Report on World Tourism Economy Trends (2018) Excerpt -7 Artificial Intelligence increases the operating efficiency of the tourism industry

1. Characteristics

(1) Artificial Intelligence (AI) will trigger a far-reaching change of the human society

Scientifically, artificial intelligence (AI) means using computers to simulate some thinking processes and intelligent behaviors of humans (such as learning, reasoning, thinking and planning) and making computers similar to human intelligence. AI applications include robot, autopilot, speech identification, image identification, natural language processing and expert system.

AI fuses new theories and new technologies, including machine learning, in-depth learning, big data, supercomputing, Internet and brain science, and is now promoting the human society to change. Such transition will be 10 times faster in speed, 300 times bigger in scale and almost 3,000 times bigger in influence than the Industrial Revolution (McKinsey, 2016).

(2) AI can promote creative upgrade of human work

AI can slash the burden from repeated tasks and allows people to complete work with more values and more creative ideas. For example, AI is now widely used in the translation area, which will help streamline the travel and improve interpersonal exchange. In future, all B2B and B2C industries will introduce AI in an all-round manner to harvest more benefits. For example, AI can be combined with enterprise-grade operation consulting, industry (mainly finance and medicine), B2B service and B2 products.

(3) AI has become a heated investment and financing area

In recent years, the global AI market has remained a heated area of investment and financing. Venture Capital’s survey shows that the total financing amount has annually grown steadily from USD 200 million in 2010, tripled to USD 600 million in 2013, and further doubled to USD 1.2 billion in 2015. Until November 2016, the total of 1,485 companies related to AI technology and involving 13 types had raised the total of USD 8.9 billion. CB Insight’s data show that the financing amount of AI startups in US has almost grown 10 times within only four years.

(4) AI enterprises are concentrated in North American cities

The National Artificial Intelligence Development Report published by Wuzhen Think Tank shows that by the end of 2016, US ranked the first by number of AI companies, up to 2,905, and most of them are distributed in California. In China, the financing size of AI startups has kept rising and totaled USD 2.76 billion in 2000-2016. In particular, AI grew the fastest in 2014-2016. These companies are mainly distributed in Beijing, Shanghai and Shenzhen, which are home to 7.4% of all AI startups worldwide and rank the third, sixth and eighth respectively globally. In particular, Beijing takes the lead nationwide and takes more than 50% of the financing amount nationwide.

Table 3.1 Top 50 Cities by the Number of AI Startups

Data Source: Wuzhen Index – Global Artificial Intelligence Development Report 2016

Figure 3.1 AI Financing Amounts of Major Provinces/Municipalities in China

Data Source: Wuzhen Think Tank – 2016 National Artificial Intelligence Development Report, http://tech.163.com/special/aireport2016c/

2. Application to tourism industry

AI will greatly change tourism, hotel and related industries. Now, it has made much progress in the application to route design of tourism community, cloud system technology for hotels, OTA online search, hotel income management and other areas.

(1) AI realizes precise marketing and stream conversion

AI can improve the customer identification and reservation efficiency of tourism enterprises and hotels. A report of Software Advice points out that in the AI time, hotels will highly depend on the cloud system to perform precise marketing, attract customers, simplify the reservation flow, improve the customer experience and increase the reservation decision-making efficiency. In particular, hotels can use AI software to effectively identify tourists at the selection stage and push products through the online reservation engine, thereby increasing the purchasing rate and conversion rate of stream.

(2) AI deepens data analysis and improves management

AI can improve different business activities of tourism enterprises and hotels such as marketing, customer service, income management and product design. With in-depth data analysis, AI can realize word-of-mouth management, improve product service and perform market forecast and competitiveness analysis. It can influence the strategic decision, intervene in income management and help hotels and tourism enterprises to complete pricing and channel strategy, distribute the stock and realize other income management activities.

(3) AI can improve customer service efficiency and service quality

Call centers and customer service centers of the tourism industry will widely use the AI customer service technology. This will provide a technical solution based on the natural language for enterprises to realize quick and effective communication with mass users. At the same time, AI can generate statistical analysis information enterprises need to enable lean management. Enterprises can preprocess text inquiries from customers with AI, and conduct AI understanding and reply at the semantic layer, word module layer and keyword layer. Only customer service requests that can’t be processed with AI will be processed by real persons. The intelligent customer service robot system can integrate customer service centers effectively and in multiple channels. Moreover, while slashing the customer service cost, the system can effectively reduce the human cost, improve the user experience and thus improve the service quality and innovative brand image.

3. Influence on global tourism

AI will greatly change the operating mode of the global tourism industry with human resource input and customer service as the core.

(1) AI can increase the operating efficiency of global tourism industry

First of all, AI can greatly improve the operating efficiency and service quality of the industry. A lot of human labor in the traditional tourism industry will be replaced by AI to cut the human customer service cost and reduce repeated work. AI’s powerful data processing capacity will remarkably increase the service efficiency and upgrade the customer experience.

(2) AI will change the operating mode of the industry

Second, the tourism industry will face a revolutionary change in the human-intensive operating mode. Many tourism enterprises are now deploying the all-new AI-based operating system and delivering a precise service experience to customers based on big data. Workers will depend more on AI to handle customer service, increase the efficiency and improve the quality. However, AI will not fully replace workers, but help workers deliver face-to-face services with increased complexity and higher quality, and enhance the tourism experience of customers. This will bring a significant change to the human resources strategy of the global tourism industry.