How AI is Changing the Travel and Hospitality Industry?

Updated on Dec 18th, 2023


A striking increase in the number of travelers worldwide and the adoption of technology make it a necessity for travel and hospitality industry to bring a change in their strategy. They need to focus on reinventing themselves using the latest technologies to satisfy the ever-changing customers demands and deliver excellent customer experience. 

Personalization is the first step in this endeavor. Delivering customized services to the customers paves the way for better engagement, higher loyalty, and of course, significantly higher revenues. To personalize customer services, businesses are turning towards AI and related technologies. Seasoned AI experts identify AI as a game-changer in the realm of travel and hospitality industry and are emphasizing on the importance of cost-effective AI development services for growing and emerging businesses and companies. Identifying potential operational risks and making data-driven business decisions take the businesses a notch higher. 

Let’s see some of these striking examples here. 

8 Ways Artificial Intelligence is Changing the Travel and Hospitality Industry 


1. Context-Sensitive Personalized Customer Experience

Today’s customers are more likely to engage with you and build a long-lasting relationship with your brand only if you talk about what interests them and try to provide solutions to their pain points. As many as 67% of customers these days would prefer personalized content from brands. Apparently, if building great bonds with your customers is on your priority list, there is no other way than personalization. 

Having the right personalization strategy in place, travel and hospitality industry can optimize the customer journey while offering hyper-relevant content alongside to boost customer loyalty. 

And there’s no other way than AI and machine learning to implement personalization in your service. You can integrate advanced AI tools to analyze user behavior along with their buying journeys to understand their behavior and tailor your content to ensure a smooth flow. What else? You could combine best-in-class tools with your marketing and get deeper customer insights like their needs and requirements, their pain points, and more to leverage targeted marketing.

2. Automate Customer Support

This is the digital era, and arguably, customers any day prefer tapping on their smartphones to find answers to their queries, rather than spending hours looking for them on customer service numbers. 

Consequently, airlines, hotels, and OTAs are experiencing a surge in customer service queries across email, chat, and messages. Most of this data, however, covers general few topics and scenarios about flights, baggage, status, etc. This can be wonderfully achieved by employing AI and ML-based customer support, instead of manual counterparts. 

AI-based chatbots can be trained to answer high volume, frequent queries from past calls, emails, messages, and chat history. Machine models can be trained to understand various combinations through which a customer might ask the same question. Higher the data availability, the better will be the outcomes of the trained models. 

The best part is humans are freed from mundane tasks and can devote their time to offer better customer service. Here’s how automated customer support can help you: 

  • Manage Booking-Related Tasks like “Do you have rooms available in New York?” or “Can you book me a flight to Chicago at the earliest?” 
  • Upgrades and Value-Added Services: Make it easier for your brand to provide updates and value-added services. For example, “Can I get an upgrade to a suite?” or “Can I book a Business Class for tomorrow?” 
  • Status: Easily answer status-related queries for your customers. “Can I check in right now?” or “What time will my flight depart from New York?” 
  • Policies: Let your system answer simple policy-related questions like “How much will an extra bag cost me?” or “How many bags can I bring?” 
  • Billing Questions: Free your manual labor from answers mundane questions like “Why were my taxes so high?” or “What are the best offers I can avail on my bookings?” 

3. Manage Travel Disruptions

Thousands of trips are disrupted every day due to natural disasters or run-of-the-mill delays. Not only does it cause inconvenience but can cause enormous losses for business travelers. 

AI can come in here and prove to be a life savior. One can integrate state-of-the-art AI and ML-based solutions to garner information about weather and current delays. This information or alerts to possible disruptions can be communicated to the customers while offering automated solutions. 

4. Encourage Loyalty with Customer Segmentation 

As a travel and hospitality brand, you may have customers across the globe. However, you may wish to offer Christmas deals to your customers in the US, which may not be as relevant to the customers residing in Asia. 

This is precisely where customer segmentations would come handy. Customer segmentation involves segregating customers according to their preferences and adaption of the general stack of services to approach each customer, focusing on what they exactly need. It does not just let you convert more deals by offering customers exactly what’s required, but also keeps your customers closer to you and foster excellent brand loyalty. 

Segmentation implies dividing guests into groups based on different factors like the purpose of travel, age, marital status, the new or returning customer. As price elasticity differs from customer to customer, precise segmentation impacts price policies as well. Machine learning allows for detailed classification and making tailored offerings to customers based on their needs and price sensitivity. 

