality customer service. The World Travel and Tourism Council (WTTC) reported 334 million jobs (10.3% of all jobs) stemmed from Travel and Tourism, which “accounted for 1 in 5 new jobs created” (Travel & Tourism Economic Impact). Yet, throughout COVID-19 many companies had to cut costs and fire staff leading to a major labor shortage amongst one of their many challenges, with estimates amounting to 62 million lost jobs globally (International Tourist Arrivals 2023) .


So what if AI could help solve the industry’s challenges?


Before we dive into this, it is worth defining the tourism industry. According to Glion, a leading hospitality school in Switzerland, tourism encompasses hospitality and includes many sectors ranging from restaurants, hotels, events, entertainment and travel, whether it is for leisure or business (Chechi, 2023). With revenge travel still underway since 2021 after

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people were locked up for months, studies expect travel to “grow at an average of 5.8% a year through 2032 - more than double the expected growth rate of the overall economy (at 2.7% a year)” (Almasi et al. 2023). This means the industry has to evolve as a McKinsey report states in the EU alone, “11% of tourism jobs are likely to go unfilled” (Binggeli et al. 2023).


Main challenges faced by the Tourism Industry


One of the main challenges is to meet consumers’ demands for flexibility, ease of travel and focus on experiences (10xDS Team 2023; The current state...and beyond 2022). This is

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where technology can step in to enhance the overall experience without necessarily replacing all human interactions by machines. Areas of frequent bottlenecks can be the first steps where tech can be embraced to reduce friction points.


The other main challenge touched upon earlier is the chronic labor shortage, and if anyone was in the UK last summer flying out of Heathrow they would remember the baggage issues and canceled flights that dampened travelers’ plans (2022). Further, the rise of inflation is making the issue even more prevalent today for travelers and workers alike, as this industry is by no means one of the most well-paid and with a higher cost of living, workers want higher wages to maintain a similar lifestyle (2022). The industry will need to look at new ways to attract talent, whether it is by offering more options to grow across sectors, outsource jobs that are not core to operations, there is no choice but to embrace technology to help leverage the shortage (Binggeli et al. 2023).


Use of Technology in Travel and Tourism


I had the pleasure of speaking to Dr. Jassim Haji, Chairman of the International Artificial Intelligence Group and researcher in AI, after attending his keynote speech at the Future Innovation Summit in Dubai, and had a preview as to what AI would step in across industries. AI has been around for more than 130 years, but the watershed moment came when Generative AI, precisely ChatGPT, was launched to the public. To put it into numerical terms, AI’s contribution to the global economy is estimated to be $15.7 trillion with 75% of jobs requiring big data skills in the next few years (Guevara and Benett 2019).


Oftentimes, there is resistance to new technologies either because it means jobs will be replaced or because most of us still prefer human interaction on some level. In WTTC’s report, “85% of customers say being treated like a person, not a numb, is very important to winning their business” (Guevara and Benett 2019).


The UN World Tourism Organization and Telefónica signed a partnership agreement to build new ways of gathering data and using Big Data and AI to transform the tourism sector starting with a set of visualization tools under the UNWTO Global Data Dashboard (UNWTO 2020). This is step one in embracing a digital transformation at a global level.


So what are some ways that technology and specifically AI could step in to improve our travel experience and help ease workers’ hours?


tourism, tech, AI, innovation

1. AI-powered chatbots and virtual concierges


AI combined with machine learning can fast-track response times, provide 24/7 answers and information, as well as suggest personalized recommendations and itineraries based on previous booking patterns, search history and inputs (Garcia-Madurga and Grilló-Méndez 2023). This touch of personalization enhances the customer experience and can be used to grow their loyalty to the brand. A Google study found 57% of US travelers want brands to provide customized interactions (Montejo 2023).


Further, machine learning algorithms can analyze huge amounts of data so they can let customers know when the best to book would be at different times. A travel app that does that is Hopper, which compiles all the historical data and other consumers’ behavior to let their users know if they should book now or wait for the best price. Other brands embracing ChatGPT plugins are the Expedia Group, KAYAK and Airbnb (Montejo 2023; Angry Nerds 2023). Whilst AI chatbots like Maya may provide tailored itineraries they are not a replacement for the local human touch.


As the industry continues to evolve, virtual concierge services providing guests with recommendations based on their personal preferences from their past searches is expected to become a trend amongst leading hotel chains. Nonetheless, Skift Research found penetration levels to still be quite low (Binggeli et al. 2023).

2. Electronic Word of Mouth (eWOM)


eWOM is the online version of consumers being told about a new product or service to try through word of mouth. It includes receiving recommendations online through social media, texting or through the internet. For example, most of us have probably used Google Reviews, TripAdvisor, YouTube or Instagram to find a recommendation before trying a new restaurant. What converts a consumer to try something when there are mixed reviews? Is it possible to make forecasts on what types of consumer are more likely to be converted based on the online content shared?


