What The Rise Of AI Means For The Hospitality Industry

Of all the “traditional” sectors out there, this one has been most affected by the rise of AI. It has changed a lot about what goes on in the industry – for better and worse.

The rise of AI concierges

Chatbot technology has been around for some time, but AI developments over the last few years have made artificial assistants much smarter than they ever used to be. It’s not entirely possible for someone to have a full-on conversation with an AI chatbot without really knowing that they’re not a human.

But what does this mean for the hospitality industry? Mainly, it’s led to a rise in AI concierges for hotels and other establishments. Instead of employing dedicated concierges to be at the customer’s beck and call, companies can now use chatbots to deal with a lot of queries and enquiries. Some hotels will even get their AI concierges to text guests before they arrive so they can book meals, set up additional services, and so on.

The key thing here is that the mere presence of AI concierges means guests are getting used to much faster customer service than ever before. Hotels have to keep up with this demand without losing the human touch, which is a difficult line to walk.

Concerns over privacy and safety

Following on from the point above, if hotels are employing more AI staff to handle jobs everywhere, then this will inevitably lead to concerns over privacy and safety. This is only elevated by news of OpenAI pulling its latest model due to safety concerns, along with countless other examples of AI systems going rogue and doing things they’re not supposed to.

The more AI a company uses, the more concerned the general public will be. While hotel guests may be somewhat happy with the convenience that an AI concierge brings to them, they will always be worried about what the system is doing with their data. Can they trust the concierge to handle payment information – or do they even want the AI to know their personal details?

What you end up with is a mess where some guests don’t like the use of AI and may request that their information is not shared with any third-party AI systems, and some don’t mind that much. It’s creating a real conundrum for hospitality businesses as they look to embrace this technology without compromising customer privacy or safety.

A new approach to marketing

Artificial intelligence has also transformed the way in which hotel businesses market and promote themselves. On the one hand, you have a wealth of AI tools that allow for better marketing automation. Companies can send out more personalised emails or run targeted campaigns better than ever before – and this cuts right to the heart of the target customer and can encourage more bookings.

Perhaps more interestingly, and as demonstrated by Gourmet Marketing’s hotel advertising services, AI has created a whole new way for consumers to search for hotel bookings online. Many will now use their AI platforms to create travel itineraries, which means ChatGPT or Gemini will recommend hotels to them. Marketing teams now have to adjust their content to fit AI searches, ensuring they’re recommended. Plus, you have AI advertising to contend with; AI platforms now accept placement ads, meaning hotels have to start buying this type of exposure. If you can get your ad integrated into an answer in an AI engine, then that equates to more visibility and a better chance of earning a click.

Improving revenue management

As is often the case, some of the more beneficial uses of AI in hospitality happen where nobody can really see them. Hotels are seeing a great deal of success using AI-powered tools to take real-time data that adjusts things like room rates on their websites. This is known as dynamic pricing, and it’s why a hotel may offer a room for £100 a night one moment, then £120 a night the next.

Artificial intelligence lets hotels match pricing to the demand for rooms, and this all comes down to better revenue management. The hotel can adjust the price accordingly to account for lower or higher demand, maximising profits. Moreover, AI technology like this also presents more accurate forecasts for hotel managers to see what the next few months might look like from a revenue standpoint.

It has created a world where hotel businesses have a deeper understanding of how much projected revenue they stand to make, which then allows them to adjust different aspects of their services. The data can tell them when it makes sense to invest heavily in marketing or offers during the projected slow seasons, or when to raise prices due to high demand.

Maintaining credibility

There is something to be said for what AI can mean for a hotel’s credibility, specifically when looking at the use of generative AI. A hospitality business will likely have to deal with:

• Writing room descriptions

• Detailing additional services

• Sharing photos or videos of rooms

A lot of content will need to be created, and some hotels feel that generative AI is a fast and cost-efficient way to get all of this done – especially when it comes to text descriptions or images. But this can cause credibility concerns if users spot AI usage like this. It can break down trust barriers and make it harder for hotel businesses to secure bookings. So, as convenient as generative AI may seem to a hotel owner, it’s one of those things that has to be used with caution or the benefits quickly become outweighed by the negatives.

When the dust settles, it is clear that AI has had a big impact on the hospitality industry, and it has changed the way that hotels do business. There are now more tools to help managers handle different aspects of their service, not to mention the way that AI has altered how guests search for hotel bookings. Some of it is very useful and makes a hotel manager’s job easier, but other elements of AI are concerning and can throw up more problems than a hotel needs.

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