The fundamental changes and likely long-term effects of artificial intelligence on the tourism industry are “underestimated,” says a prominent travel research firm. Speaking at the recent ITB Berlin travel trade show in Germany, Phocuswright Sr. VP. Charuta Fadnis said she could even envision a world where virtual agents replace live ones.

According to Fadnis, generative AI is affecting travel providers and customers alike, with around 80% of people of all ages aware of the existence and importance of the technology.

There are significant differences between countries and age groups regarding people’s personal use however, she said. In the US, around 50% of respondents felt comfortable with Large Language Models – an algorithm that can perform natural language processing takes – compared to 35% in Germany and 30%.

Companies that include AI in the online presentation of their services have been able to significantly increase their turnover, Fadnis noted, pointing to Tripadvisor, which in the first three months after introducing an interactive service achieved an average threefold turnover per customer compared with normal Tripadvisor customers.

Fadnis also cast her eye into the future, where she envisaged virtual agents taking over bookings for travellers.

A comprehensive One Travel app is conceivable too, she said, with Google Maps making a promising candidate by constantly updating and improving. Google’s advantage is that it has comprehensive data on users’ preferences.

“We cannot ignore AI, as its effect will be transformative,” said Fadnis. “Perhaps some people overestimate its short-term impact, but there are probably many who underestimate its long-term effect.”

However, while AI has the potential to not only make travellers’ lives easier, in some cases it can more problematic too, she said – if for instance it is used to generate a large volume of fake reviews and tempt consumers into making bookings they later regret.

One way of avoiding this is to combine generative AI and blockchain technology, she said, ensuring reliable identification of users and making misuse much more difficult.

Sustainability

Fadnis also presented Phocuswright’s latest survey findings on tourism and sustainability, calling on customers to make a greater effort. While 50% of respondents said environmental standards and climate protection criteria determined their transport and accommodation choices, only 10% actually followed up in practice.

Many travellers, she added, expect tour operators, governments, and destinations to take responsibility for a sustainable travel experience.

However, to help get consumers on board, she said the travel industry must give “palatable” and realistic recommendations to travellers.