by Josiah Mackenzie
Founder & Publisher, HotelOperations.com
Josiah has helped build several AI-powered technology companies serving tens of thousands of hotels worldwide and interviewed AI researchers, technologists, and hotel operations leaders to create this guide.
AI is moving out of buzzword territory and into practical applications, and that’s going to have big implications for us.Jacob Messina, SVP of Technology & Innovation at MCR Hotels
Artificial Intelligence (AI) is everywhere right now. OpenAI is the hottest tech company in Silicon Valley. They just released GPT-4, which can “see” and “blows ChatGPT out of the water.” AI is even inspiring the return of “hacker houses” to my neighborhood in San Francisco. Susan Barry interviewed me as “her first AI guest” which I hope refers to our discussion and not the guest!
I’ve spent my career helping to build several hotel technology companies using machine learning and big data for insights, and immersed myself even further in the world of AI recently, learning from leading hotel operators, technologists, and advisors:
- David Sax, cultural researcher and author
- Erik Larson, computer scientist, AI researcher, and founder of two DARPA-funded AI startups
- Jacob Messina, SVP of Technology & Innovation at MCR Hotels
- Jessica Kramer, CEO at Lodgistics
- Martin Soler, Partner at Soler & Associates
- Mike Chuma, VP of Marketing, Engagement & Enablement at IDeaS
- Philip Rothaus, Managing Director at A&M (and former Global Travel AI Lead for Accenture)
- Raul Moronta, CCO at Remington Hotels
- Rob Paterson, Advisor and Board Member at Storied Collection (and former CEO of Best Western UK)
- Robb Wilson, author and Chief Technologist at OneReach.ai
- Sahar Cain, CTO at Mogul Hospitality (and AI Research Scientist at California State University, Los Angeles)
- Shane O’Flaherty, Global Director of Travel & Hospitality at Microsoft (and former CEO of Forbes Travel Guide)
- Simone Puorto, CEO at Travel Singularity
In this guide, I’ll summarize what I have learned about AI for hotels and hospitality, and share the opportunities that exist. We’re going to look at:
I wanted to create something detailed and actionable, because while I’m sure you’ve seen a lot of conversations like these filling up your social feed…
…. I found fewer thought-provoking guides to practical things that could be done today and in the near future with artificial intelligence in hospitality.
Analysis from the McKinsey Global Institute has ranked travel as the #1 industry to create the most incremental value from AI:
Among the broader travel industry, hotels likely have the most potential because of the complexity of this business and the amount of data that is (and can be) created.
The question becomes how do you use all of the AI-powered tools available and that are coming out – from RPA to ChatGPT – to drive a better customer journey and a better employee experience.Shane O’Flaherty, Global Director of Travel & Hospitality at Microsoft
This guide will attempt to answer that question, beginning with a little context.
Where we are today: setting the stage for AI in the hotel industry in 2023
Technology cannot be evaluated in isolation.
“AI is a tool and not an end in and of itself,” said Philip Rothaus, Managing Director for Data & AI in Alvarez & Marsal’s Travel, Hospitality & Leisure Practice. “It’s really important to first think about what we are trying to accomplish. What is the industry facing right now?”
Let’s take a quick look at where we are now and how this should guide the way we evaluate artificial intelligence.
A need to drive revenue
The ongoing pandemic recovery and global macroeconomic uncertainty this year (2023) have put an increased focus on driving revenue growth.
“Protecting RevPAR and generating profit in the face of changing market conditions, changing mix of travelers, and overall uncertainty has driven a lot of the technological change from hoteliers over the past few years,” Rothaus observed.
Hotel tech adoption has always been driven by hotel owners who see it as a path to increased profitability. But as revenue management technology and other pieces of a hotel’s commercial stack have become more effective, owners have increasingly turned to it for driving results.
“Hoteliers today are seeing a direct impact of revenue management systems on optimizing price and increasing Net Operating Income and the total incremental value created for hotel assets,” shared Mike Chuma, VP of Marketing, Engagement & Enablement at IDeaS.
