Travel industry looks to AI to unlock new growth
New ways of leveraging AI in the travel industry are likely to unlock additional growth. From hyper-personalized marketing to monitoring markets, industry players have a wide range of AI-powered options to take advantage of.
The travel industry has faced a lot of major shifts in recent years, like a move towards dynamic pricing, wider customer choices, and increasingly complex operations. Experts from Simon-Kucher highlight that adopting AI is essential to navigate these challenges and achieve sustainable growth.
Some of the key challenges for the industry include meeting the demand for more personalization and for sustainability in travel choices. There is also a persistent shortage of skilled workers that has been a drag on the industry since the pandemic.
There is also, of course, major demand for AI tools that can help to shape new customer journeys. Customers expect tailored experiences, actively seek sustainable options, and rely heavily on search engines for travel guidance.
Since the major downturn in travel beginning in 2020, it took five years for travel frequency to return to pre-pandemic levels, though many related challenges are still lingering. AI offers a powerful solution to some of these issues, including transforming the entire customer journey.
AI algorithms and machine learning can help create tailored marketing messages, optimized booking results, seamless in-trip support, and robust customer loyalty programs. Chatbots and AI assistants are one of the easier solutions to implement in the short-term, but other more ambitious projects might include things like smart baggage handling at airports or deep data analysis of trends and feedback.
Effective AI implementation requires strategic insight and expert execution. Simon-Kucher has worked with companies to develop custom AI models that can empower teams to implement innovative solutions. Companies in different areas of the travel industry can gain a major competitive edge by implementing AI tools.
“The travel industry is in a process of massive change – prices remain dynamic, and customers are overwhelmed by choices, while operational complexities for most travel companies are increasing,” said Conrad Heider, COO and partner at Simon-Kucher.
With the US largely seen as leading the way in AI development, there has been a push under the administration of President Donald Trump to continue fostering tech innovation. Trump wants to maintain a beneficial regulatory environment in the US in an attempt to beat Europe and China in innovation.
A recent house budget bill put a 10-year pause on state AI regulation, a stark contrast to sweeping AI regulations in the European Union under the so-called EU AI Act. While governments remain cautious, industry backlash against the regulations see them as just more red tape.
