22nd Mar 2023
3 years after COVID-19 appeared and the travel industry hit the buffers, investors are returning to travel, hotel, airline, and cruise stocks. As many people buy — or buy back — into a travel or cruise ETF like Defiance’s CRUZ, which offers broad exposure to the travel rebound without the guesswork of trying to identify the best cruise stocks or top airline stocks, artificial intelligence could be a significant factor to consider.
It’s estimated that the travel AI market will exceed $1.2 billion by 20261, and it’s already helping push revenue and profits. The TravelTech Show named AI as the top technology to boost recovery2, and Alex Mans, founder and CEO of FLYR Labs, says “It’s very clear that beyond Covid and the pandemic, we’re in a more dynamic environment than ever before,” adding that multiple factors are “driving an immediate need for AI as a key component to commercial decision-making.3“
Here are some of the ways that AI is helping boost travel stocks and aid the industry’s post-covid trajectory.
Better booking processes
Self-booking has been going for a while, but AI improves it. Chatbots ask questions about budget, group size, ages, mobility, and more to produce customized recommendations, making it easier to build an ideal trip. AI can help find the best travel route for a given date, identify the most appropriate accommodation options, and create a travel itinerary for greater satisfaction. AI-powered price optimization tools like Hopper and Trivago enable travelers to find the best prices for flights or hotel rooms, or set alerts for future travel dates.
Travel companies are also applying chatbots to deliver better customer service. Airlines like Aero Mexico and KLM use chatbots to answer common queries and enable passengers to modify or cancel bookings, freeing up employees to respond faster to more complicated inquiries.4
Brian Sheerin, managing director of SABS Travel Technologies, says: “Allowing travelers to self-book through an OBT [online booking tool] while still providing simple methods to communicate, such as online chat, are key to reducing customer frustration and allowing travel businesses the space to restructure, to resource and to meet customer expectations.5”
Reduced travel disruptions
Labor shortages and border control issues placed a significant obstacle in the post-covid travel recovery. AI tech helps reduce such disturbances. For example, Amadeus, a Global Distribution System (GDS), predicts travel disruptions, prepares contingency plans, and offers a schedule recovery system that helps airlines to avoid last-minute cancellations6. AI predictive maintenance enables companies responsible for trains, planes, and other travel infrastructure to monitor and predict maintenance needs, helping prevent breakdowns and meet customer expectations around reliability and timeliness.
Airports, train stations, cruise ship hubs, and hotels are increasingly adopting AI to speed up check in and boarding, and cut the time needed for identity checks, helping them process more travelers in a shorter space of time and prevent frustrations over delays. In Norway, Avinor implemented an end-to-end touchless check in and boarding program7; Miami Airport uses biometric boarding technology8; and the Henn-na Hotel in Japan uses facial recognition software to unlock hotel rooms9.
AI could even end the annoyance of lost or delayed luggage. In the Netherlands, Eindhoven airport introduced an AI baggage handling system that allows customers to track their luggage status and location through their smartphones, simply by uploading a photo of the item10.
Richer travel experiences
AI is transforming and deepening travel in a number of exciting ways. AI-powered translation technology allows visitors to enjoy tours in their native language, unlocking a better understanding of local culture and history and enabling interactions with local residents. Augmented reality (AR) enables travelers to experience destinations in a more immersive manner, like exploring the history of a ruined site, and to preview accommodations and tour destinations to make more informed booking decisions.
With AI analytics, travel companies can gather and crunch enormous datasets from social media, online reviews, and customer behavior on apps and websites, to better understand customer preferences, expectations, and needs. With its new ability to predict demand for specific destinations or activities, the travel industry can develop more relevant and meaningful travel products11.
AI-powered recommendation engines give travel companies further tools to upsell customized travel experiences. KePSLA is a travel recommendation platform that uses natural language processing (NLP) and deep learning to offer personalized services12. Hotels can use AI to adjust room temperatures, lightning, music, and room service menus, and AI-powered IVAs (intelligent virtual assistants) like Rose, a digital concierge at the Cosmopolitan Hotel in Las Vegas, can offer guests unique recommendations and help them book a table at a restaurant, visit a spa, or go on a spontaneous trip13.
