Artificial Intelligence (AI) is revolutionizing the tourism sector by enhancing customer service, personalizing experiences, and optimizing operations. This systematic literature review identifies key challenges in implementing AI tools for experience co-creation in tourism, categorized into technological, organizational, social, human, and ethical dimensions. AI tools like chatbots and predictive analytics improve service delivery and personalize tourist experiences. However, challenges include fragmented data sources, high implementation costs, resistance to change, and a lack of technical expertise, particularly among SMEs. Ethical concerns regarding data privacy, security, and potential biases further hinder AI adoption. Organizational challenges involve financial investments, resistance to AI technologies, and significant operational changes. Social and human factors such as consumer trust, the need for human interaction, and aligning AI tools with social and emotional needs complicate integration. Solutions include developing robust data management practices, fostering industry collaboration, investing in employee training, and establishing clear ethical guidelines. Addressing these challenges is crucial for leveraging AI’s potential and achieving successful experience co-creation in tourism. This research lays a foundation for future studies and practical implementations, aiming to democratize AI benefits across all tourism sector stakeholders, especially SMEs, to enhance overall tourist experiences.