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What Merchants Should Know About AI in the Travel Industry

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What Merchants Should Know About AI in the Travel Industry

Artificial intelligence (AI) has become an integral part of many business sectors. In fact, the travel industry is one of the top 10 industries working with large-scale data.1 From consumers booking trips to operational functions, AI harnesses great opportunity for travel and is transforming the industry in ways that merchants should stay aware of.

AI industry enhancements can be seen in many aspects of payments including operations, consumer touchpoints, and B2B travel. Learning about travelers’ journeys will have an impact on business for merchants, payment enablers, and Fintech leaders around the world.


AI powers operational enhancements

AI-powered travel platforms make self-booking, managing, and navigating trips more efficient than ever, with personalized itineraries and real-time assistance at travelers’ fingertips wherever they go. Merchants who integrate with these systems can better meet the needs of modern travelers seeking seamless experiences.

By leveraging predictive AI data, merchants can not only optimize inventory, staffing, and marketing efforts based on anticipated travel patterns and peak booking times, but also get actionable insights on traveler preferences, enabling data-driven decisions that improve offerings and customer engagement. 

Merchants in airports and other travel hubs can also benefit from AI-driven efficiencies such as faster processing through security and better luggage management. These improvements allow travelers more time to shop, dine, or use services, increasing sales opportunities. One way travel hubs can streamline these processes is with AI technologies like facial recognition and ID verification. Another is with digital twin technology, which creates a 3D digital replica of the airport or train station. Powered by real-time data, digital twins use analytics, machine learning, and AI to assess performance and recommend or implement optimizations, creating a more efficient environment where merchants can thrive.2


Travelers embrace hyper-personalization

Free AI tools are at travelers’ fingertips, and they’re using them to build hyper-personalized itineraries. In fact, one in five adults ages 18 to 34 say they are integrating AI into travel plans.3 AI travel agents, for example, can be used to optimize booking decisions, including recommending specific merchants for accommodations, dining, and activities. 

Merchants can benefit by ensuring their offerings are AI-compatible and prominent within these ecosystems. One way to do this is with Large Language Model Optimization (LLMO). Essentially the AI version of search engine optimization (SEO), LLMO is a strategic way to make web content appealing to AI. In lieu of keywords, LLMO focuses on providing high-quality content based on trustworthy information.4

Researchers at Harvard recently demonstrated how merchants can do this to increase the chances of a product being recommended by an AI-powered Large Language Model (LLM). As an experiment, the Harvard team inserted a “strategic text sequence” into a product information page to emphasize the affordability of the specific product, a coffee maker. At baseline, the coffee maker was never recommended by the LLM, but, after optimizing for it, the machine often became the most frequently recommended product.5

In addition to making simple recommendations, AI travel agents can also provide advanced personalization based on user data with automated decision-making for bookings and rewards optimization. For a deeper level of personalization than free platforms can provide, some travelers have begun using AI travel agent services that use a traveler’s data to craft highly tailored plans, reserving hotels, making dining reservations, and booking tickets for local attractions. These services can also negotiate on a traveler’s behalf and decide what card to use to earn the most points.6

To benefit in these scenarios, it’s important for merchants to ensure they accept a variety of cards so that they don’t miss out on business from travelers looking to use their card of choice. Additionally, as AI tools help travelers decide which payment methods or reward systems to use, merchants offering compatible loyalty programs or rewards can become the preferred choice. 



Hand holding a smartphone with chat messages, highlighting that over 55% of consumers prefer messaging to communicate with companies.


Merchants are also considering how “always on” support provided by AI-powered messaging platforms can enable them to provide 24/7 support. This is critical for resolving issues quickly, especially for international travelers in different time zones. Keep in mind that over 55% of consumers prefer to use a form of messaging to communicate with companies, and 74% want to hear back within an hour of when they messaged.7


AI helps streamline business travel

AI has the power to transform operations, enhance planning, and streamline customer service—but it can also improve the bottom line for business owners and merchants. AI is poised to revolutionize corporate travel, simplifying processes and ultimately saving businesses both time and money.