This is where AI-powered sentiment analysis can be performed on eWOM to understand consumers’ behaviors from the language used, emoji and the consumer’s characteristics (Oc et al. 2023). The insights gathered include strategic insights, purchasing power and identifying potential trolling behavior (Oc et al. 2023).


3. Robots


The use of robots in the industry from serving as receptionists, museum guides, waiters and delivery robots has been growing rapidly (Garcia-Madurga and Grilló-Méndez, 2023). The Henn na Hotel in Tokyo, Japan, replaced its staff of 40 people to 7 and added multi-lingual humanoid robots at the front desk, as well as robots to carry luggage (Montejo 2023). Similarly to some airport check-ins, in China, the Huazhu Hotels Group added self check-in desks for their guests (Binggeli et al. 2023).


However, research indicated that whilst humanoid robots yield more positive service, there is more resistance and tourists would rather be served by “machine-like or animal-like robots” (Garcia-Madurga and Grilló-Méndez, 2023).


A prime example of a hotel that has adopted self-service check-in kiosks, facial recognition technology, mobile app and delivery robots, is the FlyZoo Hotel in Guangzhou that opened in 2019 (Binggeli et al. 2023). It was developed as a hotel of the future with Fliggy, Alibaba’s AI Labs and Alibaba Cloud Technology (Binggeli et al. 2023).


4. AI Forecasting


Forecasting is at the heart of the industry, and AI can help predict future trends in consumer demand as well as make revenue predictions. Another technique to create a harmonious environment at tourism destinations is to use data emitted from mobiles to forecast and manage crowds (Garcia-Madurga and Grilló-Méndez 2023). In these scenarios, we could imagine a Digital Twin being a good simulator to test out the forecasts.


For companies in the tourism industry, AI can be used for “revenue management insights and [streamline] back-end operations such as inventory management and supply chain logistics” by gathering data on pricing trends, booking patterns and occupancy rates (Garcia-Madurga and Grilló-Méndez 2023).


Airlines can now benefit from predictive pricing to maximize their profits and reduce costs to operate at full capacity. The algorithms can account for “weather, events, and even social media trends to make accurate predictions” (Angry Nerds 2023).


5. Facial Recognition


Facial recognition is becoming increasingly common at airports with the fast-pass security checks during immigration. The use of biometrics for check-in is being tested by Emirates at Dubai Airport’s Terminal 3 with an option to opt-in to have your data on their system. This is also being used by other airlines to identify passengers. The technology could also be used at hotel chains for security reasons as well as in customized greetings and check-in (Montejo 2023).


6. Sustainability


AI can also be used to evoke more sustainable results, whether it is by looking for smart solutions such as Lobx, a product from French startup, Orioma, that guarantees a 27% reduction in energy consumption after the first year of implementation, or by analyzing data to identify areas for improvement. Data that can be analyzed includes environmental impact such as CO2 emissions, waste management and energy consumption (Garcia-Madurga and Grilló-Méndez 2023). This data along with crowd management can be used to preserve cultural heritage sites so they are not endangered to the number of visitors. Virtual Reality and Augmented Reality may also be an alternative to manage this.


Other studies indicate that the use of IoT (Internet of Things) devices can improve how energy is allocated yielding savings of 25-80% (Garcia-Madurga and Grilló-Méndez 2023).


7. Improving Sleep Quality


A very exciting way AI is being used at the Park Hyatt in New York is to improve guests’ sleep quality by partnering with an AI mattress start-up, Bryte. The rooms “feature 90 amazing cushions that adjust to your body’s pressure points, control the temperature, and track your sleep statistics” (Angry Nerds 2023).


Risks of AI


Whether it is Sam Altman, CEO of Open AI, or Elon Musk, CEO of Tesla Motors, or even Eric Schmidt, CEO of Google, they have raised a red flag warning of the dangers that AI poses to humanity. Last week, Professor Stuart Russel of UC Berkeley spoke at the World Economic Forum’s Annual Meeting of the Global Future Councils in Dubai, and he explained the risk of not having all the answers to systems we’re creating that are more powerful than ourselves (Wanger 2023).


A common misconception Russell discussed is that of “solutionism”, where AI can be the answer to all problems, without considering if humans and civilization can coexist with an AI used for every task (Wanger 2023). Each country varies in how much they trust or accept AI with surprising figures from a survey such as Japan’s less than 30% trust in AI and India standing at 75% (Wanger 2023).