Because of this, hotel owners – and the operators and brands that work for them – are focusing on top-line revenue growth now more than ever before.
A need to focus on profitability
Driving top-line revenue isn’t enough.
Ultimately, hotel owners and operators are focused on increasing profitability, which requires also focusing on cost reductions. A tight labor market, supply chain shortages, and inflation have made this more challenging.
Here as well, hotel owners and operators are looking to technology to cut costs and increase profits.
Impressed by generative AI
Do you remember the first time you saw the latest iterations of AI-created art?
DALL·E 2 was released last September and I remembered being blown away by the ease of creating art like this:
Then last November, the first version of ChatGPT was released and the internet went crazy.
Even Ryan Reynolds was in on it:
It’s been a while since I experienced technology that felt as magical as this did.
“AI is seen as heresy”
Even as we’ve been wowed by what AI can create now, there’s something in the back of our heads that wonders if this really has an application in hospitality.
“AI is seen as heresy in hotels,” said hospitality advisor Simone Puorto. He believes it’s a perception problem. “High tech is perceived as the opposite of high touch hospitality, but that doesn’t have to be the case.”
Could AI have a place in hotels and the way we provide hospitality?
A unique business model
Hospitality is a unique industry, says Martin Soler, a former hotel general manager, and now Partner at Soler & Associates. Customers are buying both the physical product (the building, the design, the beds) as well as the service experience of hospitality.
“Hospitality is both an experience of a physical product and a service experience. We have to bring together both elements well in our hotels.”Martin Soler, Partner at Soler & Associates
This adds a layer of complexity to the discussion of artificial intelligence.
Wondering what’s next
Today, many of us are thinking about what the future holds for us.
We’ve seen glimpses of what AI can create. We’re a little skeptical that something as human as hospitality can benefit. But we’re wondering what this means for our business as we’re trying to navigate a challenging environment to operate a hotel business.
It might help to start with a definition.
Defining AI: What is artificial intelligence?
When I hear “AI” I still think of something like this:
That’s not accurate.
“The reality is we’re a long way off from Matrix-style sentient, self-aware, all-encompassing AI models that can do everything that a human brain can do, but better and faster,” Rothaus said.
Computer scientist and DARPA-funded AI researcher Erick Larsen goes further in The Myth of Artificial Intelligence.
“The myth of artificial intelligence is that its arrival is inevitable, and only a matter of time—that we have already embarked on the path that will lead to human-level AI, and then superintelligence. There is no way for current AI to ‘evolve’ into general intelligence in the first place, absent a fundamental discovery. Simply saying ‘we’re getting there’ is scientifically and conceptually bankrupt, and further fans the flames of antihuman and anti-intellectual forces interested in controlling and predicting outcomes for maximizing short-term profit by skewing discussion toward inevitability. One way to make the future more predictable is simply to disparage and eliminate any value placed on individual intelligence.”
There is no way for current AI to ‘evolve’ into general intelligence.Erick Larsen
What is Artificial Intelligence?
- “The ability of a digital computer or computer-controlled robot to perform tasks commonly associated with intelligent beings.” – Brittanica
- “The capability of a machine to imitate intelligent human behavior.” – Webster
- “The capability of a computer system to mimic human-like cognitive functions such as learning and problem-solving.” – Microsoft
- “Applying advanced analysis and logic-based techniques, including machine learning (ML), to interpret events, support and automate decisions, and to take actions.” – Gartner
What is AI good at?
What is AI good at? Rothaus sees two primary applications:
- Automating things, like quickly recognizing a face or a word.
- Quantifying relationships between data sets to come up with predictions.
Forecasting demand is an example. “We’re not just looking at past occupancy rates, but can bring in customer segments and property types and weather and plane schedules – a wide range of external or causal factors. There are machine learning techniques that are very good at understanding and quantifying what those relationships are in a systematic way that humans are just not very good at.”
“AI can seem really impressive, but it’s actually quite narrow in what it’s actually accomplishing,” Rothaus says.
