How To Use AI in Travel Industry: A Guide For Competitive Businesses

Who doesn’t love a good vacation? Now imagine trips being truly “kicked back” because AI can do all the planning, booking, and confirming reservations, making a vacation truly stress-free.

Around 67% of travelers have already used AI for travel tasks. Artificial Intelligence (AI) refers to computer systems that learn from data, interpret language, predict outcomes, and automate decision-making with minimal human input.

In the travel sector, AI is proving to be especially transformative. Consider the possibilities of disrupted flights being automatically rebooked through AI, itineraries designed around real-time local insights, or hotels adjusting rates dynamically in response to shifts in demand.

AI is streamlining the operations of travel and hospitality businesses, simplifying logistics and redefining customer expectations to unlock new growth opportunities. Read on to explore how to use AI in the travel industry and measure what works best.

How to use AI in the travel industry?

Using AI in the travel industry is like offering a virtual, yet smart, tour guide to your customers. Imagine bookings, itineraries, and check-ins all handled seamlessly.

As an aggregator, hotel owner, or travel leader, here are practical ways you can use AI for your business right away:

Can AI personalize bookings as per your customers’ preferences?

Yes! AI can filter through multiple options and show the best matches to a traveler’s budget, style, and past preferences.

A McKinsey survey shows that 33% of executives believe AI is enhancing customer personalization within their organizations. Here’s how it works:

1. The prompt: A traveler sends a request like: “Find me a boutique hotel in Rome for April 20–23 under €150/night, near the city center.”
2. Understand preferences & context: The AI identifies dates, budget, and location, while also considering past behavior (e.g., a guest who usually picks boutique stays or late check-ins).
3. Search & filter options: It scans databases, OTAs, and hotel feeds to surface the best-fit rooms, applying filters for price, amenities, and ratings.
4. Ask follow-up questions: If details are missing, it checks: “Would you like breakfast included?” or “Do you prefer a river view or city view?”
5. Show curated suggestions: Guests receive a shortlist of tailored hotel options with photos, ratings, and perks highlighted.
6. Confirm booking & send details: Once the guest chooses, the AI finalizes the booking, issues confirmation, and even shares policies or local tips.
7. Learning & memory: Over time, the AI remembers traveler preferences and habits, and creates experiences that feel tailored and seamless. This boosts satisfaction, loyalty, and repeat business.

Can AI plan trips?

Yes. AI agents designed for the travel industry can process your customers’ data and learn about their preferences and styles. In fact, 41% of travelers are open to AI-generated itineraries because they can save hours of research.

AI can determine a traveller's food preferences and the types of activities they enjoy, and offer dynamic trip itineraries. It can even offer adjustments to your customers’ travel plans based on weather changes, road conditions, and traffic volume, among other factors.

How does AI help with pricing strategy?

AI offers a smarter pricing strategy by implementing dynamic pricing to maximize revenue while remaining competitive. The dynamic pricing software market is projected to grow up to $15 billion by 2032.

AI can help adjust prices in real time by analyzing:

• Historical demand: AI algorithms analyze past booking patterns, search queries, and past consumer behavior to determine seasonal fluctuations, peak travel times, and the impact of specific events or promotions on booking volumes. It enables businesses to anticipate when and where demand will be high or low, and adjust their pricing accordingly.
• Competitor rates: AI tracks competitor pricing on OTAs and hotel websites in real time. It helps businesses spot discounts, premium pricing, or sudden changes, so they can adjust their own rates to stay competitive without losing revenue.
• Weather patterns: AI uses past climate data and real-time forecasts to predict demand changes. For example, sunny weekends may increase last-minute bookings, while storms can lower demand. This allows businesses to adjust prices proactively.

Can AI break language barriers?

Language should never be a barrier for international travel companies. 29% of businesses lose customers because they don’t offer multilingual support, while 71% of users report increased loyalty when support is in their native language.

AI can help bridge the language gap without requiring the hiring of multilingual support. Companies can use AI to instantly translate text on websites, booking apps, and customer chats into multiple languages. It utilizes deep learning models and natural language processing to detect the original language, understand the meaning and context, and generate a fluent translation in the target language.

All of this happens in just a matter of milliseconds!

This way, it’s a win-win situation for both customers and the business. Customers get content and communication in their own language, and the company doesn’t need to invest in a huge multi-lingual staff, which reduces customer service costs by up to 30%.

Can AI protect from fake reviews and payment fraud?

Fake reviews and fraudulent transactions can damage a company’s reputation. AI helps businesses detect and prevent fraudulent activities by analyzing large volumes of data in real time.

Here’s how AI can protect by detecting issues in two areas:

• Fake reviews: AI scans text patterns and metadata to spot manipulated feedback. TripAdvisor reported that 1.3 million reviews were identified as fake, with 72% of them caught before they were ever posted.
• Payment anomalies: AI flags suspicious transactions in real-time. An AI system can reduce fraudulent transactions by 50%. Even banks have been utilizing AI for fraud management, resulting in cost savings of 25 to 40% within two years of deployment.

