Successfully implementing AI applications
AI innovations have the potential to revolutionise all economic sectors and to counteract the lack of skilled laborers. A recent study by the McKinsey global management consultancy found that the world market for generative AI such as the ChatGPT text robot could increase Germany's gross domestic product (GDP) by up to EUR 585 billion by 2040. Unfortunately, not every company will be able to hit on the right AI application and use it profitably. We used Eurowings Holidays AI-chatbot "Holly" to scrutinize the preparatory work, the mindset and the circumstances involved:
The Eurowings Holiday platform began using “Holly” in January. Owned by HLX Touristik GmbH, it is the first online travel consultant to offer travel ideas based on individual specifications quickly. Travelers can book entire package holidays immediately which is a first in German tourism. The AI tool takes personal preferences into account and scours through billions of flight and hotel combinations to come up with an ideal package. Those interested can use the portal to find custom-made holidays based on e.g., food preferences, sporting activities, excursions or physical limitations. The more the digital advice tool learns about its customers' wishes, the lower the risk of a bad holiday. The AI tool also takes hotel reviews into account and immediately checks for suitable excursions or available car hire offers.
Planning a holiday with a chatbot
The intelligent text robot was developed by the Hamburg-based startup honeepot. Founded in May 2023 by Torsten Ostmeier, CEO of honeepot, the young entrepreneur is taking part in AI.STARTUP.HUB’s AI Accelerator funding scheme until April. He and his joint founders Dario Peter and Konrad Gulla are backed by five employees and seven experts who have a stake in honeepot GmbH as part of a Virtual Stock Option Plan (VSOP) scheme. Two investors have already come on board. honeepot's core product is the AI-based "honeebot", which allows users to describe their individual needs to the company.
The product is being piloted in tourism regions across the German-speaking countries. Basically, the tool can be used wherever products and services are sold digitally or used for booking. Commenting on the initial phase, Ostmeier says: "We have developed honeebot since early 2023. The tool can offer personalised travel advice and put together the perfect trip. honeebot is the modern advancement of our online questionnaire, which was developed under the old company name.” Tests of honeebot began last November with a closed test group. The application went live on Eurowings Holidays in early 2024 and is fed with travel customer data and information from a hotel database. The underlying cost model is success-based: "There is an initial set-up fee. Then we receive a cost per lead (CPL) and a cost per order (CPO), both of which are based solely on the added value that the company placing the order earns from using our technology," says Ostmeier.
Carlos Esteve Ferrandis, Managing Director of HLX Touristik GmbH, had "Holly developed for the Eurowings Holidays portal. At its peak, Eurowings Holidays sells around 1,000 package holidays daily, but there was still room for improvement. "We couldn't offer enough inspiration and advice to prospective, but undecided customers on the portal. We lost many of them as a result. Those who didn't know exactly what they wanted received too few suggestions and ideas. Only our employed travel consultants were able to do that. But they didn't have time to provide such detailed advice over the phone," says Ferrandis. The search mask integrated into the portal was unable to provide sufficiently personalised results, he pointed out. Meanwhile, "Holly” can serve prospective customers who had only have a vague idea of a holiday initially. "We encourage them and help them make a decision with personalised information. Majorca, Crete and Albania among others are suggested as possible holiday destinations," says Ferrandis, who previously lectured in online marketing at the University of La Salle in Barcelona. The use of the bot has resulted in rising travel reservations on the portal using only the search mask. He added: "On average, customers even spend more money on their trip after receiving advice from the honeebot, presumably because they get a more concrete view of their planned holiday. Then, they have a clearer idea of what they want to book additionally, e.g., sea view or half board.”
All doors are open for AI projects
Several companies plans to use AI, says Ostmeier: "During acquisition meetings, we hear time and again,: 'We simply have to do something with AI.’” However, in-depth talks frequently show that decision-makers have very low expectations and are unclear about the benefits of the technology for their company." Thus, the honeepot team is constantly knocking on potential customers’ doors, but still has to provide information and clarification. Commenting on honeepot's motto, Ostmeier says: "A lot of groundwork remains to be done to outline the enormous potential of AI to customers. We only use AI, if it makes sense and creates added value. That sounds trite, but simply launching Chat GPT on a website to talk is not innovative. The innovation begins later.”
The Eurowings Holidays portal has certain objectives: "Before honeebot, we used a special online questionnaire for customer requests, but it didn't work with AI. We were also interested in 'customer rescue' and improving the conversion rate. Using AI now seems natural. When OpenAI released version GPT-3 in late 2022, we realized how much this technology can actually do and how quickly it is developing. That's when we realised that it made sense for us and that we had to get on board now," Ferrandis says. As his company had worked with Ostmeier in the past, the AI-powered honeebot proved a happy event.
As with any new technology, the introduction of honeebot required a little sensitivity: not all of HLX Touristik’s employees were fans of the bot at first. Some even feared an unfavorable change to their job or tasks. However, management reacted prudently. "We and the honeepot team held an event to introduce our employees to the working methods and potential of AI just to stir up interest. We then organised a workshop with the team leads in each department. Everyone could think about what AI could potentially do for their department. Ultimately, we opted for the marketing use case on the website. We can see quickly whether the use of AI for more bookings is worthwhile. We don't arbitrarily use AI somewhere because that's what we have to do now. The details and development were then coordinated with our marketing department," says Ferrandis. Thus, all those involved in the AI project ultimately pulled together. From an economic point of view, he notes: "The success-based cost model of honeepot is convincing. We compared all the costs incurred with the expected added value and then decided accordingly."
The figures speak for themselves and point to the long-term added value of the AI tool, says Ostmeier. "Our typical customer has 500,000 visits to their website, of which around 40 per cent use the search function. In tourism, a conversion rate of well under 0.5 per cent is common and the average booking price is around EUR 1,500. Our offer is as follows: 20 per cent of people using the search function get a link to our honeebot for a personal consultation. We then send them highly relevant and personalized offers that have a perceived individuality. Our conversion rate is at least 0.7 per cent and our average booking rate is EUR 1,750 - significantly higher than before. This is due to the improved offers that we provide. As a result, our customer has more sales without additional costs and an average conversion rate that is 10 per cent better than before." Asked what AI startups need, apart from good figures, to impress potential investors and clients, Ostmeier has several tips: "Ideally, you should already have a functioning business model with a pilot customer and be able to present corresponding figures. A good team that gives investors the feeling that competent people are working throughout the company is also convincing. The scalability of a product is of course extremely important. Ultimately, presenting a complete case is always good. We have a data warehouse that provides us with concrete figures. I also think it's highly dangerous to make your business model entirely dependent on Open AI and ChatGPT. If they stop providing their large language model, you're finished overnight. So you should definitely look at alternatives. That's what we're doing!"