Customers turn to AI chatbots for support when they hit an obstacle while they’re away, for example if a connecting flight is canceled, their luggage is lost, or extreme weather affects their resort. Chatbots can listen to complaints, suggest solutions, and refer to relevant resources more swiftly than human agents, especially if many people are seeking help at the same time.
More efficient operations
AI can increase efficiency and productivity for travel companies, just like for any other industry. By digitizing workflows and automating tasks, travel businesses can reallocate employees to provide better customer experience. AI helps optimize resources, like cleaning for hotel rooms and maintenance for cruise ships, and improve scheduling for flights, shuttle buses to resorts, or restaurant reservations.
Through cutting waste and expenses, companies are able to reduce costs, deliver more affordable and accessible travel to consumers, and scale into new markets. Chatbots, robots, and automation can help overcome labor shortages, allowing travel companies to reassign employees from e.g. check in, front desk, or luggage handling tasks.
Pricing optimization is a boon for travel companies too, empowering them to dynamically adapt offers and maximize occupancy rates. Hotels, cruise stocks, and airlines can adjust pricing based on real time factors, to improve revenue and ease cash flow. AI fraud detection systems also help identify and prevent fraudulent activity, protecting both companies and customers from scams, credit card theft, and other financial losses.
Travel stock prices could owe a lot to AI
Overall, AI could significantly add to the momentum for travel stocks and travel ETFs in a number of ways. As investors seek to benefit from the boost that AI could bring to the travel sector, a travel or cruise ETF like Defiance’s CRUZ could be worth considering.
CRUZ tracks the BlueStar Global Hotels, Airlines, and Cruises Index, a rules-based weighted index that includes some of the best cruise stocks, hotel stocks, airline stocks, and other travel stocks, helping retail investors balance their portfolio and mitigate exposure to risk while still joining the travel recovery.
1“Travel & Hospitality AI Market Overview” 2021, https://www.industryarc.com/Report/18662/travel-hospitality-ai-market.html
2“AI CRM and Online Booking Tipped To Boost Travel Recovery” May 27, 2022 https://travel.report/articles/ai-crm-and-online-booking-tipped-to-boost-travel-recovery
3“Q&A: Preparing for the Age of Artificial Intelligence in Travel” January 10, 2023 https://skift.com/2023/01/10/qa-preparing-for-the-age-of-artificial-intelligence-in-travel/
4“7 things you need to know about artificial intelligence in tourism” August 24, 2022 https://www.aiacceleratorinstitute.com/7-things-you-need-to-know-about-artificial-intelligence-in-tourism/
5“AI, CRM AND ONLINE BOOKING TIPPED TO BOOST TRAVEL RECOVERY” May 27, 2022 https://www.phocuswire.com/TravelTech-Show-industry-recovery
6“7 things you need to know about artificial intelligence in tourism” August 24, 2022 https://www.aiacceleratorinstitute.com/7-things-you-need-to-know-about-artificial-intelligence-in-tourism/
7“Avinor rolls out end-to-end touchless travel programme” July 2020 https://www.futuretravelexperience.com/2020/07/avinor-rolls-out-end-to-end-touchless-travel-programme/
8“MIAMI AIRPORT ENABLES LARGEST USE OF BIOMETRIC TECH IN U.S.” May 17, 2022 https://www.phocuswire.com/miami-airport-largest-use-of-biometrics-in-US
9“HOW AI IS TRANSFORMING THE TRAVEL INDUSTRY” July 21, 2022 https://easternpeak.com/blog/ai-use-cases-in-travel-and-hospitality/
10“AI system for baggage handling at Eindhoven Airport proves successful” January 28, 2021 https://innovationorigins.com/en/ai-system-for-baggage-handling-at-eindhoven-airport-proves-successful/
11“4 Ways to Achieving Recovery & Growth in the Hospitality Industry” APril 11, 2022 https://themathcompany.com/blog/4-ways-to-achieving-recovery-growth-in-the-hospitality-industry
12“7 things you need to know about artificial intelligence in tourism” August 24, 2022 https://www.aiacceleratorinstitute.com/7-things-you-need-to-know-about-artificial-intelligence-in-tourism/
13“HOW AI IS TRANSFORMING THE TRAVEL INDUSTRY” July 21, 2022 https://easternpeak.com/blog/ai-use-cases-in-travel-and-hospitality/