Tech Explained: Here’s a simplified explanation of the latest technology update around Tech Explained: Travel firms tune into AI tech big time in Simple Termsand what it means for users..
According to a 2025 report by McKinsey and travel platform Skift Travel, the number of travel companies using AI jumped to 35% in 2024 from just 4% in 2022. Aloke Bajpai, cofounder and CEO of Ixigo, said online travel has been growing at double digits in India in the last few years, which is not just because of pent-up demand after Covid but also the result of change in consumer behaviour, who are spending more on travel experiences.
“I think we are sitting at a moment in history where we’ll look back and say that this was a time when companies which actually leveraged GenAI to improve customer experience and build new use cases, were able to grow faster,” Bajpai said. Many online travel companies going aggressive on AI raised funds from venture capital firms in 2025.
For instance, Scapia raised $50 million in a round led by Peak XV while Dutch firm Prosus took a 10% stake in Ixigo for $146 million. RateGain, a listed travel company, acquired AI travel startup Sojern to double down on its AI initiatives.
Other startups that raised funding in 2025 include Holiday Tribe, and Passprt Trips. Beyond reducing operational cost and improving productivity, AI also has specific use cases when it comes to travel.
The McKinsey report, noted that when over 200 flights were cancelled owing to a typhoon, AI tools helped the firm reschedule the flights in two hours, when it would have taken close to 10 hours prior. In India, travel platforms are using AI for customised travel, and answering customer queries.
Anil Goteti, founder of Scapia, said they have launched Scapia Experiences, which are AI-enabled services to improve consumers’ travel experience by shortlisting options based on their interests. The AI platform, built on top of frontier models, will vet experiences and offer personalised limited choices.
The firm is now working on a similar platform for flight and hotel booking as well. Ixigo is investing 25% of the investment from Prosus to develop an AI platform, currently dubbed as ‘NewCo’, within the firm. Rajnish Kumar, group CTO, Ixigo, said while these are early stages, the focus is on hyper personalisation based on the data the company has.
Challenges
While there is lots of enthusiasm, there are challenges too. The McKinsey report pointed out that despite interest in AI, the travel and hospitality sector lags behind others in terms of AI maturity, as many of the efforts have not scaled throughout.
Ixigo’s Kumar agreed that for incumbents, AI presents a huge risk and a sense of urgency is important, given that timelines for product development have been compressed, with new-age companies reaching $100 annual recurring revenue in a short time.
“The tech is revolutionary and companies need to reinvent themselves,” he added. Another challenge is there is no clarity on how AI will shape travel. Scapia’s Goteti admitted that while the company is working on multiple AI projects, not all of them will succeed. “But this is an evolution and we need to be ready,” he added.