AI in Hospitality: More Than a Passing Trend

Not utilizing Artificial Intelligence (AI) is not an option anymore. The question is how fast. In the swiftly progressing realm of the travel and hospitality industry, the strategic integration of AI has assumed paramount significance. By harnessing the potency of AI, organizations can gain a competitive advantage, amplify guest experiences, optimize revenue management, and revolutionize marketing endeavors. Let us delve into the current state of AI utilization within the hospitality industry and explore its potential to address crucial business challenges.

Why Is Everyone Talking About It?

According to?a recent research?study, the travel and hospitality AI market is estimated to surpass the $1.2 billion mark by 2026, growing at an estimated CAGR of more than 9.7% during the forecast period 2021 to 2026. This means the hospitality industry is witnessing a paradigm shift due to AI utilization, and the reason for that is the need to streamline processes and provide exceptional customer experiences, which the end user is already used to in other industries.

On the tech side, major technology and platform providers urge to introduce new AI-based products that would enable businesses in many industries to leverage AI at full scale. Amazon Web Services introduced?Amazon Bedrock, which simplifies accessing and utilizing cutting-edge AI models. This fully managed service offers an API through which you can effortlessly explore a diverse range of functional models (FMs) and select the one that aligns best with your specific use case.

In its turn, Google introduced?Vertex AI, which allows leveraging one AI platform for multiple projects in different industries, with access to a wide variety of APIs, foundation models, and open-source models.

In parallel,?Azure OpenAI?empowers users to use an extensive range of AI services. It gives access to top-notch AI models for vision, speech, language, and decision-making through user-friendly API calls.

The Transformational Power of AI

Let us dive into the reasons why AI excites the minds of industry leaders and check how your business can benefit from leveraging AI:

Meeting Guest Expectations

Hospitality companies face the challenge of managing increasing heterogeneity and complexity in the customer experience. To retain guests, businesses must balance seamless automation and opportunities for human interaction.

At the same time, on the business side, according to a report from?Oracle Hospitality and Skift, over 85% of hoteliers expect ancillary revenues to make up a larger share of their annual revenue by 2025, and 49% strongly agreed that special amenities and upselling are critical to their revenue strategy. Leveraging AI allows companies to create personalized experiences based on behavioral data, CRM information, and automated back-office operations. This ability to cater to diverse guest demands positions businesses for long-term success.

According to?Forbes, 65% of consumers say they will still trust businesses that use AI. While some industry players were waiting for AI to prove some results, early adopters followed the lead from adjacent industries and started getting benefits from AI-powered services from day one.

And the industry responds to the demand. According to GlobalData’s thematic research report,?Artificial Intelligence (AI) in Travel and Tourism,?leading adopters include?Airbnb, Hilton,?InterContinental Hotels Group, and OYO Room.

Revenue Management

As of 2021,?only 30%?of all hotels use Revenue Management Systems (RMS), but this number is constantly growing. Additional attention was drawn to RMS in the recent year, as AI showed its potential to significantly enhance revenue management strategies by leveraging predictive modeling to analyze historical data, forecast demand, and optimize pricing and availability. Dynamic pricing, personalized offers, and real-time inventory management can maximize revenue during peak and off-peak periods. Moreover, AI can identify upselling and cross-selling opportunities, adapt pricing decisions based on market conditions, and uncover revenue patterns and trends.

Customer Experience Improvement

AI is poised to transform the guest experience by delivering personalized and efficient services.?Through personalization engines, automation, virtual assistants, and smart room technology, guests can enjoy tailored experiences. AI can also enhance safety and security measures and integrate with virtual and augmented reality for immersive experiences. Automated check-out processes ensure convenience for guests.

Loyalty Systems Improvement

Loyalty programs are hugely important in the hospitality industry, helping securely repeat customers and letting your guests know you value them. The number of participating customers continues to increase. But according to?iSeatz report, approximately 70% of consumers who receive personalized recommendations via their rewards booking site express satisfaction with their current loyalty programs, as they perceive them to offer the desired value.

Artificial intelligence can help to streamline loyalty programs and use customer data from these programs to curate personalized offerings for repeat guests.

This helps to cement customer loyalty, mitigate churn, and secure a faithful customer base for your hotel. AI can also help develop new offerings for first-time customers, tailoring these to encourage customers to stay with you again.

Navigating the Fine Line of Success

Privacy and Personal Space:?Respecting boundaries in AI adoption as the hospitality industry explores the vast potential of AI and ML, it must proceed with caution and thoughtful consideration. It is crucial to avoid the indiscriminate application of these technologies and respect guests' privacy and personal space. Attempting to predict every aspect of travelers' behavior may result in a disconnect and an intrusion on their privacy. While consumers are willing to share information when it enhances their experience, it is imperative to ensure that AI solutions provide relevant and meaningful results.

Maintaining the Human Touch in an AI-Driven Landscape:?The essence of the hospitality industry lies in human interactions and personal touch. Introducing AI systems into operations may bring a significant cultural shift that reduces the human element. Guests may feel disconnected from the service or their surroundings, potentially compromising their overall experience. Balancing the integration of AI with the preservation of genuine human connections is crucial to uphold the industry's core values.

"A wonderful experience is now going to be defined as seamless and easy interaction with all touchpoints on the guest's terms. Development of systems that can proactively help customers in the background is a quiet but growing trend." - Andrew Sanders, VP, Travel, Transportation & Hospitality, DataArt

Technical Implementation:?Ensuring operational resilience running a successful hospitality business requires seamless coordination among various systems. However, the complexity of operations leaves room for potential disruptions when these systems fail. Double-booked rooms, misplaced orders, and prolonged wait times can lead to customer dissatisfaction and negative reviews, tarnishing the business's reputation. To mitigate the risk of system failures, hospitality operators need to have a robust contingency plan. Being proactive and prepared allows them to swiftly address any AI tool breakdowns and maintain a seamless experience for their valued customers.

As a well-seasoned technology vendor, DataArt can provide the resources and technological capabilities required to leverage AI effectively within your hospitality business. With a proven track record of delivering over 400 projects and being selected by?100+ clients?in the global travel, transportation, and hospitality industry, DataArt stands out as a proficient partner that offers unparalleled quality, domain knowledge, and software engineering expertise.

Conclusion:?In the hospitality industry, adopting AI is no longer a luxury but a necessity. By prioritizing AI, businesses can unlock new opportunities, improve revenue management, offer targeted marketing campaigns, and enhance the guest experience. Striking the right balance between AI and human interaction will enable businesses to excel in an evolving landscape.?Contact us?if you want to know more about how to embrace the power of AI and position your hospitality business for accelerated growth and success.

Originally published here.