AI in the Travel Industry: Trends to Watch Out For

AI Trends in the Travel Industry

There’s been an awful lot of discussion about artificial intelligence and what new cool applications are going to crop up.

But there’s been a little insight as to how AI is going to actually change the commercial structure of the travel industry. You’ve probably used AI-powered solutions to create travel business professional designs or deploy chatbots in your company. But AI’s functions extend far beyond that.

There have been dozens of discussions with senior leaders around the travel industry, and very interesting trend lines have been identified as a result.

Below are three major changes in the travel industry AI is promised to bring about.

The Goldilocks Opportunity

One of the first areas that experts see an implication on the travel industry from the AI technology is actually that the biggest disruption is going to occur in the middle of the market. Hence, the name of the trend – the Goldilocks effect.

In many industries, you can find new technologies and innovations affecting the top of the market. Thus, people tend to observe revolutionary changes in retail, home electronics, automotive, or beauty industries.

The newest ones tend to occur at the highest price points and then trickle down into the rest of the industry. But one can observe a completely different dynamic in the travel industry, where the middle will be most affected.

So, it’s expected that the middle market players will be able to use artificial intelligence solutions to bring personalized and concierge services to their clients, the services that previously would have only been available at higher tiers or luxury price points.

The most acute impact could be a budget traveler trading up to the middle because AI affords a much higher quality differential that they’re seeing today.

Nevertheless, at the other end of the spectrum, you can see big players selling their services in the premium market having to provide plausible justifications for their premium prices.

The Netflix Effect

The second trend is how the channel will be impacted by AI. And by the channel we mean those players that are offering travel services to customers. And as with any industry, only those travel services suppliers can reach the top tier that have the most data at their disposal. Thus with the most data to provide to your machine, you’ll have the best solutions and the smartest adaption to what the customer expects.

Hence the term – the Netflix effect. The natural inclination would be to say the tech giants would win because they have the most rigorous data. But as practice shows, regulation is starting to crack down on the ability to indirectly observe behaviors, whereas online travel agencies actually follow the guests across the entire journey.

So, smaller players have a great opportunity to potentially collect the richest data set. They also may be doing that in a covenant with consumers that might be eager to see this information in exchange for better predictive power and loyalty points.


You can see all types of different business models and challengers coming up and carving up the travel market. And one of the clearest places for smaller players to actually carve out share is in pursuit of travel as a service.

As travel consumers start to engage more with AI, we’ll see them behave in a way similar to how they did it in the past with regular travel agents. They will see that their AI travel agent can cater to their needs and expectations.

So, rather than having to do research and making a decision in a moment about what to purchase, the consumer can provide information about the available dates, personal preferences, types of trips, their budget, etc.

So, while Artificial intelligence is changing applications in a lot of different industries, we see tectonic shifts happening in travel, in particular. And it would be a mistake to think that AI is just going to do what you currently do in a more efficient fashion. That will certainly be a case.

But this new tech also can help you redefine and revolutionize the way you deliver services to your customers and run your business. So, be sure not to miss out on new big opportunities.

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