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AI implementation in hotels today: Busting the myths and truths

Last Updated: September 25, 2023|Categories: Blog|Tags: , , |10.6 min read|

Breaking down the myths and truths of AI implementation in hotels

According to Hotel Technology news, 94% of C-level executives believe that Artificial Intelligence (AI) would impact their companies within five years. And yet, only 49% of the respondents believed that the hospitality industry ranked at an average or below average adoption rate for AI implementation.

If you are looking for a practical way to apply AI technology to improve guest communications consider giving our AI-driven digital concierge a trial.

What you will see here 

“Myths” about AI implementation in hotels

Just a few years ago, IDC – Worldwide Hospitality predicted that by 2019, AI will have been adopted by 60% of hotels worldwide. While the pandemic has undoubtedly impacted the speed of implementation, many hotels have only just begun with their technological initiatives.

In fact, the hospitality industry is quite behind in its AI implementation. And this could be due to many misconceptions about the practical applications of AI in resorts and casinos.

Let’s look at some of the common “myths” about implementing AI in hotels.

AI can replace 100% of hotel staff

Yes, the hospitality industry is facing a workforce crunch, but that doesn’t mean you can replace your staff with AI. While there may be a significant increase in AI support over the next decade (concierges, room service delivery, cleaning), it can never replace your human staff. In fact, one hotel in Japan tried it (100% AI staff of 243 robots), and it failed.

What AI can do is reduce the manual workload on your staff. Imagine if all repetitive questions from your guests were routed through an AI concierge, handling over 80% of queries. Suddenly your staff has more time to focus on guest-centric tasks, improving your guests’ relationships automatically.

AI can only be run by data scientists

Training AI algorithms are considered to be a highly technical task for data scientists. Luckily, this is a myth. While the creation of AI technology does require deep expertise in programming languages, many of today’s AI software tools are “programmable” by the business users themselves.

Many applications (such as digital concierges) use the same information your front desk or support staff uses to train the AI system to respond. For example, Facebook lets you create a chatbot in minutes to your page without any programming knowledge required.

While IT specialists are needed to integrate AI with your existing systems, most programs are designed to interact with the end-users (meaning your staff and guests) with ease.

You need deep pockets to implement AI

A common misconception hotel owners have about AI is that it requires a high investment to deliver results.

While AI-level robots (think drones, self-driving cars, and robots) certainly cost a pretty penny, these aren’t the only applications that can benefit your hotel. There are many cost-effective applications of AI in hotels that can begin to pay for themselves within the first year.

For example, businesses that use AI-powered chatbots in customer service operations save around 30% of their investment over corporations that avoid bringing AI into use. Voice assistants like Siri, Alexa, and Cortana are all AI-powered applications common in households across the US today and can add tremendous benefit to your guest experience.

AI is a tool for the big hotel players

Nope. Wrong. AI can be implemented regardless of the size of your hotel. Small hotels can also leverage the benefits of AI based on how it is deployed.

AI-based face recognition, for example, can alert the front desk to the guest’s name, length of stay, etc. This elevates the guest experience regardless of the size of the hotel or the number of guests.

Similarly, a digital concierge can upsell based on their previous interactions with the guest. What matters here is not the size of the hotel but the information from the guests’ previous stays.

AI is an impersonal way to interact with guests

Your guests are changing, and so are their preferences. Millennials and Gen Z are driving a lot of those changes. While baby boomers are more likely to prefer human interactions, younger generations are more optimistic about AI.

Hoteliers have already begun to understand that next-gen guests prefer to self-serve in many ways. With the evolution of AI into practical applications, guests can experience seamless, real-time benefits. These guests are also aware that AI can offer them more personalized service and be available 24/7, making it easier to find answers.

Additionally, AI can even offer a level of personalization for guests or potential guests who have never interacted with your hotel before. By crunching vast amounts of data, AI can create micro-segments that hotels can use to create more ideally suited offers and have higher chances of conversion.

“Truths” about AI implementation in hotels

Many in the hotel industry believe that the best use of AI and Machine Learning (ML) is limited to revenue management.

A large part of this belief is due to the association that AI has with data and analytics.  But the truth is that AI can be used beneficially across several hotel operations, including guest relations, social monitoring, waste reduction, and personalization.

Let’s take a look at some of the real results that AI can achieve for hotels.

AI can help hotels intelligently monitor online mentions

AI is helping hotel managers stay on top of both positive and negative reviews. The thinking behind any review is to be heard, but sheer volume sometimes makes that difficult. Intelligent tools can now monitor online comments and mentions of your hotel’s name. Managers can even leverage AI to understand the sentiment of what people are saying about your hotel.

The luxury chain Dorchester Collection used machine learning to further understand what travelers felt about their stay. By analyzing reviews across multiple sites, Dorchester uncovered that their guests valued their breakfast, which many wanted to be customized. As a result, the hotel removed the breakfast menu and allowed their guests to order whatever they wanted, improving their reputation amongst their guests.