What is machine learning?
Machine learning is a subset of AI and one that many hotels have been using for a while.
Larsen defines machine learning as simply: “Getting computers to improve their performance based on experience.”
There are three types of machine learning:
- Supervised learning: where people first label input to indicate desired outputs
- Unsupervised learning: where systems analyze patterns in data
- Semi-supervised learning: where people label an initial set of the data and then extend the analysis with more data and without supervision
“Supervised machine learning is behind much of the modern web, and accounts for nearly all the major successes in machine learning to date, including image or voice recognition, autonomous navigation with self-driving cars, and text classification and personalization strategies online,” Larsen notes.
“Machine learning is really a misnomer since systems are not learning in the sense that we do, by gaining an increasingly deep and robust appreciation of meaning in the world. They are rather learning bell curves — purely data-driven simulations of whatever we experience directly in the real world.”
Now that we have a working definition, let’s get into what you should know about AI.
What you need to know about AI for hospitality
There are a few things hotel operators and investors would benefit from considering.
AI may not be what you think it is
“AI is frequently thought about in the most extreme terms,” Rothaus observes. “It’s either seen as this very scary force that’s going to automate all of our jobs away and change the nature of our lives – or it’s seen as some sort of nirvana that is not attainable for mere mortals. But AI is math, not magic.”
Yet good technology works and feels like magic, Puorto notes. “You don’t see it. A lot of the potential for AI is working behind the scenes to make processes more efficient.”
Soler agrees. “We’re a long way from robots cleaning our rooms and changing our bed sheets. It would be great to have robots help there, but we’re a long way from that. Instead, the opportunity now in hotel operations is small steps like optimizing room cleaning sequences.”
AI is already all around us
“In our daily life, we already use AI in banking, in shopping, in entertainment, and more,” notes Raul Moronta, CCO at Remington Hotels. “AI is everywhere we are now.”
The movies recommended by your favorite streaming service, the music suggested to you, and the online shopping experience you had today were all powered by AI.
AI isn’t brand new. We’ve already been experiencing and benefiting from it for years now.
AI progress isn’t inevitable
I constantly hear people talk as if the progress of AI is inevitable but many of those closest to the technology, such as Larsen, do not share this belief.
“This myth assumes that we need only keep chipping away at the challenge of general intelligence by making progress on narrow feats of intelligence, like playing games or recognizing images. This is a profound mistake: success on narrow applications gets us not one step closer to general intelligence.”
If AI isn’t inevitable, it changes the way we use and plan to use the technology.
The difference between generative AI and “traditional AI”
While DALL·E and ChatGPT have captured our imaginations recently, “traditional AI” still holds the most promise for businesses like hotels.
Investor Rex Woodbury notes this for communication and e-commerce:
“Much of the buzz lately has been around generative AI, but ‘traditional’ AI still has a lot of room to run. And perhaps no use of AI is more visible to more people than TikTok’s For You Page, the best modern-day analogue to Hyperland’s prescient ultra-personalized internet.”
But this is even more true for hotel operators, where the job is less about creating content and images and more about becoming efficient and effective.
“Traditional AI” is the biggest opportunity for hoteliers now and in the foreseeable future.
AI isn’t a cure-all that abdicates us of responsibility
Discussions about the use of AI often imply an over-reliance on what computers can do.
Rothaus noted, “If I don’t know how much revenue is produced at this property or that property, and am struggling to understand the basics of how my business is performing, AI isn’t going to be some sort of magic wand that fixes all of your problems.”
This sort of thinking is actually dangerous, Larson argues. “It’s difficult to imagine a cultural meme that is more directly corrosive to future flourishing and, paradoxically, more directly inimical to the very invention or discovery of a workable theory of general intelligence. Whether such a theory is forthcoming in future research and development is itself an unknown, but what can be recognized is the threat of an increasingly anemic culture of ideas that will militate against any such discovery.”
AI isn’t an excuse to disengage and hope the machines will save us.
