Impact and Misconceptions of AI in Hospitality

By Prince Thampi, Founder and CEO of Hudini

AI in hospitality is here to stay, but which technologies will immediately impact the industry, and how do we overcome adoption hurdles?

Let’s be clear. Artificial intelligence in the hospitality industry is here to stay. All over the world AI-powered technology is being implemented in hotels in some form or other, and over the next decade AI will evolve to become even more sophisticated, driving a record transformation of the industry.

AI in hospitality globally was valued at USD 90 million in 2022 and is estimated to reach USD 8,120 million by 2033, with a compounded annual growth rate (CAGR) of 60%, according to research by WeMarket. Further to this, research by Colliers International estimates 73% of manual activities in the hospitality industry have the technical potential for automation.  

THE IMMEDIATE IMPACT OF AI

Today, AI fuels hotel technology across a spectrum of features and services already. Here, I’d like to spotlight three areas where I believe AI is poised for significant growth and impact in the industry.

1. Revenue and cost

The strength of AI-driven analytics is the ability to analyse huge amounts of data with a speed and accuracy beyond human capabilities. This is valuable in many aspects of hotel operations, but especially critical in roster optimisation and dynamic pricing strategies. Previously, these used to rely on manual predictions based on historical trends. With data-driven analytics and algorithms, a multitude of variables such as past booking patterns, room occupancy rates, seasonal trends, competitor rates, and even local events can be computed in real-time, allowing hoteliers to make informed pricing and staffing decisions.

• Conversational experiences

Hotels need to be accessible on the same channels as their guests. Chat-based conversations are expected by today’s travellers, and, quite frankly, this is an easy win for hoteliers. Automated and assisted conversations – including WhatsApp, WeChat, Siri, Alexa and Messenger – are the new norm within customer service. What’s more, multilingual AI assistants can bridge language gaps effortlessly by communicating with guests in their preferred language. In the future, we will see more advanced options, such as sentiment detection, emotive conversations, and human-bot cooperations be deployed in customer service. 

• Assistive technology for staff

A digital assistant for hotel staff can help manage daily operations while, at the same time, increase efficiency and alleviate staff burnout. Automated tasks include data entry, digital communication across the property, unified guest communication across multiple channels, guest check-in, and ID registration. Furthermore, assistive tech can automate the verification of guest meal/entitlement plans in outlets, integrate the verification with point-of-sale systems, and present dashboards with a bird’s-eye view of operations and analytics to support decision making.

DEBUNKING MISCONCEPTIONS

Tech adoption accelerated during the global pandemic with the immediate need for contactless solutions. However, looking at other sectors such as retail, banking and e-commerce, it seems hospitality as an industry still lags when it comes to digital transformation. Some hoteliers may not fully understand how AI technology works or how it can benefit their business. This lack of understanding can lead to skepticism and hesitancy about investing in AI solutions. So, let’s look at some of those misconceptions.

AI is expensive
It is a common misconception among hoteliers that a huge investment is required to deliver results. The truth is that there are many cost-effective AI applications that start giving a return on investment within the first year. For example, at Hudini we have seen customers using chatbots in customer service operations save 15-30% man-hours per year, and savings of 60-70% man-hours per year with AI powered check in solutions.

AI is only for large hotel chains
No, size doesn’t matter. Independent and small hotels can also leverage the benefits of AI depending on how it is deployed. Face recognition, for example, can be implemented for compliance purposes and guest convenience regardless of the size of the hotel, and a digital concierge can upsell in any type of hotel based on existing guest data.

AI is impersonal
58% of guests feel that AI improves their hotel booking and stay experiences, according to Hotel Tech Report. Personalisation, made possible by AI-powered data handling, is key here. Also, future generations of guests, such as Millennials and Gen Z, prefer contactless self-service available round the clock. AI in customer service, such as chatbots, automated social media messaging, and push notifications can reply instantly to inquiries 24/7.

AI will replace the hotel staff
No, AI will never replace all the staff human staff and the work they do. In fact, one hotel in Japan tried operating with 100% robot staff, and it failed. Instead, AI increases staff productivity by handling manual and repetitive work, for example check-ins, standard guest queries, and wake-up calls. 70% of guests find chatbots helpful for simple inquiries but prefer human interaction for more complex requests, according to Hotel Tech Report.

AI cannot be integrated into the existing software
Yes and no. AI might not integrate into the existing software unless vendors upgrade their products, but it can definitely run alongside. A good middleware solution can feed data from these systems as well as data captured from user experiences into clean data sets. AI models can leverage this data to create personalised experiences for guests and automation for staff – without having to upgrade or replace the existing systems in a hotel’s tech stack. Even though a hotel may have a multi-vendor landscape of 10-30 different systems, it is still possible for middleware technology to connect with these systems, to create a common façade, reducing the complexity to a handful of business services, scalable and secure.

In conclusion, the benefits of integrating artificial intelligence in hotel management and operations far outweigh the hesitations. The technology is here to stay. My advice to hoteliers and owners: you’d better get onboard.