AI can also shed light on a guest’s experience during their stay. Imagine your guests are posting pictures of their room views on social media. Wouldn’t it be great if your hotel relationship manager was notified once the post went live? Imagine if you could respond on the same channel with a relevant offer, to showcase an even better view.

AI can help you capitalize on the positive mentions and quickly tackle the negative ones effectively and at scale. It can also help you process data to use for upcoming travel information in order to make timely offers.

AI can help you optimize occupancy and forecast demand

Your property may already be optimized for the winter season or summer vacation, but what about concerts or special conventions in your area?

As travel fluctuates based on season and occasion, it can be challenging to understand its impact on your occupancy. Artificial Intelligence brings together data from multiple sources, enabling your hotel to gain more insights. Understanding how these factors may impact your business can help you anticipate occupancy patterns and pricing.

AI can adjust pricing effectively to ensure you capitalize on demand. Advanced algorithms enable hotels to compete in the market by altering room pricing and optimally impacting your RevPAR. By understanding the patterns in demand, hotel managers can optimize occupancy to maximize profit.

A great example is a hotel chain called the Red Roof Inn in the US, which used AI to analyze weather and flight data. By anticipating flight cancellations, they created a marketing campaign that captured the attention of the guests affected. The hotel saw a 266% rise in non-branded mobile bookings!

Additionally, with more information on upcoming events, marketing tactics can be tailored for improved performance.

AI can help you build a bigger picture about your guests

Advanced algorithms have begun to help hoteliers unlock new levels of guest understanding. By using AI to bring together various data sources, hotel managers can build an accurate, centralized guest profile.

Additionally, the advantage of AI is that data intelligence is a constant and ongoing process, which means it can be continuously improved. Especially as your guests interact with your hotel. Every data point from their food preferences, room preferences, and alcohol choices can be added to construct a complete picture of your guest. And with this information, hotels can individualize their service and personalize the guest experience to new heights.

AI can help predict utility use and minimize wastage

Large hotels and casinos will find the application of AI to reduce their costs when applied to utility management and waste reduction. AI has been deployed in hotels to cut food waste in hotel kitchens. It has been seen to decrease food costs by 2-8% by helping restaurants and kitchens track food waste.

Another similar application of AI is the prediction of utilities (energy, water) usage and costs. Algorithms can be used to track consumption against predictive models and manage yearly performance.

Hospitality sustainability will soon be driven by AI tools in order to help hotels maximize energy usage. Hotel chains can even link in-room energy systems to their PMS so that air conditioners automatically turn off when unoccupied.

AI can help hotels achieve true personalization

ML-powered technology today enables hotels to go beyond the standard Hello <INSERT NAME> level of personalization. Imagine being able to offer guests upgrades based on their previous preferences at a price that you know your guest is comfortable paying.

With true AI personalization, a hotel can generate special offers at any point during the guest pathway, including booking, the pre-arrival period, and at the front desk. Hotel brands can monetize and leverage room features based on an understanding of guests’ preferences which can’t otherwise be captured by standard room category definitions. Machine learning can crunch hotel room and booking data to take advantage of room inventory for guests to make quicker decisions.

AI can interact intelligently with guests on your behalf

The use of AI-driven chatbots is already common across the hospitality industry. In fact, chatbots are capable of handling about 50% of users’ post-booking accommodation-related requests. It’s also known that 75% of customers preferred chatbots for self-service options to get answers to simple requests, which makes chatbots a perfect option in this case.

But the advantage of an AI-based guest communication solution is that it provides more than keyword-driven responses. Digital concierges, for example, use AI to contextually understand the conversation and reply. This can mean understanding the difference between “what is the WiFi password?” and “why isn’t my WiFi working?” Unlike chatbots, digital concierges do not require specific keyword-driven answers. They are trained using machine learning to understand nuances of personal styles. This can include lingo, contextual questions, and even humor.

In Las Vegas, Caesars Entertainment is using an AI-driven virtual concierge technology to enhance its guest experience. The solution is an automated guest engagement platform, powered by IBM Watson. Studies have shown that guests engaging with the concierge rated their experience five points higher than those who did not engage!

Would your hotel benefit from an AI-driven virtual concierge? Get a demo to see what your guests may be missing.

The more data, the better your AI solution performs

This is a fundamental truth about AI.  Machine Learning (a subset of AI) is essentially a program written to improve itself with more data. An AI program that has worked through ten thousand customer requests will respond better than one which has responded to only a few thousand.

While some incorrectly assume that an AI solution needs to be “plugged in” in order for data to start working, the truth is a bit more complicated. AI programs need to be powered by correct data. This means the data source must be clean and accurate, as well as relevant to the issue being addressed. Remember, the results of your AI program will only be as good as the quality of data being used.

The future is AI driven

The results are in, and AI is here to stay. A 2020 McKinsey Global Survey on AI across industries indicated that organizations using AI as a tool for generating value can now attribute it to 20% or more of their earnings.

As more hotels embrace their digitization, AI will find increasing practical applications across operations to improve processes and impact the bottom line. And with large hotel chains showcasing their AI implementation results, the question only remains as to when the rest of the industry will jump on to the bandwagon.

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