Artificial Intelligence is business-critical; ignore it at your peril
Integrating AI into their tech infrastructure will become de rigueur if hotels want to keep their profit margins in the black
It’s time for the next revolution in hospitality. No, this is not about better rooms or improved guest services or even loyalty programmes. Rather, this is about the next level of hospitality that technology such as Artificial Intelligence (AI) is ushering in. Not paying heed or adapting themselves to the changing tech landscape could cost hoteliers dearly in the coming decade. Also, don’t bother demarcating which AI-led decisions will impact revenue — each one of them will!
Of course, AI is not just impacting hospitality but multiple other aspects of our lives. Founded as an academic discipline in 1956, the traditional goals of AI research include reasoning, knowledge representation, planning, learning, natural language processing, perception and the ability to move and manipulate objects. Microsoft has just bet a billion dollars on AI.
So, how is AI going to impact hospitality? While it might be simpler to list what it will not impact, let’s look at what will, instead. AI is driven by big data — vast quantities of it – at its base (guest provided, of course). AI will crunch, digest, analyse and diagnose the data at never before speeds, helping hotels understand their guests better and serve them better. Nascent yet, AI looks to be the most important determinant of how hotel revenues will rise, or fall, in the future. A quick reminder, AI doesn’t affect only one aspect of operations, and hotels will need to learn how to employ it according to their specific needs.
Getting to really, really know you
AI streamlines processes, provides insights and enhances experiences, making for a new wave of responsive, guest-centric hospitality in which each guest can be uniquely tracked. Wherever you stay around the world, AI could make it possible for the hotel team to know that you want your coffee decaf with a dash of cinnamon and two ‘sugars’ or that you need your suit pressed before turning in each night. That you have a pumpkin or okra allergy — and if AI gleans that information, you will never have to face either, whichever part of the world you travel to. Suddenly, AI doesn’t seem so bad, right?
AI takes personalisation to a new level. From the hotelier’s point of view, a greater level of guest familiarisation will help hotel offer services uniquely catered for you — saving staff time and labour and impacting bottom lines. Predictable guest preferences in room type, food choices, toiletries, pillow types, rewards points usage, especially for the business traveller, could keep drawing him for repeat stays — the cherished hospitality goal. Given that hospitality is largely dependent on reputation driven by guest experiences, AI is flattening the space where a larger hotel or hotel chain is suddenly at the same level as a small boutique establishment and can offer similar quality of service. It is also helping better correlate the tenuous equation between customer information and preferences.
Globally, major hotel brands have already started using AI, visible to the guest mostly as chatbots. Hilton’s AI concierge, Connie will probably go down in history as the first true AI-powered concierge bot. Connie uses the computing power of IBM’s Watson AI and travel database WayBlazer and can advise guests on local attractions and interesting sites. Cosmopolitan, Las Vegas, boasts of Rose, fairly chatty for a chatbot, while the Edwardian Hotels have—perhaps unsurprisingly—Edward, who "is designed to deliver exceptional experiences for guests who prefer digital brand interaction", according to the group.
Booking for dummies
A pain point that AI could potentially soothe is booking, especially when done through third-party sites. Just look at the twitter feed of a major Indian aggregator such as makemytrip.com, and your confidence in their business model might falter, such is the vituperative invective poured against it. AI holds the promise of personalising this process, effectively recognising the guest as a unique person — and deal with their bookings and preferences smoothly. AI-driven chatbots are likely to make the process more interactive too, further ensuring foolproof bookings. If you thought GDS had simplified life, well, AI-driven services will go beyond by making relevant information and requests available to guests, again freeing up staff. According to a study, customers stay on for an average 15 seconds on a hotel’s website, before leaving—so the experience within that time frame has to be quick and leave a positive impact, which chatbots could ensure.
From the hotelier’s point of view, dynamic pricing will help them understand rates beyond the peak season or weekends. AI’s forecasts are predicated on dynamic occupancy patterns and multiples of secondary sources of information. AI’s number-crunching abilities will help set optimum rates, especially for those harder to comprehend off-seasons. Perhaps it is not surprising that an early leader is AirBnB, which is using AI to recommend host pricing — the secret to its pricing.
Of course, AI will also help reduce labour costs by shifting multiple tasks to automated processes, though this is more likely to benefit in a market where the labour costs are higher. Almost all estimates predict upgrading software or robots will be cheaper than rising labour costs.
Predictive analysis and interpretation—the real benefits of AI lie in the backroom strategizing. AI’s ability to read and understand data means it identifies trends at never before speeds. What are the occupancy and room rates for your competitors at any given point of time? Which category of rooms is selling faster and at what rates? What are guests ordering most from the in-room dining menu or indeed at the restaurants? Which ancillary services are the most popular and attracting the best margins? AI should have the answers faster than you frame the question.
Hotel maintenance and inventory management is another area of benefit as an automated inventory strategy helps predict what items need to be acquired, which are in surplus, and when a particular item will be needed. AI should be able to use occupancy data and guest feedback to predict the order of repairs, allocate or schedule tasks and even make changes to deliver the best return.
For hotel chains, AI will be able to align larger data trends — seasonality of rates, which destinations or even micro markets have higher rates or falling demand. It will help enormously in future planning — using data where new hotels could be located and which category would be best suited for which location. It will be easier to predict the kind of conferencing and banqueting facilities a hotel will need to create — an increasingly crucial component in revenue generation in India, especially with a vision to plan for the future. In India’s vast hinterlands, this factor would prove crucial. Forward-looking predictive analytics, supported by AI, will aid hoteliers to discover emerging trends and better identify revenue opportunities.
To re-stress, it is increasingly becoming clear that the social media posts or reviews need to be positive for hotels to reap benefits—for that directly impacts bookings and bottom lines. But morning meetings, where the dreaded social media reviews are seen, might soon be a thing of the past. AI will help hotels scan reviews and social media posts at lightning speed, providing them with the ability to receive real-time feedback if they so desire. AI can be designed to amplify positive feedback. Some hotels globally, such as W Barcelona, have already begun employing chatbots.
AI = job loss?
A crucial question, often tiptoed around—is AI going to take away jobs? Well, that depends. There are already hotels that employ robots and yes, they have replaced humans. However, AI-led technology is far more likely to impact jobs that are mundane and repetitive. For the foreseeable future, AI-powered revenue management systems will require human interaction and direction for the best outcomes. Hotel managers need to embrace AI, pass on repetitive tasks and concentrate on areas where they can add more value to their hotels. As with every other sector, big data is likely to take away some jobs and create others. And yes, as with every other aspect of technology, it is going to evolve.
So yes, AI will impact revenue management. It will ensure optimum pricing. It will reduce costs and improve the guest experience.