AI is not always effective by itself
“One of the most common misconceptions about AI is that anything powered by AI is good and that it works,” said Sahar Cain, CTO at Mogul Hospitality – and AI Research Scientist at California State University, Los Angeles.
“A lot of software firms take advantage of ‘black box AI’ which is very generic and results in very generic products. They don’t acknowledge that for AI to work, it needs industry-specific algorithms. You can’t develop something generic and use it in every single industry – that’s not going to work.”
Instead of ‘black box AI,’ ‘hybrid AI’ is getting the attention of a lot of AI scientists, Cain says. “This is where you use industry-specific data sets and incorporate domain expertise to deliver the best results. For example, in the world of hiring, you can add characteristics for candidates that would be uniquely valuable for specific brands or market segments that AI may not be able to understand.”
AI will primarily be inside the software you’re already using
I’m writing this article in Google Docs in a library I drove to using Apple Maps. Both use AI to provide their services, and both serve as examples of what the future of AI in hospitality will look like.
AI will look less like a standalone app like ChatGPT and more like the technology behind the scenes of applications you’re already using.
“You might be using AI already in your tech,” Jessica Kramer, CEO of Lodgistics, shared on a recent Hotels Magazine podcast. “AI already exists in a lot of the software platforms hotels are using. AI won’t be its own layer – it will be part of the tools we’re using.”
Rob Paterson, hospitality entrepreneur and former Best Western UK CEO, agrees. “I don’t see sort of a whole range of AI products replacing a traditional property management system or a revenue management system. It’s much more likely to end up powering platforms hotels are already using.”
“The opportunity with AI is in augmenting and embedding new insights into existing processes. It’s about supporting your people by automating tasks in their jobs that aren’t value-added so that they can focus on what they can do best,” Rothaus added.
Stop looking for a one-size-fits-all “AI app” and start asking your technology partners how they’ll leverage AI capabilities in the software you’re using.
The goal isn’t to replicate human interactions
For all the hype around AI-powered chat now, it’s a poor example of where it should be used.
“I had a pretty dim view of AI up until about a month ago,” Paterson told me. “I looked at a lot of AI products when I was in the operations side of hospitality for the past 10 years. Most of it missed more than it hit. Chatbots for customer service work for the business in some ways, but they’ve been more of a source of frustration for guests.”
Generative AI applications such as ChatGPT and DallE seem to replicate human traits of conversation and creativity, but attempting to replicate human interactions is a mistake, AI researcher and technologist Robb Wilson writes in Age of Invisible Machines:
“Conversational AI isn’t human; we’re not trying to pretend it’s human, and you shouldn’t try to make it human. Some might think we want our machines to interact with us as humans do, but that’s not necessarily true. With automation, many of us seek efficiency, not emotional complexity and psychological nuance: perform this task for me without excuses, give me this information without caveats, help me prepare for my day without giving opinions I didn’t ask for.”
Replicating human interactions is a recipe for disappointing guests and missing the bigger opportunity.
The objective is “better than human” interactions (in select cases)
Can AI enable a “better than human experience”?
Wilson provides a simple example of this with brewing coffee:
“It’s common to see automation as a means to handle simple tasks on human terms, such as automating a coffee maker so that it brews a fresh pot of coffee at 8:45 a.m. What if, instead, the coffee pot was part of a better-than-human experience that not only adjusts the time it brews coffee and the amount it brews but also cross-references company calendars and brews an extra-strong pot of coffee in anticipation of a client coming straight to the office from an international flight.”
“I often hear people saying that the goal of technology is to match human capability and efficiency. The real goal should be to outperform humans. Humans might be impressed with a facsimile, but they’re not likely to rely on a machine that simply replicates something they can already do themselves. Consider the elusive self-driving car. It would hardly be a victory for automated vehicles to match the current accident and fatality rates of human drivers.”
Catesby Perrin, EVP at CLEAR, and Branigan Mulcahy, CEO at Virdee, provided a hotel-specific example of this for identity verification at check-in in a recent Hotels Magazine interview, sharing how an AI and biometrics-powered experience can be not only faster but also a more secure than a human-powered process.
