Implications of AI for Travel Advisors: Final Cautions
by Paul Ruden /As promised, this final article in the AI series will address evaluating business performance and acquiring or disposing of a business.
Measuring Agency Performance
I and many others have long recommended conducting at least a year-end evaluation of how the agency business is performing. This applies equally to individual independent contractors operating LLCs from home offices and larger multi-advisor agencies. Such evaluations can reveal the return on invested capital and identify opportunities to make the business more efficient, profitable, or satisfying.
The process becomes much easier if the business has a formal business plan. By comparing the year’s results against the plan, you can determine how well each aspect of the business performed and what changes might improve future outcomes. Reliable information about competitors can also be valuable, though it can be difficult to obtain. If accessible, it may serve as a useful benchmark.
AI tools might provide insights here but come with caveats. While AI may generate information about competitors or broader industry trends, the reliability of such data must be carefully evaluated. AI-generated content—such as reviews or performance summaries of other businesses—often lacks transparency regarding its sources, so approach such data with caution.
One potential benefit of AI lies in compiling industry data for benchmarking purposes. To ensure accuracy, verify the sources AI uses to produce its analysis. Sampling the sources can confirm the data’s authenticity. Comparisons must involve businesses with characteristics similar to your own—a judgment call requiring careful consideration.
Acquiring or Disposing of a Business
Buying a business, whether as a start-up or as part of a merger or expansion, is one of the most significant decisions a business owner can make. I strongly advise seeking competent accounting and legal counsel to ensure the acquisition is structured effectively. This support helps avoid overpaying, uncover hidden risks, and craft favorable terms.
AI tools can aid in this process, but caution remains essential. AI’s predictions are only as good as the data they’re based on, and past performance is not always an accurate predictor of future outcomes. If an AI analysis raises red flags or seems inconsistent with your business instincts, investigate further. Mistakes in evaluating the future productivity of acquired assets can lead to irreversible financial setbacks unless fraud is involved and could not have been uncovered through proper diligence.
Traditional methods for assessing the value and future potential of acquired assets remain indispensable. AI can supplement these tools, but professional advice is critical. In the travel retail sector, finding advisors with relevant experience can be challenging, so choose carefully. Seek recommendations from colleagues and verify advisors’ affiliations with industry organizations such as ASTA.
As a final note, the current economic and political climate is particularly unsettled, with potential shifts in taxation, government budgets, and the broader economy. These uncertainties elevate the risks associated with major business decisions. While AI can analyze past economic trends, it lacks the context to fully understand or predict the implications of unprecedented developments. Proceed with caution, and rely on experienced professionals to navigate these turbulent times.
Previous articles in the series include How AI Can Promote Your Travel Agency, The Legal Implications of AI, and More of the Legal Implications of AI.