How the hospitality industry can best exploit AI

It’s hard to recall when technology didn’t play a role in hotel management. Hotel system infrastructure has evolved within a framework of tried-and-tested applications solutions to meet specific needs. These have been employed at almost every step of the business and customer journey, from payment systems to in-room control tablets. Affordable, and quick to implement, it’s easy to see why these off-the-shelf applications have proliferated.

However, the hotel industry’s “short-term fix” technology is stuck in a high-maintenance vertical framework. “Vertical” because all standalone applications must interface with the same core systems in the hotel and a business with a portfolio of fragmented systems, causes unnecessary complexity and duplication of work.

To move forward hotel companies small and large need to be strategic about how they evolve their technology architecture. It's time to re-think.

Open future

The path to future success lies in open platforms, cloud technology and horizontal architectures that abstract hotel systems from channels and in leveraging single data sources of truth to create data-driven insight across all aspects of hotel and commercial operations. In a nutshell, artificial intelligence will be crucial in ensuring the success of future business operations.

Transforming to a cloud-based system platform doesn’t require a “scratch everything” approach. Think of it as a gradual unhooking from traditional technologies and taking the necessary steps towards achieving a modern architecture and cloud-based platform enabled ecosystem.

The benefits of horizontal architecture

Horizontal architecture puts an integration layer in between every single transaction generated by a customer or channel. It abstracts customers from channels and channels from systems so that neither customer nor employee has to interface with separate property management, point of sale system and spa and housekeeping systems.

This abstraction of technology enables you to innovate any component you like without having to worry about the complexity of multiple other applications.

You can innovate a website without having to consider dependencies with any other downstream system or upgrade a hotel property management solutions (PMS) to the latest version without worrying about the point-to-point interfaces of all those systems. So how can travel and hospitality companies use AI to best effect?

From highly personalized customer experiences to targeted advertising, there are endless ways in which artificial intelligence can elevate a hotel’s performance. In the premium hospitality sector, where the art of anticipation is what sets it apart, customers stand to benefit hugely. Here are some examples of where hospitality can best exploit AI:

• Forecasting and revenue management - forecasting and predicting the market and dynamic pricing are hugely important areas because they help drive revenue. By looking at historic patterns of demand, AI can determine what the price should be on any given day, and which inventory should be made available.

AI algorithms can also analyze market conditions, exchange rates, competitor pricing and demand around calendar events to optimize room rates in real-time. Knowing what the likely demand is going to be can also help determine the conditions of sale around a particular room. Are you going to sell a room on a day-by-day basis? Should it be a weekend-only proposition, and should you incorporate a two-day minimum stay?

• Marketing and customer profiling benefits everyone - AI can be used not only to target certain customers but to communicate with them in a more relevant way. Should you need to plug a shortfall in suite sales for example, there is no point scatter-gunning your entire data base and bothering customers who only stay in entry-level rooms. AI can help you find the customers with a propensity to buy what you want to sell.

The next step involves communicating in a way that resonates with those customers. That might involve using certain images (highlighting the spa, certain restaurants and so on) the right language and the right sales points, and then sending that information at the right moment and via the right channels. Make it relevant to the customer and they will likely come back.

AI can also manage data analytics. By segmenting audiences based on user behavior and demographics, AI helps a business to understand its position in the market and identifies opportunities for growth.

• Virtual assistance saves time - AI can facilitate in-room services through voice-activated devices, enhancing convenience for guests. It can also help frontline staff with guest interaction by monitoring conversations and shaping automatic responses while AI chatbots can answer queries, assist with bookings and provide local information as well as providing 24/7 customer service.
• Personalized customer experiences build relationships - the dream scenario for any guest is to be welcomed back by name, perhaps in a favoured room type and with their preferred amenities in place. AI-driven technology in hotel rooms can be used to create seamless personalisation at different points in the customer journey, whether it’s tailored itineraries, restaurant bookings or in-room services, such as adjusting lighting, temperature and entertainment and mini-bar options based on guest preferences. The easier and more relevant the experience the more likely a guest will return.
• Operational efficiencies - there are significant efficiencies to be made. AI can monitor equipment and predict when maintenance is needed, reducing downtime and unnecessary running costs. AI tools can also optimize staff schedules (based on historical data) and expected guest numbers. Lost business can’t be recovered, but you can be better prepared for next time.
• Supply-chain optimization - AI is particularly good at anticipating perishable inventory. The procurement and distribution of perishable goods as well as energy and other resources can all be managed by cloud data. Mapping supply and demand in tandem removes guesswork and reduces overheads.
• Fraud detection and security - by monitoring transactions AI can help prevent fraud and ensure secure payments by detecting uncommon activity in hotel systems and unusual patterns in transactions.

Previously, with multiple applications to contend with, locating a security breach would require a forensic trawl through multiple, siloed operations systems. With all information in the cloud, a security breach is not only less likely, but also easier to detect.

There are also other, more often talked about, ways for AI to play a role such as sustainability and resource management, social media monitoring, travel planning tools and real-time translation.

Key takeaways

Stop spending on standalone applications that duplicate content, functionality, data and point-to-point interfaces with multiple individual systems and plan for a cloud-based future.

Build intelligence by creating a single view of the business by leveraging industrial-scale data from the big tech companies.

Hospitality leaders need modern, abstracted and scalable horizontal technology architecture to create economies of scale. With growth, unit costs come down. This is a fundamental principle and is how hotels can grow profitability and not just scale.

*This article was compiled following interviews with company executives, leaders in AI investment and innovation, and technology companies that use and innovate AI within their applications. It draws on practical experience in innovating solutions that use AI to improve business results.