AI’s influence on guiding consumers’ travel decisions

Yeah, thank you very much. And indeed it's great to be back. I really enjoyed the conference last year so I was thrilled when I was invited back and I'm pleased to talk to you today as well. And I will be talking about AI from the perspective of it being an opportunity to connect with European travel consumers. I already see some of you taking photos and please do, but there will also be a QR code at the end. So first let's talk briefly for those of you who maybe weren't here last year or are not familiar with Euromonitor International. So we are a global business intelligence provider headquartered here in London. We've got a network of sixteen offices worldwide. The company's got just over fifty years of experience and I've been with Euromonitor for twenty years of that journey. It was during my time at Euromonitor that I discovered a passion for the travel industry and have made that my focus industry. But also just to sort of emphasise that we're not just a travel specialist, we cover a comprehensive range of consumer products and services which we research at Euromonitor. I will be drawing on, I see the slides moved a bit, but I will be drawing on our travel data and again also the consumer surveys which we do in the presentation. So just to set the scene for what I'll be talking about today. So travel is an industry which is growing. There's growing demand for travel. There's a high willingness to spend on travel. However, the two things that are driving travel, the two key trends driving growth are personalization and premiumization. But in order to sort of connect now with the travelers who are looking for these two trends, then AI will be a tool to connect and that's what I will be exploring in today's presentation. A bit more specifically what I'll be talking about, I'm gonna start quickly with an outlook for the European travel market. Then we'll move on to how AI is making an impact on travel booking and travel planning before moving on to how AI can be an opportunity to connect with consumers and also an opportunity to grow the travel industry as well. So without further ado, I will start with the European travel outlook and I'm going to have to start with a couple of disclaimers here. First an explainer actually. When I say the European market, I'm defining that now as Europe as source market. And I've chosen that because I understand that you're all in the sort of communications PL space and are seeking to connect with European travelers. Also as you're well aware, there are a number of dramatic events going on in the Middle East at the moment which may or may not disrupt travel in the long term. The forecast and the data that I'll be sharing with was put together in February. So before the current events, I think it's too early to sort of say what is gonna happen. But if I were to hazard one guess what we did see for example during COVID and the lockdowns was that consumers perhaps tried still to travel when they could but would prefer to travel more locally, let's say intra Europe. So there may be a reduction in long haul travel. But again, it's early days yet so I'm going to leave it at that. Just move forward to the next slide. So travel growth is driven by two kind of macro trends at the moment that we are seeing at Euromonitor. The one is personalization and I think it's perhaps a cliche that there is no such thing as a typical consumer or a typical traveler. Everybody has their own different interests, goals and objectives for their holidays, preferences, who they traveled with, what kind of place they like to stay, what they want to do when they get there. So to have more products which are tailored for can be adapted for the individual consumer and then again AI as we'll see will be an excellent way of reaching out to individual special interests. The other one that we are seeing again covering all of travel is premiumization. Consumers are very willing to spend more on travel. It's a highly privatized spending area as well. However, are also very savvy. They are not just going to spend more money on something just for the sake of it. They will actually want to know that there is value for money and that can support that. And again with AI there are going to be many opportunities to maybe look for the optimal price of a flight and then perhaps recycle that into staying in a more expensive hotel instead. So firstly, just to give a quick sort of snapshot on the forecast growth for Europe as a source market. I think when I was here last year, took a slightly longer period back when we included the COVID years but I think you all know the market sort of suddenly plummeted and then began to recover very quickly. We're long since past that stage so I've excluded it from the chart. But what you have here is an index for the number of trips we are forecasting from Europe. As you can see there's going to be steady forecast growth now through to two thousand and thirty and also value growth which I'll put up on screen is growing. Value will be growing faster than volume. That's on the back of rising prices but also the trend towards premiumization and willingness to spend more. But we are forecasting, you can see our headline numbers on screen, we are forecasting travel to rise from a market of travel spending from Europe, from Western Europe from just under one point one trillion euros in twenty twenty six to just over one point two trillion and that's gonna be three percent growth year on year. So we'll look later on how best to sort of capture this growth. But first I'd like to just share with you which are the leading categories in travel and just to explain the bubble chart, so the horizontal axis that is the market size. The size of the bubbles that indicates how much the growth in actual value terms is gonna be over the next four years. And then, which I think is actually the most interesting one is which is gonna be the fastest growing category. Now, not I think unsurprisingly, hotels and lodging are the largest outbound spend for tourists and then after that, a long way before that, it's food. Lodging is I think something like three twenty five billion euros Food is more like two hundred billion. But the one that I think is the most interesting, mainly because it chimes again with the whole personalization and to an extent premiumization trend and the consensus with all the people we speak to in the industry is that activities are going to be the fastest growing category. At the moment it's a relatively small category. It's actually the smallest of the five on screen. But we are forecasting that to be the fastest growing over the next few years. It's actually going to grow faster than tourism spending on shopping. Also, just to share