At Anglara, we’ve built an AI shield for fraud management that saved businesses £10 million in damages. Travel businesses can implement this for their own operations as well.

Can AI predict travel trends?

AI is the best way to examine the past and predict the future, and companies that use trend forecasting can achieve a 5-15% revenue gain by being the first to act.

Custom AI solutions can analyze vast amounts of historical data to predict favorable destinations before they peak. It sifts through booking data, search trends, and social media activity to identify where people are looking forward to traveling to.

This information can give travel companies a competitive edge. They can create tailored offers and itineraries for destinations that other businesses haven’t yet monetized.

How to use chatbots and virtual assistants in customer service?

AI-powered chatbots and virtual assistants are one of the most visible and widely used forms of AI in the travel industry. A traveler’s first interaction is important because it sets the tone for the entire journey, literally, and here’s how AI chatbots and virtual assistants can do it right:

• Instant query resolution: AI chatbots can provide instant support to users without requiring them to wait. That’s why 82% of consumers prefer chatbots over waiting for human support. It can quickly resolve simple queries, like baggage rules or cancellation policies, within seconds.
• 24/7 support: Users no longer have to wait until the next day for assistance, as AI assistants provide round-the-clock help. 24/7 availability is the top expectation of customers, and AI enables companies to fulfill it without the need to invest in a day-and-night call center.
• Multilingual support: An AI chatbot can communicate in different languages, making support more accessible for international travelers. As per 71% of customers, companies offering support in their native language are “very” or “extremely” important.
• Faster resolution: AI-powered chatbots often resolve routine queries instantly or in seconds. This significantly cuts waiting time for users. These bots are shown to respond 3 times faster than human agents in many cases.
• Personalization: Bots and virtual assistants can tailor their responses based on past interactions, user preferences, and the current context, which can increase customer satisfaction by 24%.

Apart from AI adding convenience for your customers, it can also reduce the burden on your human staff by handling simple tasks, freeing them to focus on more complex cases.
With AI, it becomes easier to:

• Rebook canceled flights to manage loyalty program points
• Answer 50–90% of guest inquiries, like questions about size restrictions, lost luggage updates
• Handle check-in & boarding passes with mobile links and digital passes
• Process refunds & vouchers automatically
• Resolve common service requests like late checkout or room service

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Types of travel businesses that can use AI

By now, you should know that the power of AI extends to all businesses in all industries, without exempting businesses in the travel industry. Below, we discuss how various travel businesses can utilize AI to enhance their operations.

Airlines

We already know that Airlines can use AI to optimize pricing and routes in real time. The latter has saved British Airways 160,000 minutes of delays from gate allocation optimizations, and 243,000 minutes by rerouting around storms.

However, did you know that it can also help airlines ensure the airplane's condition is up to date?

A minor glitch in the airline industry can cause significant inconvenience to thousands — the passengers, airline employees, and airport staff. 

So, how can AI help with that? 

AI can help with aircraft maintenance and help manage disruptions instantly. AI analyzes sensor data from engines, flight logs, and past failure records, enabling ML models to detect anomalies, such as vibrations or temperature spikes, and forecast when parts may fail. 

This enables engineers to plan repairs in advance, rather than waiting for breakdowns, which means fewer cancellations, more planes in the air, and significant cost savings.

Airports

Similar to airlines, minor hiccups, such as long queues, baggage delays, or slow security checks, can create chaos. Using AI in airports enhances passenger satisfaction and boosts efficiency. Airports utilizing AI have experienced a 6% reduction in ground delays and 4% faster aircraft turnarounds. Here’s how AI can help with that:

• AI systems can process live video feeds, passenger data, and baggage tracking information to predict where congestion will build up and allocate resources accordingly.
• Facial recognition tools at boarding gates expedite passenger verification, and biometric screening lanes can process up to 20 passengers per minute, compared to just 1 or 2 using manual checks.
• AI-powered crowd analytics enable airports to redirect traffic in real-time, helping to avoid long queues.
• In baggage handling, AI tracks luggage across scanning points and predicts possible delays or misroutes before they happen.

As a result, Airports enjoy benefits like:

• Faster passenger processing
• Reduced queues and a smoother travel experience
• Fewer baggage mishandling incidents
• Enhanced security with automated threat detection

Hotels and Resorts

Hotels are using AI to personalize guest experiences, optimize room pricing, and automate routine services like bookings, check-ins, and customer support.

AI systems enable hotels to adjust room rates dynamically, tailor offers (such as spa or dining packages) by drawing data from:

• Past bookings
• Guest preferences
• External factors, including seasonality, local events, and weather conditions

AI Chatbots and virtual assistants also handle reservations and service requests around the clock, freeing up staff to focus on higher-value guest interactions. Marriott utilizes AI Chatbots on Facebook and Slack to promptly handle bookings and guest queries. It has addressed 2.5 million guest requests, with half of them resolved even before guests checked in.

