How hospitality AI is steering hotels toward a smart future

Guest services and hospitality marketing artificial intelligence are a few examples of how hotels are transforming and gaining efficiencies.

In brief:

• AI is transforming hospitality by boosting efficiency and personalization, yet challenges remain in maintaining the industry's human element.
• Hotels must strategically integrate AI, invest in technology, manage data, and train staff to enhance guest experiences and improve efficiency.
• AI integration aims to improve hotel efficiency and revenue, though it must navigate data privacy concerns with strategic investment.

The advancement of artificial intelligence (AI) marks a significant shift in technology, moving from personal content creation to becoming a key driver in business innovation. Its impact is projected to be substantial, with a recent EY report estimating that AI could contribute to a 2.5%-5.0% increase in US GDP by 2033. As this technology integrates into various sectors, it is set to alter the landscape for information and knowledge workers, creating new efficiencies and opportunities.

Different industries will experience the effects of AI to varying extents. Some may encounter disruption, while others, like the hotel sector, are positioned to benefit greatly. AI is expected to introduce new customer service methods, streamline operations, and foster the development of new business models within the hospitality industry.

The transformative impact of AI on the hotel industry is set to refine customer service, enhance revenue management, innovate marketing, and improve operational efficiency. Embracing and capitalizing on AI’s capabilities will be crucial for the hotel sector as it strives to set new benchmarks for industry excellence.

Where is the value?

The core value of AI in the hotel industry lies in its capacity to redefine customer service and operational efficiency. Already, the deployment of AI-powered assistants and chatbots marks the beginning of this transformation. AI will enhance these tools, elevating them to become the primary touchpoint for customer interactions. This advancement will enable contact center agents to provide more precise responses to customer inquiries, allowing hotel staff to address demands swiftly and offering companies the means to craft experiences that resonate with individual guest preferences.

Furthermore, AI’s influence extends to pivotal areas such as distribution and revenue management. Hotel companies are actively seeking ways to diminish their dependence on online travel agencies (OTAs) by encouraging direct bookings. AI can facilitate the creation of novel booking experiences that entice customers to book directly, challenging OTAs to enhance their offerings. In revenue management, AI’s ability to process vast amounts of data can lead to more dynamic pricing strategies, resulting in meaningful improvements to net operating income (NOI).

How to get AI value in the hospitality industry

To harness the full potential of AI, hospitality companies must prioritize its integration into their business models. This transformative technology, much like the digital transformations that preceded it, is set to redefine the industry. Companies must be prepared to embrace the opportunities that arise. The following key steps are essential for hospitality companies to extract the value of AI:

1. Reimagine the business:

It is crucial for companies to allocate dedicated resources — be it an individual or a team — to apply AI within their operations. This group should begin by broadening the company’s understanding of what AI makes possible. Subsequently, they should collaborate with various departments to rethink operations, encompassing customer experience, loyalty programs, revenue management, distribution, and back-office functions.

2. Build the infrastructure:

The development of an AI ecosystem is a foundational step for hospitality companies. This involves establishing four critical layers: AI platforms, data, AI models and AI-enabled applications. AI platforms are the bedrock, providing the necessary tools for AI model development, training, and deployment. Data, both structured and unstructured, forms the core of AI, necessitating meticulous collection, cleansing, preprocessing, and annotation to ensure its utility. AI models are the engines of prediction and task execution. AI applications serve as the user interfaces that leverage AI models to deliver specific services and functionalities.

3. Ensure confidence in AI:

Trust in AI is paramount. Companies must address potential AI risks and adhere to evolving AI regulations. Ensuring the reliability, privacy, and fairness of AI applications is imperative. Establishing a comprehensive AI governance framework, complete with policies and procedures for AI usage, is essential. Additionally, robust cybersecurity measures are necessary to protect the enterprise.

By following these steps, hospitality companies can position themselves to capitalize on the transformative capabilities of AI, driving innovation and securing a competitive edge in the industry.