The effect of chatbots in travel industry
First you could book flights on the internet. Then came online travel agents. Now you can do everything from asking your smartphone if your flight is on time to having your queries answered by a chatbot.
Artificial intelligence (AI) is going from strength to strength. According to IDC, worldwide spending on cognitive and AI systems will total US$12.5bn in 2017 (an increase of 59.3% over 2016), and the AI market is expected to be worth US$46bn by 2020. And artificial intelligence is a powerful force for the travel industry, too. But what exactly is it, and how is it being used in travel?
Simply speaking, AI is a branch of computer science that simulates intelligent human behaviour. It can understand natural language - text and voice - as well as video and images. It can even comprehend and organise unstructured data, such as reviews and blogs. But perhaps the most important aspect of AI is that it has the power to learn.
Putting relevant offers in front of travellers at the right time and at the optimal price is key for travel operators. By merging historical data with sophisticated Machine Learning algorithms, companies can now predict where and when travellers might want to go, and generate personalised ads, thereby boosting sales.
Terry Jones, Chairman of Wayblazer, an AI startup transforming online travel planning, says: “The profound thing about this technology is that it learns and never forgets. When you have a car wreck, you probably won't make the same mistake again. When a self-driving car has a wreck, it tells all the other self-driving cars about it so they can avoid the same problem. AI is constantly getting smarter, more helpful and, ultimately, more powerful.”
Understanding customer needs
AI is being used to create a smoother travel experience. One example of this is the chatbot, which allows customers to pose questions in digital chats, which are answered by artificial intelligence-powered systems. Booking.com, Skyscanner and Cheapflights are among the travel companies integrating chatbots with Facebook Messenger, Skype and Amazon Alexa. The chatbots are able to manage simpler customer transactions, such as booking and boarding passes, while their human counterparts are freed up to deal with more complex interactions.
In September 2017, Finnair launched its first chatbot via Facebook Messenger. Nicknamed Finn, it can sell flights, calculate how much baggage a passenger can take and respond to questions. The airline worked with Caravelo, an IT provider for the travel industry, to develop Finn. Iñaki Úriz, CEO of Caravelo, describes chatbots as a cross between a super-knowledgeable friend and a PA. “It’s someone who knows everything about your trip and also makes a booking for you.”
Úriz believes AI can boost loyalty by helping companies know more about their customers, thereby better meeting their needs and winning repeat business. “The really interesting thing about chatbots is that they change the way you interact with your passengers. The bot gets to know the passenger. For instance, if they have no driving licence, why send them pre-departure emails about car rentals? With chatbots, you move away from long bookings and spam emails and into intimate conversations.”
Other companies are experimenting with AI in different ways. Group adventure specialists Flash Pack uses Facebook Lookalike Audiences, which allows marketers to target Facebook users that are similar to existing customers, as part of their marketing strategy. "By using Facebook’s artificial intelligence and unique algorithms, we are able to match like-minded solo travellers and the results are outstanding," says Co-Founder Lee Thompson. "Forget traditional marketing – AI is the future. Knowing accurate information about your potential customers and giving them targeted content based on what they like is more powerful than anything else.”
Travellers are experiencing AI after booking, too. Hotel chains including Hilton and Starwood are experimenting with digital room keys - where guests use their smartphones to unlock doors - while Japan recently opened Henn-na Hotel, the world’s first hotel staffed by humanoid robots.
AI is certainly creating a shift towards self-service and interactions with technologies offering “personal” information. In airports, for instance, face-to-face check-in is now down to 46% of passengers according to a study by Sita, specialists in air transport communications and IT.
But not everyone foresees the end of human-to-human interaction. A spokesperson for ABTA, which represents UK travel agents and tour operators, says one in five Brits booked a holiday in a high street store last year, claiming that the “personal touch” is hard to beat.
Sean Tipton, from ABTA, says: “People’s travel choices can often be extremely nuanced as they seek out a particular type of experience – which is where a travel professional is very well placed to provide the ideal holiday that even sophisticated AI on its own may find very hard to replicate.”
Read part two of our AI series here. You can also read: Will artificial intelligence kill hospitality?
- Worldwide spending on cognitive and AI systems will total $12.5bn in 2017 (an increase of 59.3% over 2016)
- The AI market is expected to be worth $46bn by 2020
- Hotel chains including Hilton and Starwood are experimenting with digital room keys
- Japan recently opened Henn-na Hotel, the world’s first hotel staffed by humanoid robots