Online Travel Agencies (OTA)

OTAs like Expedia, Booking.com, and Trip.com rely on AI to personalize search results, recommend hotels or flights, detect fraud, and optimize pricing.

AI builds traveler profiles using past searches, booking patterns, reviews, and browsing behavior. This allows OTAs to surface the most relevant options first.

AI systems also scan millions of transactions in real-time to flag anomalies, such as location mismatches, duplicate cards, or suspicious booking behavior.

Benefits:

• Smarter recommendations → higher conversions and bookings
• Real-time fraud detection → fewer chargebacks and safer transactions
• More relevant search results → improved customer satisfaction

Businesses, such as Expedia, that apply AI filters experience a 1.3 times higher average conversion rate. Hence, the sooner businesses start using AI, the better.

Cruise lines

Cruise operators can use AI to personalize onboard experiences and optimize itineraries by tracking guest preferences from booking data and onboard activities, making customized recommendations. Predictive analytics can also help cruise lines to adjust itineraries based on weather or port congestion.

AI can also help with improving supply chain efficiency for essentials like food and fuel. The supply chain AI monitors inventory levels and forecasts demand so ships stock exactly what they need without overloading.

Carnival’s OceanMedallion demonstrates what’s possible when IoT, AI, and intelligent systems converge in cruising. They introduced wearables, which enable automatic cabin unlocking, touchless payments, and personalized guest interactions by creating a seamless experience that likely drives higher engagement and spend.

If a major cruise player is doing this, it underscores that other lines could also adopt similar tech to compete on experience and loyalty.

Rail and bus operators

Rail and bus networks move more people daily than almost any other mode of transport. Adding AI to the mix could be revolutionary for reliability, safety, and passenger trust. For rail and buses, AI can reduce delays, improve safety, and maintain efficient services with:

1. Forecast demand: AI analyzes ticketing data, passenger flows, and external factors, including weather and traffic patterns, to predict peak times and optimize schedules accordingly.
2. Predict maintenance issues: Predictive maintenance systems monitor vehicles and rail tracks for anomalies, enabling early detection and prevention of issues.
3. Provide real-time passenger updates: AI also powers real-time communication tools that update passengers about delays, alternative routes, or available seats.

Car rentals and ride sharing

Car rental companies and ride-sharing platforms, such as Uber, Lyft, and Ola, are already utilizing AI to price competitively, optimize their routes, detect fraud, and deliver top-notch customer service. Lyft integrated Anthropic’s Claude AI into its customer service, cutting resolution times by 87%. AI can transform efficiency at scale.

If you’re into the business of car rentals or ride sharing, you can also implement AI to:

• Analyzes demand, particularly during holidays, peak hours, or special events, and dynamically adjusts prices accordingly.
• Process traffic, GPS, and weather data to suggest the fastest routes, reducing wait and ride times.
• Detect suspicious behavior, such as fake accounts, duplicate bookings, or unusual payment activity, to protect both drivers and passengers.

Travel insurance companies

AI can help insurers reduce claims processing/administrative costs by up to 30%, while also enhancing fraud detection and boosting customer satisfaction. It can speed up claims, detect fraud, and personalize coverage, enabling travelers to receive faster payouts and fairer policies. Here’s how:

• AI can scan claims documents, receipts, and travel itineraries to automatically approve straightforward cases (such as baggage delays or flight cancellations).
• Fraud-detection algorithms analyze transaction patterns and historical claims to identify anomalies in real-time, thereby reducing the incidence of false claims.
• On the customer side, chatbots provide instant, multilingual assistance for policy queries or emergency help abroad.

Benefits:

• Faster claims approvals → happier customers
• Stronger fraud detection → lower losses
• Personalized coverage → better product fit and retention

Common benefits of using AI in the travel industry

By now, you already know these benefits, but here’s a quick summary: 

1. Faster service: 24/7 AI chatbots resolve routine questions instantly, reducing wait times.
2. Revenue growth: Beyond dynamic pricing, AI-upselling strategies boost Revenue and generate ancillary revenue streams.
3. Cost savings: By utilizing predictive maintenance, organizations can reduce overall maintenance costs, while automation further minimizes routine operational overhead.
4. Better customer experience: Personalization and multilingual support improve satisfaction and loyalty.
5. Fraud prevention: AI detects payment anomalies and fake reviews to protect businesses and their reputations.
6. Data-driven decisions: Trend forecasting, demand surge predictions, and insights into external factors enable companies to gain a first-mover advantage. 

With so many proven benefits, not adopting AI in travel is simply leaving money on the table. Every missed opportunity to personalize, automate, or forecast means falling behind competitors who already are. 

If you’re unsure where to start, AI consultations can really help determine the right use cases, solutions, and approaches. At Anglara, we help travel businesses uncover the proper use cases and turn AI into real-world results. Fill out the form below to get started now!