- Oliver Wyman’s report unveils the rising influence of generative AI in leisure travel planning.
- 41% of Americans and Canadians have embraced generative AI for trip inspiration or planning.
- OTAs could gain up to 17% market share by 2029 if they invest in generative AI.
- Generative AI alleviates information overload and enhances personalized recommendations.
- 82% of users are likely to use generative AI for future travel plans, with high satisfaction rates.
- Over 90% of users book activities and dining suggestions recommended by generative AI.
- Elite loyalty members and cruise enthusiasts show strong affinity towards generative AI.
Main AI News:
As summer approaches, the influence of generative artificial intelligence (AI) on leisure travel becomes increasingly pronounced, ushering in a new era of vacation planning dynamics. Oliver Wyman, a prominent consultancy under the Marsh McLennan banner (NYSE: MMC), unveils compelling revelations in its latest report, “Unlocking the Power of Generative AI in Leisure Travel.”
The report underscores a notable surge in the adoption of generative AI among consumers for trip organization and inspiration, with findings indicating a significant shift in consumer behavior. According to the study, titled “Why Generative AI Is a Game Changer for Leisure Travel,” 41% of surveyed Americans and Canadians have embraced generative AI for trip ideation or itinerary structuring, marking a substantial increase from 34% recorded in August 2023.
Oliver Wyman’s in-depth analysis further projects a potential upswing in online travel agencies’ (OTAs) market share within the US online travel sector. By 2029, OTAs could witness a notable increase of up to 17 percentage points if travel suppliers fail to invest in generative AI capabilities. This strategic inertia could translate into a lucrative opportunity for OTAs, potentially yielding over $2 billion in incremental commissions from suppliers.
Lawrence Burka, Principal at Oliver Wyman’s Transportation and Services division and an expert in Pricing, Sales, and Marketing, elucidates, “Generative AI streamlines travel planning, addressing key consumer pain points such as information overload and fragmented sourcing for travel-related insights. Despite its evident benefits, the pace of development in customer-facing generative AI tools within the travel industry has been tepid, representing a missed opportunity for brands to bolster customer engagement, foster direct bookings, and deliver tailored recommendations to enrich travel experiences.“
Key insights from the report spotlight the overwhelmingly positive reception of generative AI among travelers:
- Repeat Adoption: A remarkable 82% of travelers express a likelihood of utilizing generative AI tools for future travel planning endeavors, underscoring its enduring appeal. Notably, younger demographics exhibit a higher propensity for leveraging these tools, with 59% of individuals under 45 years incorporating generative AI in their travel planning routines, while 31% of older travelers aged 45 and above also embrace its utility. Moreover, the satisfaction levels with AI-generated travel recommendations remain notably high, driving substantial conversion rates towards booking AI-recommended travel options.
- Ancillary Engagement: Over 90% of recent generative AI users proceed to book specific activities (44%) and dining recommendations (43%) proposed by the AI tool, highlighting its efficacy in facilitating ancillary spend opportunities.
- Loyalty Dynamics: Elite loyalty members within the travel sector exhibit a strong affinity for generative AI, with 45% leveraging AI tools in recent trip planning activities. The report further illuminates the widespread adoption of generative AI among cruise enthusiasts, with 54% of respondents who embarked on at least one cruise since 2022 leveraging generative AI for trip organization.
The comprehensive survey, encompassing insights from nearly 2,100 consumers across the United States and Canada in March 2024, underscores the growing significance of generative AI in reshaping the contemporary travel landscape. Respondents qualified for the survey based on their engagement in leisure travel activities, including roundtrip flights, lodging stays, or cruises, since the onset of 2023 or 2022, respectively.
Conclusion:
The emergence of generative AI as a pivotal tool in summer travel planning signifies a paradigm shift in consumer behavior and industry dynamics. With a growing reliance on AI-driven insights and recommendations, travel brands face a pressing imperative to invest in customer-facing generative AI tools to bolster engagement, drive direct bookings, and capitalize on ancillary revenue opportunities. Failure to adapt to this transformative trend risks ceding market share to competitors and missing out on substantial revenue streams in the evolving landscape of leisure travel.