with you a bit about what channels people are booking through. At the moment online is the largest channel, that's the blue field here and that will continue to be the largest, let's say online now the PC, that will continue to be the largest channel through to two thousand and thirty. But things are moving there because the mobile is rapidly catching up and actually forty two percent of net sales growth in travel from Western Europe will be on the mobile. As we'll see later on within the AI space, lot of the big players, they have launched various AI applications but they are all actually on the mobile app. They tend not to be on the website and browser versions. That again indicates how the mobile will be a far more important communication channel for travel over the next four years. So how is AI currently making an impact on travel? And as Linda was alluded to, people used to spend a lot of time booking and indeed for many people the whole kind of research choosing the destination and comparing hotels that was in many ways perhaps as much fun as the travel itself. But it's still a very time consuming process especially if increasingly consumers are looking at very specific types of travel to tailor their needs. But also the whole infrastructure on travel is perhaps in many ways been based around the fact that you go on a site, find out and then people increasingly also use things like influencers, but ultimately are going to go to let's say a major OTA, Expedia Booking dot com and you're probably going to spend hours there with searches where you filter in. You're looking for particularly a four star hotel, hotel with a swimming pool, hotel in a city location just scrolling and filtering and looking for the places and then eventually booking your trip. However, in the AI world we foresee that this process is gonna change in a completely different way in terms of you're gonna be instead of filtering you're gonna be effectively chatting with a bot. You're gonna be entering in on a sort of emotional led search. I want to go to a vibrant but family friendly destination which is not over tourism and then you let the AI search come up with suggestions for you. And we'll see later how that's gonna impact on the OTAs. But also, I don't know if many of you here attend the World Travel Market which is held in London every November because I was there and a common theme at all the seminars that I attended was AI. What's gonna happen? And that was very much a rhetorical question because everybody agreed that it would have an impact but nobody really had an answer how is this gonna affect the industry. But we commissioned a Euromonitor surveys with corporate and industry sources and we asked them, and this is not specifically to travel. As you can see here in the chart, round about fifty percent of our respondents said for a survey we've done in September last year that yes, AI will have a major impact on their business within the next twelve months. And the main area where they highlighted that they thought AI would have a business would be for targeted marketing campaigns. It be the most important one for AI and that's again the space that you know C junction and everybody are working in. So also when we've looked now at example how in industry thinks of AI, but the big question is gonna be consumer adoption. And indeed AI has come very far, very widespread consumer adoption. On this slide, this is based on our survey, I've chosen the five largest European source markets. We've asked people have they used AI and indeed this is specifically now for seeking information and recommendations and that can be information and recommendation for really any consumer product. But from the charts you can see that typically it's forty percent of consumers have already consulted an AI bot for seeking information and recommendations. Slightly more in Spain and slightly less in France. But if we go down a bit more granular and drill into this to see how many have used it for travel, what's interesting here is that actually travel is round about fifteen to twenty percentage points lower for people using AI searches for recommendation. Again, I think this could be to do infrastructure that already exists with OTAs and trusted brands. But there is perhaps a gap which can be narrowed in terms of people using AI for travel recommendations versus recommendations in general. If we look now at AI as an opportunity for the travel industry, how to better connect with potential consumers. So if we move back, if remember now we moved back a few slides, we were discussing about the whole research process going through OTA sites also hotel chains and direct booking sites and filtering. The OTAs have historically had a very strong presence. Now the question is will they be surpassed by the AI because hypothetically somebody who perhaps is not so particular about where they're going, they just want to have a nice hotel by a beach somewhere at a good price could in theory just delegate the whole process to an AI bot and just at the end click okay and maybe confirm their card details. That's probably for the OTA industry the worst case scenario. I and Euromonitor think it's unlikely that it will ever come to that rather that AI will be a complement to the OTAs. There are a number of reasons for this. One is OTAs like some we've got here, Expedia Booking, believe also are present here today have invested very heavily in AI and have AI applications to help you book. But also there's a lot of brand equity as well within the OTAs and also the direct booking with hotel chains and airlines. And there's still an element of what the consumer is seeking trust when they make a travel reservation which again is often high ticket expenditure points as well. So what we believe is that the AI will come in as the initial phase where you look for where you're going to go, what you can do there, then it's going to make recommendations and potentially connect to a booking site like an OTA. Ultimately at the end booking people will still go in, go to the OTAs and book there. I also thought I'd just see what OTAs are doing and as I mentioned this can be a bit difficult. I'm not the sort of guy who downloads an app unless actually plans to become a regular customer of the company. So what I did was that I decided to put AI to a test and I asked copilot which we use at Jiro Monitor to give me case studies on AI in travel booking. And it suggested for, I chose Expedia and Booking I gather because they are by far the largest players in this space and then it came up with two others, Layla and Hopper. But certainly Expedia and Booking, have invested heavily in travel in AI. They base their platforms on their apps, on their phones. And again, their kind of way of how they