Another common application is clustering, automatic segmentation based on hidden relations between different data variables. Basically, you can apply clustering algorithms to nuance your segmentation and enrich it with deep customer insights. These may be implicit connections between demographics and price sensitivity or in-hotel behavior and customer lifetime value. 

A good forecast is granular enough to capture the nuances of market segmentation, understanding that each customer segment reflects different preferences, booking trends and patterns, and purchase intentions. A family taking a leisure vacation will have different requirements than a business traveler attending a convention. Predicting demand and conditions for each of these customer segments helps you better target your marketing, four budget your operational expenses, and achieve an optimal business mix – knowing at any given time which business to take and which to turn down.

5. Dynamic Pricing Solutions using Market Data and Back Office Automation and Revenue Accounting

Effective revenue management is the key to a successful hospitality business. It is an amalgamation of multiple components like customer segmentation, demand forecasting, pricing techniques, and yield management. 

Dynamic pricing refers to techniques that hotels apply to adjust prices on the fly by constantly recalculating the demand/ supply spectrum. It is an integral part of the revenue management and offers variable room rates based on demand and supply. Hoteliers can quickly react to changing market values maximizing revenue and occupancy rates. 

6. Post-Trip Loyalty and Sentiment Analysis for Feedback Generation

Understanding customer behavior enables a company to improve its products and services with effective business strategies. It provides vital inputs to deliver exceptional user experiences to retain your customers and build healthy relations. Several prominent brands use sentiment analysis systems to augment their upselling and cross-selling efforts with significant customer interactions.   

Sentiment analysis bridges the gap between a brand and its customers by accurately analyzing every response. The same technology drives several AI-powered applications such as chatbots, recommendation engines, and several other business intelligence tools. 

7. Demand Forecasting for Occupancy Prediction 

You may have hotels jam-packed and yet not have significant revenue. Alternatively, you can have hours of less occupancy and still not make it big. That’s precisely how it is when you overlook the difference between having ideal numbers. The idea of being into the hotel business is not to optimize the occupancy but to optimize the revenue in the long run. 

Efficient AI-based systems can track historical data and the latest market trends to understand user behavior and requirements to forecast the demands. This would include: 

  • Macroeconomic factors including trigger events such as conferences, vacations, conventions, economic development, citywide transport disruptions, etc. that cause fluctuations in the demand patterns. 
  • Ratings and Reviews: Positive reviews about your services have the potential to cause a high surge in the demands. 
  • Weather Impact: Running your hospitality business in a weather-driven market can be a significant game-changer. Good weather can spike up the demand. 
  • Web Shopping Regrets and Denials: Customers’ browsing behavior and booking activity/ inactivity can yield significant insights. If you layer this information into the forecast, a clearer picture will be visible. 

8. Operations Management

The International Air Transport Association (IATA) estimates that by the year 2035, 7.2 billion passengers will be in transit. With these whopping numbers and the vast volumes of passengers, it is typically challenging to manage smooth operations. And to cope up with the same, flight turnaround activities would require smart and advanced systems to track and monitor potential departures or operational shortfalls. 

This is where AI comes in. One can deploy smart predictive analysis tools and monitor the passenger flow to train the machine learning model. Once thriving, the system will help to prevent overcrowding and manage operations. 

The systems can also detect delayed departures based on current situations and previous data patterns as well as proactively trace the baggage by learning baggage mishandling and breakpoints, conditions, and environments. 


Take-home Message 

There is excellent potential when artificial intelligence is deeply integrated into the travel and hospitality industry. Apparently, today, businesses are moving away from, rule-based automation such as chatbots to intelligent cognitive agents that can process data, offer human-like interactions, and continually evolve. The mix of AI and travel and hospitality can help businesses thrive and ensure better value to the customers. 

If you, looking to bring transformative shifts in your travel and hospitality industry with AI, team Matellio’s AI-based travel app development services are the right fit for you. With 20+ years of industry experience and certified skill-set, we ensure that the software developed by us delivers seamless execution across all the devices as well as takes care of customer satisfaction. Our customer-centric methodology gives us a stringent uniqueness, winning us popularity in the global market and our top-tier machine learning solution development services help businesses grow . Experience the seamless transformation for yourself, contact our team today, and book a free consultation.  

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