Implementing AI from this perspective will ensure you stay focused on improving the experience for both guests and staff – the two most important stakeholders in any hospitality business.
Where AI can help hotels today: a look at practical use cases
Now that we’ve looked at a framework for how AI can support hospitality, let’s look at some practical use cases for hospitality.
AI use case: Hotel bookings
AI creates the possibility of highly-personalized commerce, and I would like to see more hotel booking processes look more like Netflix and less like they’re straight out of 1998.
But let’s not get ahead of ourselves.
“In Germany and other parts of Europe, 20% of all hotel bookings still happen by email,” Soler shared. “That’s a lot of unstructured data that gets into an inbox, and AI could help by processing those emails and saving time for both guests and hotel staff.”
With more than 80% of travel, today being booked online, the e-commerce and booking process is one of the best use cases of AI in hospitality today.
AI use case: Pre-arrival process
Your guest experience begins before your guest steps foot on your property, and this is another strong use case for artificial intelligence in hospitality today.
I recently received this email before checking into one of my favorite hotels in Sonoma:
A big part of its recommendations were wineries, but the only problem is there are so many things I’d rather be doing than wine tasting!
Imagine a world where all the recommendations were personalized to each guest.
AI use case: The check-in process
AI and machine learning also could play a role in the check-in process.
“You don’t go to the airport 4 hours early because you want the human touch,” Puorto notes. “You want to sail through check-in. Hotels are always a few years later than airlines, but could learn from them on this.”
My view on hotel check-in is slightly different but this is a shrewd observation.
I love the citizenM brand and have stayed at many of their hotels, but I dislike checking into a hotel on a kiosk. There’s something about being welcomed to the hotel by another person that gives me a sense of arrival.
What I do appreciate is not having to wait for someone to type in my credit card and passport details into their system.
The application for AI that intrigues me is using a smart pre-arrival process (as described above) to capture all my information so that my check-in interaction only has to take a few moments and focuses on answering any questions I have or pointing out things I should know about the property and what’s going on.
AI use case: Pattern recognition and suggestions
Let’s change tracks a bit and talk about the use of AI for operations behind the scenes.
Having worked for a company that processed guest feedback for sentiment analysis for years, I saw first-hand the power of AI for processing unstructured data for insights.
People like Kris Leszczynski at Edwardian Hotels in the UK are using technology to aggregate and synthesize guest feedback for insights to constantly improve.
Humans are terrible at pattern recognition. That is something much better suited for machine learning.Jacob Messina, SVP of Technology & Innovation at MCR Hotels
“AI-assisted models are really good at not only finding outliers but finding correlations between massive amounts of data, whether that be media data, e-commerce data, scheduling or hotel operational data,” Messina said. “These things are often very disparate and being able to look at this in real-time is going to be a real boon for our industry.”
AI use case: Workflow optimization
AI can be helpful for operators beyond scheduling to optimizing workflows to save time.
“AI uses are emerging for areas such as housekeeping that optimize the room cleaning process,” Soler told me. “How much time do housekeepers waste knocking on doors to find out there’s somebody still in there? Automation and AI could save time and increase efficiency in so many areas of hotel operations like this.”
Wilson advises looking beyond today’s workflows to what’s possible. “Don’t automate what you already do. Approaching automation in this way might blind you to important opportunities.”
Nine times out of 10 it will be more valuable to your company if you create automation that reflects the ideal way of getting things done, rather than how they’re currently being doneRobb Wilson
AI could save time for your housekeepers – and perhaps other areas in your hotels as well.
AI use case: Attracting and retaining staff
“You already have a lot of automation in the operations of many hotels, but what’s really missing is the use of AI and automation in human capital management – which is the #1 issue facing hotels right now,” Cain noted.
AI-powered technology can play a role not only in hiring and engaging people, but empowering them, Kramer observed. “Talented people want the tools that will help them do their work well.”
