Travel Companies Refine AI Investment Strategies Amid ROI Measurement Challenges

Travel companies are investing heavily in artificial intelligence, but measuring the return on these investments remains complex, with brands focusing on both financial outcomes and operational improvements to assess AI’s true value.

AI Investment in the Travel Industry

Travel brands are increasingly turning to artificial intelligence (AI) to gain a competitive advantage. However, the benefits of these investments are not always immediately clear. Companies such as Expedia Group, Booking Holdings, Hostelworld Group, and IdeaS are all exploring different approaches to AI, but each faces challenges in quantifying the return on investment (ROI).

Expedia Group views AI as a way to lead the market, particularly through generative engine optimization and answer engine optimization. A company spokesperson described their efforts as “highly experimental” but emphasized the importance of being at the forefront of AI adoption. Similarly, Booking Holdings is tracking the impact of most AI initiatives to ensure resources are allocated effectively, according to Rob Ransom, the company’s chief strategy officer.

Approaches to Measuring ROI

Travel companies are using a variety of methods to assess the effectiveness of their AI investments. Hostelworld Group, for example, is focused on balancing innovation with practicality. CEO Gary Morrison stated that the company aims to be “on the leading edge but not the bleeding edge,” emphasizing agility and efficient assessment. Hostelworld relies on real-world experiments, rapid iteration, and defined success metrics to guide investment decisions. If an AI initiative proves successful, it is scaled; if not, the company pivots quickly.

For consumer-facing features, Hostelworld tracks engagement metrics, including click-through rates and conversion uplift. Internally, the company looks at productivity and quality improvements, though these are not always directly quantifiable. Key indicators of success include operational efficiency, enhanced customer experience, and marketplace competitiveness.

IdeaS, a company specializing in revenue management solutions, focuses on financial performance and productivity gains as primary measures of AI ROI. Klaus Kohlmayr, chief evangelist and development officer, noted that while some applications, like revenue management, are easy to measure, others are more challenging. He also noted that many hospitality organizations lack a formal AI strategy, which can lead to inefficient resource use.

Challenges in Quantification

Not all AI initiatives are equally measurable. At Booking Holdings, the use of AI in customer service—such as chatbots handling traveler requests—is relatively straightforward to assess. The company can track spending and customer impact, providing clear data on the effectiveness of these tools.

However, more innovative uses of AI, such as new ways to search for or plan travel, present measurement challenges. Ransom acknowledged that in these cases, the company focuses first on meeting customer needs and may only later develop detailed measurement strategies. He emphasized that a one-size-fits-all approach does not work and that the company is comfortable with some measurement uncertainty.

Kohlmayr of IdeaS stressed the importance of a solid data foundation for AI success. He advised companies to consider how AI fits within their overall technology ecosystem rather than focusing on isolated systems.

Indicators of AI Success

Despite the challenges, there are signs that AI investments are delivering value. Booking Holdings has observed improved resolution rates, higher customer satisfaction, and lower costs in some areas. Expedia Group reports measurable value from AI through partnerships, product integration, and operationalization at scale. The company aims to meet travelers across various channels, including AI-powered search, and to improve both productivity and efficiency.

Hostelworld Group has achieved the highest ROI from initiatives aligned with its strategic priorities. Morrison noted that even modest investments can yield significant results when they help travelers find relevant connections, increase bookings for properties, and enable the team to develop better tools more efficiently.

Industry Outlook

As the travel industry moves from rapid AI adoption to a focus on accountability, companies are refining their strategies for measuring success. The ability to demonstrate the effectiveness of AI investments is becoming as important as the technology itself. Brands that can prove their AI initiatives are working—through financial results, operational improvements, or customer satisfaction—are likely to maintain a competitive edge as the industry evolves.

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