AI in Travel Tech: Underrated Factors Shaping the Future of OTAs
In the evolving landscape of AI and travel technology, discussions often center around customer-facing advancements. However, there are crucial factors on the supply side that receive far less attention but will play a pivotal role in shaping the future of Online Travel Agencies (OTAs). Let’s explore three key areas that could redefine the way we think about AI in travel tech, especially in products like bus ticket bookings and things to do.
1. The Untapped Potential of AI in Inventory and Supply Management
Most conversations about AI in travel tech tend to focus on the demand side optimising user experiences and enhancing customer interactions. Yet, the true game changer might lie in how AI can transform the inventory and supply side. For OTAs offering products like bus ticket bookings or activities and things to do, the ability to leverage AI to streamline and scale their inventory could become a significant competitive moat. Even if platforms like OpenAI (OAI) succeed in automating direct bookings across multiple verticals, the challenge of establishing revenue models without traditional commission agreements remains a hurdle.
It’s likely that achieving these scalable, AI-driven inventory models will take considerable time unless rapid adaptations occur. This challenge provides OTAs with an opportunity to solidify their position by investing in AI innovations that deepen supply chain integrations and maximise profitability across all their product offerings, not just traditional bookings.
2. The Importance of Context and Choice in AI-Driven Travel Experiences
In nearly 5 years of experience in the travel industry, one crucial insight stands out: travelers prioritise context and choices over simply being presented with the top three options. While AI can quickly sift through vast amounts of data to offer the "best" solutions for bus ticket bookings, accommodations, or activities, customers still value the ability to compare all their choices, much like they do with Google.
The user interface (UI) and user experience (UX) of AI-powered travel agents will be as critical as the AI’s technical capabilities, such as latency and privacy.
Visual discovery and user engagement need to focus on offering a holistic view of travel options, allowing consumers to weigh various factors in their decision-making process. This transition won’t happen overnight, but it’s a vital area that demands more attention as we work towards AI-driven travel experiences.
3. The Role of AI in Servicing and the Future of OTA Partnerships
A major question mark surrounds the role of AI in servicing bookings across diverse products like bus tickets, accommodations, and local experiences. While there is potential for AI agents to handle customer interactions, it's challenging to envision a scenario where these AI entities also take charge of servicing bookings themselves. More realistically, OTAs might continue to dominate this space while AI platforms like OpenAI aim for broader applications beyond just travel.
The interesting dilemma here is about which industry players might step up to disrupt the current model. Companies like Hopper, with relatively less to lose, could take bold moves in reshaping how servicing and bookings are handled. This creates a strategic puzzle that could lead to significant shifts in the industry’s power dynamics, testing the willingness of major OTAs to disrupt their own businesses to stay ahead.
Why OTAs Must Act with Urgency
The tsunami of AI innovation on the horizon poses both a threat and an opportunity for OTAs. Incremental product updates and minor innovations will not suffice in this new landscape. To remain in the driver's seat, OTAs must act with a much higher sense of urgency and agility. The focus should shift towards larger-scale AI implementations that go beyond surface-level enhancements, driving fundamental changes in both supply chain and customer engagement strategies for all product categories.
Conclusion
While AI has the potential to transform the travel industry, the focus must expand beyond customer interactions to include the vast opportunities in inventory management, user choice, and servicing across diverse products like bus tickets and activities. OTAs are still in a strong position, but the pace at which they adapt to these changes will ultimately determine their place in the AI-driven future of travel tech.