This is something I saw in my research on hotel technology:
“My daughter did an internship at a hotel this summer and was shocked by the technology she had to use,” O’Flaherty shared with me. “She told me she’s never seen anything as bad as the property management system she had to check people in on. The hotel industry is trying to attract new employees and to do that the user interface of technology needs to be excellent because you don’t want to scare them away like this. AI-powered technology can and should be a way to attract employees and show them the long-term viability of a career in hospitality.”
All of this means a mindset shift for many: AI is not just about reducing the need for staff but can instead be a tool for attracting and engaging more of the right people.
AI use case: Training and coaching
Part of engaging and retaining your people is providing educational opportunities, and for Moronta and his commercial teams at Remington Hotels, this is a big use case for AI.
“We provide our teams with training through a third party on how to do things like sales effectively. This used to include a lot of roleplay with another human, but we’re introducing more AI to do this roleplay. AI can understand intonation and intent and give feedback on how well an interaction went. This reduces our costs and allows us to offer more training to more people.”
I’ve seen this firsthand when I led a sales team because I used another AI-powered tool (Gong) that allowed me to provide my team with instant feedback and automated suggestions, but also made me more efficient in the coaching I provided.
AI for training and coaching is a great example of using technology to empower better human interaction at scale.
AI use case: Revenue management
This guide focuses on operations, but I would be remiss to overlook revenue management, which is one of the most valuable applications for AI today.
“Revenue management was the first major function to deploy advanced analytics at scale, with practices like dynamic pricing now an industry standard. As artificial intelligence increasingly powers these predictions, we expect to see a new wave of pricing and revenue-management strategies come into play,” McKinsey shared.
“We expect that advances in machine learning will improve hotels’ ability to optimize pricing through more accurate analyses and predictions based on market demand signals, local room availability, and a deep understanding of the individual customer’s willingness to pay. This trend toward personalized pricing can feel jarring at first, but it is rapidly gaining prominence in the retail sector with brick-and-mortar retailers and supermarkets attempting to replicate the flexibility of retail e-commerce giants who can instantly serve up a tailored set of products with personalized pricing to match.”
The typical hotel has to make 5 million pricing decisions each year.Mike Chuma, VP, IDeaS
“Five million. That’s the number of pricing decisions a typical hotel has to make each year. Layer in merchandising programs, other revenue streams, and unexpected events, and that volume and complexity increase exponentially. Revenue management systems (RMS) are better equipped than ever to handle this volume and complexity, and commercial leaders are seeing this value, especially in the continually tight labor market,” Chuma added. “Because of the positive performance at scale, we see the use of RMSs expanding beyond daily room pricing to other areas of strategic growth areas such as meetings and events spaces, food and beverage, and other areas of ancillary spend within the hotel.”
“We also see hoteliers taking a much more holistic, collaborative, and strategic approach to how they run their business based on advances in AI-powered revenue technology. Hotels are using the RMS to understand demand more accurately, which helps them operate more intelligently. They not only use the RMS to better price and determine if they should take group business but to also plan the type of staffing, support, and services they provide.”
Hotel owners and operators are looking to technology to maximize hotel revenue more than ever, and artificial intelligence will give users an edge over those who don’t use this.
AI use case: Sourcing & procurement
Sourcing and procurement is a good example of a back-of-house function core to hotel operations that presents opportunities for AI.
“AI can help illuminate the insights hidden in data,” Deloitte shared. “It enables sourcing and procurement teams to validate or clarify their assumptions and inform decisions.”
The firm outlines six core opportunities in this area:
- Spend classification and enrichment: supporting compliance and analysis
- Global sourcing insights: identifying opportunities and evaluating savings potential against the corresponding risk
- Invoice data extraction: digitizing documents
- Automated compliance monitoring: reducing erroneous transactions and preventing inaccurate payments
- Contract data extraction: digitizing data and highlighting areas of risk
- Contract lifecycle management: reducing partnership management time
“As a hospitality procurement professional, managing and maintaining supplier relationships constitutes a significant part of the job,” notes Gareth Fraser, VP of Enablement at BirchStreet. “Fortunately, AI can improve back-of-house tasks, data aggregation, communication, and supplier collaboration. With AI-powered technology, organizations will be empowered to build and maintain more effective partnerships.”