The power of AI to streamline travel processes is welcome news to both companies and the businesses travelers they employ. When asked about AI, 64% of travel managers said they would like to begin using it to automate some of their responsibilities. As for travelers themselves, 95% would consider using AI automation to support their tasks, including for visa and documentation support (37%) and completing expense reports (37%).8



Illustration of a document with a dollar sign and a passport, highlighting that 95% of business travelers would use AI automation for visas and expense reports.



There are other economic implications to consider as well. For example, VAT taxes, a consumption tax on goods and services bought and sold within and into the EU, can be monitored by merchants to ensure they were properly accounted for, and by consumers to tag what purchases included them—which is helpful for B2B travelers’ expense reports.9


Embedded finance has potential to integrate with AI solutions

 Alongside AI, embedded finance is also transforming the travel industry. Online travel agents have been adopting AI and using data to make more personalized plans and provide better assistance.10 Separately, they have been implementing embedded payments, so customers don’t have to leave the site to book.11

Airlines are also increasing their use of AI while simultaneously adopting embedded finance.12 For example, the International Air Transport Association (IATA) recently launched IATA pay, an instant bank transfer tool for travelers. 

As travel industry leaders embrace AI and embedded finance separately, there is potential for the two technologies to be merged more frequently in coming years—ultimately making it easier for consumers to purchase from merchants based on their travel destinations.


AI will continue to shape the way we travel—and how we pay along the way

AI is transforming the travel industry from operational processes to consumer-facing logistics that the everyday or business traveler must handle. Looking ahead, the synergy between AI and embedded finance is expected to be a key driver for future innovations. 
It’s clear that this exciting technology has already impacted many types of merchants and will continue to do so as its capabilities increase and it is integrated with other technological innovations.

Learn more about other transforming industries, the future of AI , or contactless solutions powering embedded payment in the Discover® network.

 

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  2.  Sims, N. Transforming Future Airports with Artificial Intelligence, Machine Learning, and Generative Design. Burns & McDonnell. Retrieved 10 January, 2025.
  3.  (2024, June 20). MoneyLion. 2024 Travel & AI Trends Report. Retrieved 24 January, 2025.
  4.  Harvard Business Review. (2024, May). How Marketers Can Adapt to LLM-Powered Search. Retrieved 24 January, 2025.
  5.  Kumar, A. & Lakkaraju, H. (2024, September 2). Manipulating Large Language Models to Increase Product Visibility. Harvard University. Retrieved 24 January, 2025.
  6.  Papandreou, T. (2024, August 14). AI Is Transforming Travel: It’s Getting More Personal. Forbes. Retrieved 10 January, 2025.
  7.  (2018). Nuance. Customer Service Messaging trends report. Retrieved 15 January, 2025.
  8.  Sultan, C. SAP Concur. (2024, July 10). Tap into the Power of AI to Transform Your Business Travel. Retrieved 10 January, 2025.
  9. Carpenter, R. & Campbell, D. (2024, July 22). EY. Tax transformation: Adopting AI to drive efficiencies. Retrieved 10 January, 2025.
  10.  Guru Technolabs. (2024, April 12). Top Travel Companies Using Artificial Intelligence. Retrieved 10 January, 2025.
  11.  Lai, P. & Zhang, D. (2024, May 14). Euromonitor International. Embedded Finance Powered Transformation Across Travel – Intermediaries, Lodging, Shopping, and Food and Dining. Retrieved 10 January, 2025.
  12.  Lai, P. & Zhang, D. (2024 October 22). Euromonitor International. Embedded Finance Powered Transformation Across Travel – Airlines, Surface Travel, Attractions and Wellness Retrieved 10 January, 2025.


The information provided herein is sponsored by Discover® Global Network. It is intended for informational purposes, and is not intended as a substitute for professional advice.