How AI is Transforming Consumer Loyalty in the Travel Industry

Artificial intelligence (AI) is transforming the travel industry, reshaping how businesses interact with customers and significantly impacting consumer loyalty.

From automating processes to creating personalized experiences, AI plays an increasingly new role in enhancing the traveler's journey while keeping customer satisfaction and retention at the forefront.

Personalization and Proactive Support

One of the key benefits of AI in the travel industry is its ability to offer personalized recommendations and proactive support. AI systems can analyze vast amounts of data, from travel history to preferences, and offer tailored suggestions, such as recommending flights or hotels that align with the traveler's needs.

As Noopur Bakshi, former Senior Director of Product Management at Hewlett Packard Enterprise, says on a recent episode of The Frictionless Experience:

"So that's really how I see where you find the balance that you're not creepy because you have built that relationship over time and you have asked the customer, I know this about you, is this good? Okay, well, now I know this, right?..Like it doesn't come out of the blue, it's about building that relationship over time."

AI's capacity to anticipate a traveler's needs without overstepping into the "creepy" territory builds trust. By focusing on previous customer interactions, AI can predict when customers need to book a new trip or provide relevant updates during their travel, such as notifying them of flight delays or cancellations.

Noopur adds:

"If it's something that was built over time and I'm expecting it, I think that's how you take that creepiness element out of it."

This kind of proactive communication removes friction during travel and fosters a positive experience, which is essential in retaining consumer loyalty.

Frictionless Yet Human-Centric Experiences

While automation is often seen as the key to providing a frictionless experience, human interaction remains critical in certain situations. AI can automate more straightforward tasks, such as booking flights or resetting passwords, greatly reducing friction.

However, more nuanced issues still require the empathy and problem-solving skills of human agents. Noopur's experience with Delta Airlines, for instance, illustrates this well.

She recounts an urgent situation where she had to fly back due to a personal emergency and called Delta's customer service to rebook her flight. She says:

"Technology doesn't yet know that, right? It's not sentient…Technology cannot take that human emotion and translate it into the right next best action."

In this situation, AI alone couldn't solve the problem; human intervention was crucial to handle the complexity of her situation.

In fact, necessary friction can enhance consumer loyalty. When things go wrong, having a human agent who can understand the traveler's emotional state and offer solutions is invaluable. As Bakshi explains, "It's not about how many times things went wrong. It's about how you recovered from how many times those things went wrong."

AI and Trust: The Risk of Mismanagement

While AI is incredibly powerful, its use in customer service must be carefully managed to avoid costly mistakes.

A recent example from Air Canada highlights the risks of relying too heavily on AI without proper oversight. In this case, a chatbot incorrectly promised a customer a refund, which the airline later refused to honor.

The customer sued Air Canada, and the airline's defense was bizarre: they claimed the chatbot was its "own entity" and thus, Air Canada couldn't be held liable for its promises. As Noopur puts it: "They didn't do the due diligence in terms of what the chatbot was able to spit out."

This incident underscores the importance of human oversight in AI-driven customer interactions. AI is not yet capable of fully understanding the nuances of human emotions or legal obligations, which can result in significant errors.

As Noopur emphasizes: "AI is still in its very fledgling state… you have to do it really with caution because AI is still emerging".

Without adequate supervision, companies risk not only alienating customers but also facing legal and reputational damages.

Loyalty Programs Powered by AI

AI is also reshaping loyalty programs in the travel industry.

By analyzing customer behavior, AI can create more dynamic and personalized loyalty programs that cater to the unique needs of each traveler. For instance, AI can predict when a frequent flyer may benefit from an upgrade or offer special deals during certain seasons, fostering a stronger emotional connection to the brand.

Noopur shares the significance of loyalty in her own travel habits, especially when discussing Delta Airlines' service.

"I pay a lot more for several of my flights because Delta is just more expensive. But will I walk away from it? No, because that every single time Delta's had my back."

This emotional connection is where AI can play a role in continuously rewarding loyalty and providing perks that resonate with the individual traveler.

Striking the Right Balance: Leveraging AI in Travel While Preserving Human Connection for Lasting Loyalty

AI is revolutionizing the travel industry by enabling businesses to deliver personalized, proactive, and frictionless experiences. While automation can streamline processes, the human touch often seals the deal when it comes to customer satisfaction and loyalty.

As companies continue leveraging AI in their operations, they must carefully balance automation with empathy and trust, ensuring that AI enhances—not replaces—the human connection that keeps travelers returning.

Incorporating AI thoughtfully will allow the travel industry to maintain consumer loyalty even as technology continues to evolve. However, businesses must tread carefully, as mismanaged AI, like in the case of Air Canada's chatbot, can lead to serious customer dissatisfaction and even legal consequences. Balancing AI's capabilities with proper oversight and maintaining the human touch will ensure long-term loyalty and trust.