AI use case: Waste reduction
Recent supply chain issues put a spotlight on waste reduction in hospitality, but frankly, we should have been looking at this more before the pandemic.
“Food control is a big issue, and companies are starting to get better at predicting demand to solve waste,” Soler said. “AI can forecast the percentage of your guests that night that will eat breakfast, and the hours they will be there. With these forecasts, you can do things like encourage different groups of guests to come at different times to spread out demand. For example, you could tell a leisure traveler they could save a few minutes and a few dollars by coming at 9 instead of at 7:30. Both guests and staff would be happier – and you would cut down on food waste.”
IHG began using technology for this several years ago, and Spanish hotel group Iberostar is now implementing AI-powered technology with a goal of reducing food waste by 50% this year and sending zero waste to landfill by 2025.
The value of food cannot be underestimated, and we put in place this system to reduce the amount of waste we produce without affecting the guest experience. We are convinced the use of state-of-the-art technology, training, and innovation dedicated to removing food waste will help us reduce climate impacts.Sabina Fluxá, Vice-Chairman & CEO, Iberostar Group
AI use case: Sustainability
Sustainability is moving from marketing to operations, Matthew Parsons writes as one of the 2023 Skift megatrends, and reducing the environmental impact of our hotels is an area that holds promise for AI.
“There’s a role for AI in how we can impact the industry more broadly,” Rothaus said. “How can we operate more efficient, sustainable properties and encourage more sustainable travel? Smart buildings are one area. AI can play a role in analyzing your supply chain to understand impact and identify areas for improvement.”
What I like about using AI for sustainability initiatives is how this can programmatically reduce energy needs and environmental impact instead of just hoping people make the right choices.
Hotels aren’t benefiting from this widely yet because of a lack of data from limited connectivity, O’Flaherty shared. But he believes the potential is significant here.
“If you think of where smart buildings are going and the concept of a Digital Twin with AI, long term they are going to be self-nurturing. They will move from a predictive maintenance world where I know something’s going to go wrong, so then I’m going to send a work order out to fix it to a world where when something is going wrong and the system fixes or adjusts itself. That plays into sustainability by driving the best energy efficiency.”
This is a powerful proposition for hotel operators: cutting costs as you increase sustainability.
AI use case: Cybersecurity
Finally, the opportunity for AI in cybersecurity cannot be overlooked.
“Historically, cybersecurity has been a field dominated by resource-intensive efforts. Monitoring, threat hunting, incident response, and other duties are often manual and time-intensive. This can delay remediation activities, increase exposure, and heighten vulnerability to cyber adversaries,” writes Booz Allen Hamilton. “Over the past few years, artificial intelligence solutions have matured to the point where they can bring substantial benefits to cyber defensive operations across a broad range of organizations and missions. By automating key elements of labor-heavy core functions, AI can transform cyber workflows into streamlined, autonomous, continuous processes that speed remediation and maximize protection.”
AI can be used to help detect attacks more accurately and then prioritize responses based on real-world risk, Gartner research vice president Mark Driver told CNBC. “It allows automated or semi-automated responses to attacks and provides more accurate modeling to predict future attacks. All of this doesn’t necessarily remove the analysts from the loop, but it does make the analysts’ job more agile and more accurate when facing cyber threats.”
Messina confirmed the benefits of this for MCR Hotels. “The security tools and software we use have built-in machine learning capabilities and gets smarter over time. It is looking at outlier behavior as well. For example, if someone on our team is emailing from New York City and then all of a sudden we start receiving pings off servers halfway around the world, outlier behavior like that is detected very quickly.”
As data security and privacy protection become more important than ever, smart hotel operators will be using AI to ensure security.
Where artificial intelligence cannot help
While there are many use cases of AI emerging, it’s helpful to look at where AI is not going to help you or your hotels.
