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AI helps drive post-pandemic growth in travel and tourism

Artificial intelligence is transforming the way companies and entire industries, including travel and tourism, do business. Companies in market segments such as airlines, hotels, attractions and booking platforms are using AI for a variety of tasks, including gathering and analyzing customer data to predict customer behavior, make relevant recommendations, personalize services and enhance customer experience.

Advances in AI, including generative AI and machine learning (ML), are prompting the industry and consumers to reimagine what it means to plan, book and experience travel. Businesses must reassess how they develop and market their products and services, interact with consumers, and manage their operations.

Travel and tourism companies are using AI to automate and optimize the customer service process, enhance customer experience and operate more efficiently. AI-enabled technology shows up in a variety of places and functions, such as trip planners, booking platforms, check-in systems, automated baggage handlers, smart hotel rooms, face ID security, front desk robots and virtual tour guides.

AI-powered analytics are being used to gather and analyze data on customer preferences, predict behavior, make recommendations and personalize services such as hotel room temperature, lighting and entertainment.

The COVID-19 pandemic had a significant impact on the industry as a result of social distancing guidelines, travel restrictions, moratoriums, passport and visa delays, mandatory quarantines at some destinations, and other measures. Today, inflation and increased travel costs pose new challenge.s

Nevertheless, travel and tourism remain one of the world’s largest industries, expected to continue growing as transportation systems improve, remote work allows more travel, and younger generations prioritize investing in memorable experiences over spending on goods.

The global travel and tourism market
Defining the size and growth of the industry is challenging because it incorporates many industries, including transportation, accommodations, attractions and travel agencies. As a result, the data and statistics can vary.

In its 2023 economic impact research, the World Travel & Tourism Council (WTTC) projects the global market will reach $9.5 trillion this year, only 5% below pre-pandemic 2019 levels, when travel was at its highest. The sector’s gross domestic product contribution is expected to grow to $15.5 trillion by 2033, representing 11.6% of the global economy and employing 430 million people worldwide, almost 12% of the working population.

In the U.S. market, the industry is projected to be worth $3 trillion by 2033, including the amount spent in-country by international visitors and how much citizens of each country spend on their own travel abroad, Bloomberg reported, citing WTTC research.

According to Statista data, the market size of the global travel and tourism sector grew about 41% in 2022 over the previous year, after dropping dramatically at the onset of the pandemic, but remained below pre-pandemic levels at $2 trillion. By the end of 2023, it should grow to nearly $2.29 trillion, surpassing the peak reported in 2019.

In its 2023-2028 forecast, Research and Markets reported that the global leisure travel market size reached $804.4 billion in 2022 and is expected to grow at a compound annual growth rate (CAGR) of 8.75% to $1.33 trillion by 2028. Leisure travel involves casual trips for recreation, entertainment, relaxation and personal enjoyment. 

Future Markets Insights predicts the global tourism market will grow at a CAGR of 5% to $17.1 trillion in 2032, while the International Air Transport Association estimates it will surpass $8.9 trillion by 2026, growing at an estimated CAGR of more than 3.1% from 2021 to 2026.

Based on these forecasts, by 2032 or 2033, the global travel and tourism market should be worth between $15.5 trillion and $17.1 trillion.

Travel and tourism in Puerto Rico
Historically, Puerto Rico’s tourism industry has played a significant role in its economy, creating jobs and comprising somewhere between 2% and 10% (the data varies greatly) of the island’s GDP of about $113.4 billion (World Bank, 2022).

According to WorldData, tourism generated about $2.8 billion in Puerto Rico in 2021, representing 2.5% of its GDP and about 15% of all international tourism receipts in the Caribbean.

The travel and tourism industry has grown significantly since the COVID-19 pandemic, outpacing the U.S. mainland and other Caribbean destinations, Discover Puerto Rico reported. According to the local destination marketing organization, 2021, 2022 and 2023 will go on record as the best years Puerto Rico tourism has had in terms of visitor demand, lodging yields, tourism tax collections and leisure hospitality employment.

Earlier this year, Discover Puerto Rico announced a record-breaking 2022, reporting peaks in revenue, the number of incoming travelers and the number of people the industry employs. The organization also reported the following findings:

  • More than 5.1 million passengers arrived at Luis Muñoz Marín International Airport last year, up 6.5% from 2021.
  • Travel and tourism revenue reached $8.9 billion, a 39% increase over the previous high in 2019.
  • Some 91,500 employees worked in travel and tourism-related jobs, the highest ever in Puerto Rico, up 12.8% from pre-pandemic levels.
  • Group room nights doubled from 2021.
  • A record-breaking fourth quarter, with lodging demand 7% higher than in 2021 and 31% higher than pre-pandemic levels.

And further growth is expected. The WTTC projects tourism spending in Puerto Rico will rise 156% by 2032.

AI will have a hand in growth
AI and e-commerce are expected to drive part of this growth.

Online sales will generate 74% of global revenue and 71% of U.S. revenue by 2027, Statista reported. The rapid integration of AI, big data analytics and the internet of things (IoT) in the tourism industry is propelling the market, R&M noted.

“AI is emerging as a pivotal component in the travel and tourism sector, transforming various aspects of the travel journey, from inspiration to the overall experience. AI’s role in the sector will grow exponentially by 2030,” R&M said in its report “Artificial Intelligence (AI) in Travel and Tourism.”

Travel is expected to grow at an average of 5.8% a year through 2032 – more than double the overall economy’s expected growth rate of 2.7%, global management consulting firm McKinsey said in its report, “The Promise of Travel in the Age of AI,” attributed to ongoing corporate travel recovery and consumer demand for unique experiences.

News is my Business requests for data and insights from local organizations regarding AI’s impact on Puerto Rico’s travel and tourism industry had not been provided at the time of publishing.

Travel agents still in demand
Despite the current and projected growth of AI in the industry, travel agents still have a job to do. The travel chaos caused by the pandemic led travelers to rely on agents to plan and book their trips.

Planning and booking a trip, especially a complex one, takes time and effort many people living busy lives don’t have. A 2023 American Society of Travel Advisors (ASTA) consumer survey found that 50% of travelers are more likely to use a travel adviser today than in the past. More than half, 54%, agreed that “a travel advisor can cut through some of the issues regarding airline fees.”

Travel agents are responsible for almost 77% of the total cruise bookings, 55% of air travel bookings and 73% of travel package bookings, according to Travel Technology & Solutions, a provider of travel agency tech tools.

The U.S. Bureau of Labor Statistics projects that employment of travel agents in the U.S. will grow 3% from 2022 to 2032, about as fast as the average for all occupations.

Author Details
Author Details
G. Torres is a freelance journalist, writer and editor. She’s worked in business journalism for more than 25 years, including posts as a reporter and copy editor at Caribbean Business, business editor at the San Juan Star and oil markets editor at S&P Global Platts (previously a McGraw Hill company). She’s also worked in marketing on and off for decades, now freelancing for local marketing and communications agencies.

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