Game Theory in Hospitality: Curating The Ultimate Guest Experience.

In the fine world of hospitality, the quest to offer unforgettable guest experiences is relentless. Hotels, resorts, and restaurants continuously battle to capture and retain the attention of discerning guests. While luxurious amenities and personalised service play a major role in shaping guest experience, there’s a little used framework that can, in my view, give operators a distinct advantage: Game Theory.?

You might be wondering, "Isn’t game theory all about economics and competitive business strategies?" And you’d be right, it is widely used in those fields, but it’s also a powerful tool for decision-making in hospitality.

Game theory allows?operators to predict guest behaviour, outmanoeuvre competitors, and allocate resources in a way that maximises both guest satisfaction and profitability.

This might sound complex, but I intend to?break it down with real-world applications that hopefully will inspire you to think of new ways to elevate your guest experience.?

Understanding Game Theory in Hospitality?

At its core, game theory examines strategic interactions where the outcome for one player (or business) depends on the actions of others. Each decision a business makes influences, and is influenced by, the choices of competitors, guests, and even internal teams. By analysing these interactions, hospitality operators can craft strategies that create a win-win for both the business and its guests.?

The simplest game theory model, the Prisoner’s Dilemma, demonstrates how cooperation often leads to better outcomes than competition. In the hospitality context, this model reveals how strategic collaboration within the market can lead to better outcomes for both operators and their guests. Additionally, advanced game theory techniques—such as Nash Equilibrium and dominant strategies—offer a deeper layer of analysis, allowing businesses to calculate optimal moves even in uncertain environments.?

With this in mind, I now want to explore with you how game theory can be applied beyond the realm of economics, to transform the guest experience.?

Crafting Loyalty Programs that Create Long-Term Value?

Loyalty programs have become table stakes for many hotels and resorts, with guests expecting points, perks, and exclusive offers as part of their stay. But offering rewards is only half the battle; the real challenge lies in making your program stand out in a crowded marketplace.

Here, game theory offers a way to design loyalty systems that anticipate competitor responses and create heightened value for guests.?

Marriott vs. Hilton – The Battle of Loyalty Programs?

Take Marriott Bonvoy and Hilton Honors, for example. Both giants offer comprehensive loyalty programs, but the real game begins when one brand seeks to differentiate its offering. Marriott anticipated that Hilton would match its initial loyalty benefits, so it introduced experience-based perks such as VIP event access and personalised services, rather than relying solely on traditional rewards like free stays or upgrades. This strategy, informed by game theory, aimed to deliver benefits that were more difficult for Hilton to replicate quickly, creating a deeper, experience-driven loyalty among Marriott’s most valuable guests.?

By applying game theory, Marriott strategically moved beyond mere rewards to forge a loyalty program that leverages guest experiences, ensuring that they remain not just frequent visitors but long-term brand advocates.?

Elevating Guest Experience through Differentiation?

In an age where guests are increasingly drawn to curated and personalised experiences, I have observed that the traditional differentiators such as luxury, location, or pricing are no longer sufficient.

To truly stand out, hotels and resorts must anticipate what guests will value next and preempt competitor strategies. Game theory provides a framework to do exactly this.?

Six Senses – Redefining Luxury with Wellness?

Six Senses Resorts carved out a niche in the luxury market by focusing on holistic wellness, an area many traditional luxury brands overlooked. At a time when competitors were adding high-end dining and flashy amenities, Six Senses applied game theory to predict that discerning guests would increasingly seek relaxation and mindfulness experiences. They developed and curated wellness journeys, including personalised yoga sessions, meditation retreats, and spa therapies, positioning themselves as the go-to destination for health-conscious travellers.?

This strategic foresight allowed Six Senses to corner a growing market and offer experiences that competitors couldn’t replicate quickly. Their ability to predict trends and stay ahead of guest preferences set them apart, giving them an edge in an otherwise crowded luxury segment.?

Optimising Resource Allocation to Maximise Guest Satisfaction?

Resource allocation is a perennial challenge in the hospitality industry, where high-touch service demands must be balanced with operational efficiency.