interact with consumers is very much based around emotions. That is again going to be the way people look now. Before it was perhaps very specific, they want a hotel in Rome shall we say. Now instead it's moving on to I want to have an adventurous trip with luxury food in the evening, can you find a place that can do that or as we'll see soon all kinds of possible permutations that consumers will come up with. And whereas Expedia and Booking are very driven here with emotion, what you're seeking from the trip. Another area where AI comes in and that again ties in with the premiumization trend or perhaps a better way of putting it is kind of maximizing value trend that we are seeing. And that is to use AI to sort of seek out the optimal price. And that was where Hopper, which Co Pilot recommended comes in. Hopper's kind of angle here is to sort of choose for you the optimum date to book the price. So it uses AI to identify that let's say not many people book trips to the US in total random dates here, let's say the end of April, that's the optimal day to go in to find the bargain price. Fourth player which I've identified here is Leila. Leila is an up and coming German company. They have a membership model. You can do one search yourself for free on their website but then you have to sort of be a member. And I would say that they bridge both the emotion and the pricing side of things because you can look for your destination by emotion but then use it to sort of identify the day to get the best deal on the flights or something. But again, what I think needs to be emphasized now is and sort of going back we're saying there's no such thing as an average consumer. I've got here twelve different search terms that somebody could enter into an AI and I mean you can easily do one hundred and twenty or twelve hundred there in no specific order. But people will be looking for a travel destination that particularly addresses what they prioritise be it not just the date and the price but weather. We're going be hearing later on for weather based search engine. But also is it family friendly, is it pet friendly. Other things that are sort of trending up is over tourism and that I think is a big area for AI because there's a lot of talk particularly in the Mediterranean countries about being too crowded, tourists maybe not even being welcomed. So to use AI to disperse people but also perhaps look for the destinations where other people aren't travelling at any one given time. No fly as we'll see later on is particularly important in Europe and also perhaps I'm personally very secular but I forget that there are a lot of religious people in the world who might have dietary requirements like Ramadan at the moment. So also to have travel preferences that might fit with their religious or ethical needs. We've also done a survey on what are the main factors that consumers look for in a destination. Again this is amongst European consumers so not unsurprisingly value for money by far comes up as the most important criteria that people look for and then there's relaxation which is again understandable because why isn't people going on holiday mostly? Yes, you do have people go on activity holidays but mostly it is to relax. And then after that it's a safe destination and this is where I think it gets interesting because I've just compared now I've added the grey chart where we've got the same questions and the respondents for all over the world and I think it's interesting to see now how perhaps Europe differs in terms of priorities versus the rest of the world. We stand out in two accounts. Safe destination, yes it's number three, but it's actually a lot less of a priority than consumers in the rest of the world. And equally where Europe does also stand out is we have a higher proportion of people. It's about eight percent who are interested in a no fly destination which again I think chimes for a lot more opportunities. Europe is a much more compact continent. There's growing high speed rail network so people to go and take the train or even drive in their own car rather than fly. Moving on to I think how best to connect with the consumers with AI now that we know what kind of things that they will be searching for. So just to go through really what to recap on what we've seen today. Firstly we've established that travel demand continue to grow. That will be on the back of I think two macro trends here, personalization and premiumization. And we've also seen that consumers to find these sort of criteria are already rapidly embracing AI and within AI their searches are being driven by emotion and value for money. But in order to make the most and to have your services connect to consumers via AI. Ultimately AI is a sort of a mega language model. I'm not a computer programmer so I'm gonna leave it at that. But what I think is key here is that the AI and ultimately the consumer can only really pick up on what is clearly stated and then digest that and sort of pass it on to the consumer. So in order for AI to clearly understand your product offerings, you need to have clear and consistent product descriptions. And again, I really want to emphasise here that you need to think of every single possible little detail and have it in clarity to match up with individual consumers. Again to be transparent on pricing. So we've seen services like Hopper, they can go in and sort of detect which is the most optimum day to travel on. And and again this is very much, this is a tricky one I think because you need to sort of predict everything but to make sure that your product descriptions are aligned with the expectations of travelers which again are a very diverse group. But again, I think AI it's not a competitor, it's more of a complement or an additional layer in travel. So really to make the most of AI it's a case of thinking of AI as a partnership connecting both the suppliers of travel technology and the consumers but also if we're looking now at the audience today it's not just that AI will be basing its recommendations on sites offering travel products. There's also a whole space with influencers recommending cities. Looping back to my timestamp earlier on, there's been a lot in the news now about influencers in Dubai for example who are now stuck there. But again we've got the whole publishers, influencers and suppliers bringing all of those different sort of players in promoting travel together and using AI to leverage that and then connecting with the consumers. So as promised, there's a QI code. If you photograph it you'll need to answer a handful of questions with feedback on my presentation and then we can supply you with a copy of the presentation. But I hope you found my presentation interesting and thank you very much for listening.