Airbnb, Uber, Booking, Hilton: The Risks AI Poses on Business

Executives at companies like Airbnb and Booking Holdings have been talking for over a year about plans to implement the latest advances in artificial intelligence.

The CEO of Airbnb, in particular, made multiple mentions in the latest earnings call about how AI could fundamentally change the way the company operates — a topic he has discussed many times.

Executives tend of focus on the positives when talking about generative AI.

Companies were more candid in annual reports published over the past month. While they highlight worst-case scenarios, it’s the first time so many travel companies have made such pointed statements about the risks of AI.

Below are the biggest AI-related threats that travel giants are keeping an eye on, according to those reports. 

Pressure from Competitors 

The latest advances in AI have led travel giants to explore how they can strengthen operations, streamline business processes, and release new customer products. 

Meanwhile, the buzz has inspired the birth of new travel startups, like trip planners and software for back-office tasks. 

Industry incumbents are aware of the competition among one another and the startups that seek to push them out or get acquired. 

Booking Holdings: “The competitive pressure to innovate could encompass a wider range of services and technologies, including services and technologies that may be outside of our historical core business, and our ability to keep pace may slow. Emerging start-ups may be able to innovate and focus on developing a particularly new product or service faster than we can or may foresee consumer need for new services or technologies before we do.”

Hyatt: “Our competitors or other third parties may incorporate AI into their offerings more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our results of operations. Our competition may have access to greater financial and technological resources, giving them a competitive advantage in recruiting, motivating, and retaining sought-after AI professionals.” 

Tripadvisor: “In July 2023, we launched an AI-powered travel itinerary generator which creates personalized travel itineraries using OpenAI’s generative artificial intelligence technology…There is no guarantee that our itinerary generator or other artificial intelligence focused initiatives will be competitive or attract more consumers to our platform.”

Uncertain Regulatory Future

There’s been a big push from governments, particularly in the U.S. and the European Union, for more strict regulations around what AI companies are allowed to do. The Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence is an executive order by the U.S. presdient meant to produce guidelines for the development and use of AI. The EU plans to soon implement its own regulations through the Artificial Intelligence Act.

Because AI is advancing so quickly, the laws have not been able to keep up. Travel companies recognize that laws likely will change more in the coming years, and that could affect some aspects of their businesses. 

Airbnb: “New laws, guidance, and decisions in this area may limit our ability to use our machine learning and AI, or require us to make changes to our platform or operations that may decrease our operational efficiency, result in an increase to operating costs and/or hinder our ability to improve our services…Moreover, the intellectual property ownership and license rights, including copyright, surrounding AI technologies has not been fully addressed by courts or laws or regulations, and the use or adoption of AI technologies into our offerings may result in exposure to claims of copyright infringement or other intellectual property misappropriation.”

Uber: “AI use or management by us or others, including decisions based on automated processing or profiling, inappropriate or controversial data practices, or insufficient disclosures regarding machine learning and algorithms, have and could impair the acceptance of AI solutions or subject us to lawsuits, regulatory investigations or other harm, such as negative impacts to the value of our intellectual property or our brand.” 

Tech Limitations 

There have been countless examples of generative AI producing inaccurate answers. Air Canada recently got a lot of press for being ordered to refund a passenger who got bad information from a chatbot on the company’s website. 

Travel companies are wary of such issues continuing. 

Uber: “AI algorithms or automated processing of data may be flawed and datasets may be insufficient or contain biased information, which can create inaccurate or discriminatory outcomes.” 

Tripadvisor: “These deficiencies and other failures of artificial intelligence systems could subject us to competitive harm, regulatory action, legal liability, and brand or reputational harm.”

Cybersecurity and Fraud

Companies can use AI for benefit, but scammers can also use it against them.

Expedia: “The rapid evolution and increased adoption of AI technologies may increase the risk of fraudulent bookings and fraudulent supplier scheme risks. Any of these events could have a significant negative effect on the value of our brands, which could have an adverse impact on our financial performance.”

Choice Hotels: “Cybercriminals have increasingly demonstrated advanced capabilities, such as use of zero-day vulnerabilities (undiscovered security gaps in tech applications), and rapid integration of new technology such as generative artificial intelligence.”

Hilton: “The sophistication of efforts by hackers to gain unauthorized access to information systems has continued to increase in recent years and may continue to do so at an accelerating pace as criminals leverage generative artificial intelligence-based technologies and services.”

Increasing costs 

It’ll take a lot of work for companies to overhaul operations as they predict could happen with AI. 

That would be expensive, especially if it does not pay off in the long-run. 

Uber: “The rapid evolution of AI may require us to allocate additional resources to help implement AI ethically in order to minimize unintended or harmful impacts, and may also require us to make additional investments in the development of proprietary datasets, machine learning models or other systems, which may be costly.”

Booking Holdings: “Uncertainty around new and emerging AI applications may require additional investment in the development of proprietary datasets, machine learning models, and systems to test for accuracy, bias, and other variables, which are often complex, may be costly, and could impact our profit margin as we expand the use of AI technologies in our offerings.” 

Hyatt: “AI programs may be costly and require significant expertise to develop, may be difficult to set up and manage, and require periodic upgrades. There is also a risk that we may not have access to the technology and qualified AI personnel resources to adequately incorporate ongoing advancements into our AI initiatives, including access to the licensing of key intellectual property from third parties.”