Game theory helps operators anticipate guest behaviours and strategically allocate staff, amenities, and services to maximise guest satisfaction without straining resources.?

The Venetian Las Vegas – A Masterclass in Event Management?

The Venetian, one of the largest hotels on the Las Vegas strip, expertly applies game theory to manage the intricate logistics of serving thousands of guests while ensuring high-quality service. During peak periods, such as major conferences or concerts, they anticipate competitor strategies (e.g., when nearby hotels will hold their major events) and adjust their own schedules to stagger guest activities. This minimises congestion and ensures that both leisure and business guests experience a seamless stay.?

By using game theory to predict crowd flow and optimise event scheduling, The Venetian maintains operational efficiency while providing guests with the attention and service they expect, even during the busiest times.?

Forming Strategic Partnerships for Unique & Authentic Experiences?

Partnerships are a crucial component of any hospitality business looking to offer distinctive experiences. The right collaboration can create memorable moments for guests, while the wrong one may fall flat and leave plenty to desire.

Strategic application of Game theory can help operators decide which partnerships will create a unique value that competitors cannot easily replicate.?

Aman Resorts – Local Partnerships for Immersive Experiences?

Aman Resorts is a global brand known for delivering highly personalised and immersive experiences. Unlike many luxury chains that offer standard tours or spa treatments, Aman partners with local artisans and cultural leaders to provide guests with intimate, hands-on workshops, from pottery making to traditional cooking classes. These partnerships, strategically selected using game theory, create experiences that align with the brand’s ethos and are deeply rooted in the local culture and community, a unique and bespoke value proposition competitors struggle to match.?

Through these partnerships, Aman distinctly differentiates itself and creates experiences that are irreplaceable, fostering a deeper connection between guests and the destinations they visit. Game theory allows Aman to outmanoeuvre competitors by offering something both exclusive and authentic.?

Resolving Guest Conflict and Building Loyalty?

Even in the best hotels, things can go wrong. Whether it’s a missed reservation or a malfunctioning amenity, mistakes are bound to happen. How operators resolve guest complaints can have a significant impact on building and maintaining guest loyalty.

Game theory I suggest, offers a strategic framework for understanding guest expectations and responding in a way that maximises satisfaction while protecting profitability.?

The Ritz-Carlton – The Art of Anticipating Guest Needs?

Ritz-Carlton is legendary for its approach to guest satisfaction; no stone left unturned, and no ask is too great. They empower their staff to spend up to $2,000 per guest to resolve any issue. In truth though, this isn’t really a blank check; it’s a game-theory-informed strategy. Ritz-Carlton staff are trained to predict how a guest might react to different resolutions. A small inconvenience might be handled with a sincere apology and a complimentary drink, while a major disruption could be compensated with an upgraded room or even a free night’s stay. The key is to preempt dissatisfaction before it escalates, turning a potentially negative experience into a story of stellar service.?

By applying game theory to conflict resolution, Ritz-Carlton surely increase their loyal guest's retention rates and certainly turn potentially negative experiences into positive, long-term brand loyalty opportunities, reinforcing their reputation for unparalleled service.?

A New Age of?Guest Experiences?

Guest experience is at the core of the hospitality industry. Preferences evolve rapidly and competition is fierce. Relying on traditional methods of decision-making is on its way to becoming obsolete. ?

The future in my view belongs to the creative operators who dare to venture outside the norm and harness the power of imagination and out of the box thinking. ?

To get on that train, Game theory gives operators a powerful strategic framework that can be applied across a wide spectrum of operations. From loyalty programs to resource management and guest conflict resolution.

Anticipating the actions of competitors, predicting guest behaviours, and optimising internal resources will always be priorities for operators and creative applications of game theory enables hospitality businesses to curate guest experiences that are truly ahead of the curve.?

In an industry that thrives on the human connection, using game theory to stay one step ahead in crafting personalized, differentiated experiences can be the key to unlocking long-term loyalty and achieving a sustainable competitive edge.?

And while game theory might still seem like an abstract concept for many in this sector, when understood and applied with precision, it’s anything but a game. It’s a strategic advantage that can transform the way operators design and deliver the ultimate guest experience.?

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