Title: A Journey into the Future of Travel: AI's Impact on Lodging and Flying

Introduction

Have you ever found yourself lost in the labyrinth of travel planning? Endless web searches, opaque pricing, and an overwhelming array of options can easily transform the excitement of an upcoming trip into a source of frustration. Now, picture a world where planning your perfect vacation, business trip, or weekend getaway is as effortless as a conversation. This is not an unreachable fantasy, but the imminent future of travel – a future powered by the transformative potential of Artificial Intelligence (AI). With the travel industry valued at over $1.5 trillion and poised for further growth, the potential impact of AI is tremendous. This revolution promises not just an upgrade but a profound transformation, poised to redefine the travel experience as we know it. Welcome to a journey into the future of travel.

The Evolution of Major Players in Lodging and Flying

The travel industry is characterized by a complex ecosystem of key players, including service providers, discovery engines, distribution channels, and metasearch companies. The cooperation and competition among these entities significantly impact the user experience.

The aviation industry offers a compelling example. Airlines, as service providers, generate a significant portion of their total booking revenue through direct channels. According to a report by Atmosphere Research Group, airlines generated 72% of their total booking revenue through direct channels in 2021 [1]. This shift towards direct channels has been mirrored by a decline in bookings through Global Distribution Systems (GDSs), which accounted for only 10% of airline bookings in 2021 [1].

Supplementing this ecosystem are Online Travel Agencies (OTAs) and metasearch platforms. OTAs were responsible for around 24% of gross bookings in the U.S. in 2021, offering users the ability to compare and book various flight options [2]. Metasearch platforms, on the other hand, provide an aggregated view of flight options from various sources, including OTAs, GDSs, and direct airline sites.

The lodging sector follows a similar, yet distinct pattern. Direct reservations made through hotel websites and apps constitute a significant channel, accounting for 49.4% of hotel room revenue in the United States in 2021 [3]. Paralleling the aviation sector, GDSs and OTAs also play critical roles. OTAs, for instance, accounted for 25.6% of hotel room revenue in the United States in 2021 [3]. Metasearch platforms round off the ecosystem, aggregating accommodation options from various sources to provide customers with a comprehensive view of prices and availability. The direct bookings from metasearch channels had a share of 16.4% of the total number of bookings and 13.2% of the revenue generated between 2019 and 2022 [4]

Despite the interplay among these major players and the impact it has on the customer journey, significant challenges persist. The industry continues to grapple with issues such as siloed pricing data, a lack of personalized recommendations, and fragmented user experiences, all of which indicate room for substantial improvements.

Who owns what data?

• Airlines and Hotels (Service Providers): They own data related to flight and room availability, pricing structures, and past booking patterns. These entities are generally protective of this data, especially pricing structures and strategies, as they are considered trade secrets that give them a competitive edge.
• OTAs: They collect information from various airlines and hotels, offering users a wide range of options. The proprietary data they own include aggregated pricing data, user search and booking data, and user behavior data such as click patterns and time spent on pages. They do not typically disclose the detailed pricing algorithms or user behavior data as it can provide insights into their operations and strategies, which they consider to be a competitive advantage.
• GDSs: These intermediaries have access to extensive booking and inventory data, maintaining real-time information about availability and pricing from airlines, hotels, and even car rental companies. This includes both the data they receive from service providers and the booking data they generate. They typically do not disclose the proprietary booking data to other players as it forms part of their competitive advantage in providing comprehensive services to travel agencies.
• Discovery Engines and Metasearch platforms: These platforms, which include entities like Google, TripAdvisor, and Skyscanner, have extensive data about user search habits, destination research, reviews, ratings, and booking trends. They also capture demographic information, location data, and device usage patterns, which can provide a comprehensive picture of user behavior. This proprietary data is utilized to personalize their own platforms, but sharing across platforms is limited due to competitive considerations and privacy regulations.[5] [6]