Governments need to come together to develop regulations so companies cannot develop technologies they cannot control, as scientists cannot control a technology if they do not know the mechanisms behind it (Wanger 2023). Once the technology is out there, there will be no turning back and that showcases the all-around view of AI, where on the one hand it has a lot of positive blessings to impact an industry and on the other it has severe consequences. A solution would be to have a human-AI co-creation ecosystem to “augment rather than replace human capabilities” (Garcia-Madurga and Grilló-Méndez 2023).


Conclusion


The travel and tourism industry is full of exciting opportunities and it is the industry that keeps travelers dreaming of where to go next when they return from a trip. When someone goes on a trip we want to hear about the experience, the service and any recommendations they have. It is the personal human touch on a trip that marks most of us and enhances the trip.


Although those same human interactions can make or break a trip if there are long queues, lost baggage, cancellations and too many crowds. Is AI the industry’s savior? Not as its sole solution but as the use cases showed, AI, machine learning and IoT not only have but are necessary for the industry to meet its demand and streamline back-end operations. With the increased digital transformation and automations, McKinsey estimates the industry will be able to cope with a labor shortage of 10 to 15% and provide staff with better packages as the industry fully recovers (Binggeli et al. 2023).



References

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  2. 10xDS Team (2023) Transforming the travel and tourism industry with Generative AI and LLM: 10xDS, Exponential Digital Solutions. Available at: https://10xds.com/blog/transforming-the-travel-and-tourism-industry-with-generative-ai-and-llm/ (Accessed: 24 October 2023).

  3. Almasi, S. et al. (2023) The promise of travel in the age of ai, McKinsey & Company. Available at: https://www.mckinsey.com/industries/travel-logistics-and-infrastructure/our-insights/the-promise-of-travel-in-the-age-of-ai (Accessed: 24 October 2023).

  4. Angry Nerds: Custom Software Development Company (2023) What are the latest AI advancements in the travel industry?, LinkedIn. Available at: https://www.linkedin.com/pulse/what-latest-ai-advancements-travel-industry-angry-nerds-software/ (Accessed: 24 October 2023).

  5. Binggeli, U. et al. (2023) The Future of Tourism: Bridging the labor gap, enhancing customer experience, McKinsey & Company. Available at: https://www.mckinsey.com/industries/travel-logistics-and-infrastructure/our-insights/future-of-tourism-bridging-the-labor-gap-enhancing-customer-experience (Accessed: 24 October 2023).

  6. Chechi, H. (2023) What is tourism and hospitality?, Glion Website. Available at: https://www.glion.edu/magazine/what-tourism-hospitality/ (Accessed: 24 October 2023).

  7. The current state of global tourism and factors shaping the industry in 2022 and beyond (2022) HLB. Available at: https://www.hlb.global/the-current-state-of-global-tourism-and-factors-shaping-the-industry-in-2022-and-beyond/ (Accessed: 24 October 2023).

  8. García-Madurga, M.-Á. and Grilló-Méndez, A.-J. (2023) ‘Artificial Intelligence in the tourism industry: An overview of reviews’, Administrative Sciences, 13(8), p. 172. doi:10.3390/admsci13080172.

  9. Guevara, G. and Benett, A. (2019) World, Transformed. rep. World Travel & Tourism Council. Available at: https://wttc.org/Portals/0/Documents/Reports/2019/World%20Transformed-Megatrends%20and%20their%20Implications%20for%20Travel%20and%20Tourism-Jan%202019.pdf?ver=2021-02-25-182733-437 (Accessed: 24 October 2023).

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  11. Montejo, V. (2023) How artificial intelligence leads the future of Travel Tourism Marketing, Hylink Group. Available at: https://hylinkgroup.com/insights/how-artificial-intelligence-leads-the-future-of-travel-tourism-marketing/ (Accessed: 24 October 2023).

  12. Oc, Y. et al. (2023) ‘Luxury is what you say: Analyzing electronic word‐of‐mouth marketing of luxury products using Artificial Intelligence and machine learning’, Psychology & Marketing, 40(9), pp. 1704–1719. doi:10.1002/mar.21831.

  13. Travel & Tourism Economic Impact: World Travel & Tourism Council (WTTC) (2023) World Travel & Tourism Council. Available at: https://wttc.org/research/economic-impact (Accessed: 24 October 2023).

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  15. UNWTO AND TELEFÓNICA PARTNER TO HELP DESTINATIONS USE DATA AND AI TO DRIVE TOURISM’S SUSTAINABLE RECOVERY (2020) UNWTO. Available at: https://www.unwto.org/news/unwto-and-telefonica-partner-to-help-destinations-use-data-and-ai-to-drive-tourisms-sustainable-recovery (Accessed: 24 October 2023).

  16. Wanger, J. (2023) We need to move beyond AI as solution to everything, expert says, World Economic Forum. Available at: https://www.weforum.org/agenda/2023/10/move-beyond-idea-that-ai-is-the-solution-to-everything/ (Accessed: 24 October 2023).

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