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How Will Generative AI Impact Hospitality and Tourism?

Nearly 80% of American travelers complained of at least one problem in the first half of 2023, according to research by McKinsey & Company, due in large part to post-COVID pent-up demand that left providers unprepared.

The research, however, also predicts that hospitality and tourism leaders who emphasize new technologies, including customer-centric generative AI (GenAI), have the potential to grow revenues by up to 25%. “This surge of innovation sets the stage for travel companies to rethink how they interact with customers,” the study notes.

GenAI platforms like ChatGPT and Microsoft’s Bing engage users in digital conversations powered by Large Language Models (LLMs). Those platforms can create poetry, subject explanations, communications, images, music and computer code. As new user inputs generate more data, machine learning algorithms analyze and organize it to expand the LLM capacity to create content.

How Can Generative AI Improve Managerial Practices and Effectiveness?

The travel industry quickly rebounded after the COVID-19 pandemic, recovering to pre-pandemic levels within a year, but struggled to meet surging demand.

According to a Bankrate study, nearly 8 in 10 travelers were “plagued by travel problems” post-pandemic, including higher prices, long waits, poor customer service, canceled or disrupted plans and hard-to-find availability.

Providers accelerated the adoption of GenAI in their management practices, and leaders are gaining advantages in the competition for the travel dollar. Among other benefits, GenAI enables them to raise their customer experience standards and adopt revenue-enhancing pricing strategies.

AI enables providers to offer travelers meaningful, personalized customer experiences by deploying intelligent chatbots on their websites, social media and travel platforms (such as Priceline.com and Expedia.com). This allows them to assist clients in booking flights, accommodations, vehicles and destination activities.

Creating positive customer experiences is central to earning repeat business, and AI-powered traveler relationship engines can identify the best clients and offer them upgrades and reduced fares and fees based on their personal preferences. As Skeepers notes, customer experience is critical to success in this field because “customers attach great importance to the quality of services and experiences. They aren’t buying a product, they’re buying a service, reception and customer relations.”

As a revenue driver, GenAI supports continuous pricing strategies that enable airlines, lodging and rental car companies to adjust fares and rates in real-time in response to highly fluid market conditions. In the airline industry, for instance, carriers use dynamic pricing to adjust fares in real-time to exploit surges in demand that reduce the number of seats available on any particular flight.

How Are Travelers Using GenAI and Innovative Technologies?

According to research by Oliver Wyman, more than one-third of leisure travelers use GenAI to get destination ideas, plan trips and book reservations. The consultant adds that “a whopping 84% of respondents reported being satisfied or very satisfied with the quality of generative AI’s recommendations.”

The University of West Florida (UWF) online Master of Business Administration (MBA) with an emphasis in Hospitality and Tourism Leadership program equips graduates with the expertise to apply advanced practical and theoretical concepts to create industry-specific solutions.

In the Hospitality Financial Analysis & Revenue Optimization course, students learn to identify and exploit revenue management and how to perform forecasting, pricing decisions and monitoring. The Service Experience Marketing for Hospitality Management course examines significant customer experience issues and the successful implementation of a customer focus in service-based businesses.

UWF’s program does more than just equip professionals with the skills to utilize modern technology in the hospitality and tourism field. It also prepares graduates for the Certification in Hotel Industry Analytics (CHIA) from the American Hotel & Lodging Educational Institute (AHLEI), making it an ideal way for industry professionals to expand their knowledge of customer service and consumer behavior and gain effective management experience.

Learn more about UWF’s online MBA with an emphasis in Hospitality and Tourism Leadership program.

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