skiff take
— Seth Borko
Skift Research believes that generative artificial intelligence represents a $28 billion+ opportunity for the travel industry. It has the potential to transform the way travel is searched, the way businesses serve their customers, and increase operational efficiencies across industries.
Skift Founder and CEO Rafat Ali, Skift Research Director Seth Borko and Travel Tech Reporter Justin Dawes shared in a recent LinkedIn Live session how the travel industry is facing the ongoing development of generative AI. We discussed opportunities and challenges. This discussion can be seen belowWe’ve covered how AI is being used in travel today, the companies deploying these tools, and how Skift believes this technology is shaping the future of travel. It builds on the findings of the recently published Skift Research Generative AI Impact on Travel report.
Large Language Models (LLMs) like ChatGPT, like mobile phones, could cause a wave of disruption and movement in the travel industry, but the sector doesn’t seem ready for it.
Who could have predicted that a new mobile phone would transform the centuries-old travel business? Travel companies that couldn’t adapt to the mobile age and the desktop internet age that preceded it didn’t survive.
Below are excerpts from this industry-first report detailing how Skift Research sees at least four key use cases for large-scale language models in generative AI and travel. These are well-defined markets with moderate to high visibility into the role an LLM can play. This allows you to create an estimate for each amount.
- customer service chatbot: LLM can greatly improve the chatbot experience and make it more convenient for your customers.We estimate that this could be a multi-billion dollar market.
- developer efficiency: Generative AI helps programmers write better code faster. This shortens the development cycle and increases the number of new technologies. We estimate that this could save hundreds of millions of dollars annually.
- Reputation management: AI can enhance your online reputation by assessing customer sentiment and enabling travel agencies to respond to online reviews. We estimate that this could be a multi-billion dollar market.
- performance advertising: One of the key strengths of generative AI is its ability to find, summarize, and present information in an accessible way. This means changing the way travel planning searches are made, thereby making them a significant portion of performance advertising dollars. We estimate that this could be a multi-billion dollar market.
When it comes to time-to-market, operational efficiencies in the form of “co-pilot” tools are already here, and the first impact of AI will be felt on travel. Customer support and reputation use cases are also relatively easy to develop, and we expect these tools to become the second wave of AI in travel. Changes in consumer search behavior and the impact of AI on the travel marketing funnel will likely take the longest.
Our baseline is ~$8.4 billion in AI-generated value in the travel industry. But there are additional, and potentially even more impactful ways AI is transforming the travel industry, but less visibility is given to how these secondary impacts will play out.
For example, AI can not only disrupt travel planning searches and performance ads, but it can also disrupt travel inspiration searches. As a result, all sales and marketing methods during travel will change. Another case is operational efficiency. These need not be limited to developer tools only, AI can lay the groundwork for a wide range of productivity improvements in millions of travel industry jobs. Another scenario we envision is that AI assistants could change the way we integrate complex technology stacks.
These additional categories of ‘dreaming big’ about the impact of AI on travel are more difficult to estimate with true accuracy. But we think it could be a $20 billion opportunity. Combined with baseline market forecasts, artificial intelligence is contributing her $28 billion impact to travel.
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