The travel and hospitality industry is on the brink of a transformation unlike any seen before, driven by the rapid rise of generative AI (GenAI).
Speaking at WiT Africa in Cape Town on March 13, Chris Hemmeter, a venture capitalist from Thayer Ventures who has invested in over 35 travel tech companies worldwide, urged the industry to address its cynicism about what he believes will be a shift that will reshape the entire travel supply chain.
The industry has evolved significantly over the years. It was once built on static marketing strategies before transitioning to new forms of display and distribution. The late 1990s saw the rise of online travel agencies (OTAs), which dominated the sector for well over a decade. More recently, social media has played an influential role in travel marketing and booking.
GenAI is something entirely new. Unlike previous disruptions, this transformation is happening at an unprecedented pace. “What’s different about today is that this isn’t just one player like when Google won the search game. The battle happening here and the acceleration of this game is unprecedented,” said Hemmeter.
Travel is already emerging as a leading use case with 70% of US travellers indicating they will use GenAI for travel planning.
The three waves of AI in travel
Hemmeter described three waves of AI-driven transformation in travel:
- Discovery
- Agency
- Adaptation
The Discovery wave
GenAI is changing the way people discover travel. Traditional keyword-based search, which has shaped travel content strategies for decades, is being replaced by conversational AI-driven discovery. Travellers now engage with AI tools that ask clarifying questions and provide only a few highly relevant recommendations rather than pages of search results. “We are no longer in a keyword search playbook,” Hemmeter explained. “People are asking completely different questions; learning how to converse with these tools.”
This shift poses an existential threat to suppliers who rely on traditional search engine optimisation strategies. To stay visible, travel suppliers must rethink their data structures to ensure their offerings remain discoverable in AI-driven searches. “Suppliers need to think about how their data is structured because, if it’s not visible, it simply won’t be presented,” Hemmeter warned.
The Agency wave
The early signs of this next phase are already emerging, as seen with OpenAI’s Operator, which can complete entire bookings on behalf of users. This shift has profound implications for travel services distribution. It could level the playing field for individual hotels and travel providers, allowing them to be recommended directly without relying on OTAs. However, to take advantage of this opportunity, suppliers must have the right technological infrastructure – what Hemmeter referred to as “pipes” – to support direct AI-driven bookings. Otherwise, OTAs will continue to dominate distribution. “If the supplier doesn’t ultimately have the pipes, that booking will end up with OTAs,” he noted.
The Adaptation wave
The third wave remains undefined but promises to be the most transformative. Hemmeter suggested moving beyond personalisation – a concept he said has been discussed for 15 years but has never fully materialised in travel. Instead, the future lies in true adaptation where AI-driven platforms can understand a traveller’s changing moods, interests and contexts in real time. “Forget personalisation; it doesn’t work,” he stated. “The concept of adaptation is where suppliers have to figure out how to connect content, booking and customer relationship management systems in a way that responds to individual traveller needs dynamically.”