“We forget humans have bodies”
Author and cultural observer David Sax believes we often forget this.
“It’s almost as if we act as if people are just these virtual avatars or numbers on a spreadsheet. How do we design environments and experiences with people’s bodies in mind? Interior designers and industrial designers are very good at doing this but the more you can engage people and their different senses in hospitality, the better.”
It’s an important reminder as we start thinking about the applications of AI.
In a world where data and answers are everywhere, theoretical frameworks are more important than ever.
“In the age of AI apparently we can’t wait for theory to come from discovery and experiment. We have to place our faith in the supremacy of computational power over human intelligence — even in the face of an ongoing theoretical mystery about how to imbue computers with flexible intelligence in the first place,” wrote Larsen. “This thinking is a mistake, and when the dust settles, will likely prove a costly one at that.”
Theory is closely related to another core aspect of innovation that AI isn’t great at: insights.
“Computers don’t have insights,” Larsen adds. “People do.”
“Society is about to experience an epidemic of false positives coming out of big-data projects,” says Michael Jordan, Professor of Computer Science at the University of California, Berkeley. “When you have large amounts of data, your appetite for hypotheses tends to get even larger. And if it’s growing faster than the statistical strength of the data, then many of our inferences are likely to be false. They are likely to be white noise.”
It’s like having billions of monkeys typing. One of them will write Shakespeare.Michael Jordan, Professor of Computer Science at the University of California, Berkeley
Technology without adoption is useless.
The very thing that will unlock value through the adoption of AI is something that requires very human traits: empathy, listening, relationships, and consensus building.
Now that we’ve looked at what AI can and cannot do for us in hospitality, we have to look at one of the most common questions on this topic.
How to save your job from AI
“Will AI take my job?”
That’s often the first reaction when new technology is introduced.
Let’s look at a few ways that will help you become irreplaceable.
“AI won’t beat you. A person using AI will.”
Paterson says this about AI and advises hotel leaders to act on this.
If I were a hotel owner or operator right now, I’d be incentivizing my team to come to me weekly with ideas on how they can use AI to make them better at their job and do it faster.Rob Paterson
“Most people at the moment wouldn’t do that, because they think they’re going to work themselves out of a job. Hospitality leaders have to paint the picture that using AI is not about working yourself out of a job. It’s about making yourself better at your job.”
“Know thyself…better than Netflix and Google know you”
That’s what Moronta advises his teams. “They need to know what they’re good at. They need to know what they’re not good at.” Why?
“Understanding human behavior is going to be extremely important because we are automating the transaction. Successful people in the future will be leaders who can see beyond that and steer the ship. Where is the white space that’s not being addressed?”
Develop deep expertise and critical thinking skills
Betsy Freeman is an author and lead mobile designer for a large Silicon Valley technology company.
You see the limitations of AI immediately if you apply it in an area you have expertise.Betsy Freeman
Her first experiments with ChatGPT were underwhelming. “Output is basic and leaves you wanting more. It shows how critical thinking and original ideas are key for standing out and providing value.”
The design tool Canva provides an example that hospitality providers can learn from.
“Canva made everyone a ‘designer.’ My role as a design leader changed from aligning pixels to designing systems and strategies. Design used to be a service and now it’s seen as integral to effective software product strategy as designers apply empathy and design principles.”
Gone are the days when the same way of doing things will produce the same results. You need to be curious, think critically, and bring fresh insights to thrive in an increasingly AI-powered environment.
Develop your capacity for empathy
If you don’t want AI to take your job, you must think about what you can do that it cannot, and empathy is part of that.
Sax spends a lot of time researching how technology intersects with our humanity and shared this advice with me:
“Develop empathy, which is not something you can code into an AI chatbot. It’s not something that you can put on a website or turn into some process. Empathy is a person-to-person interaction. It can happen on the phone, it can happen through digital communication, but it happens at its fullest and in its highest resolution when people are together in the same space.”
“The best hotels know how to use empathy to welcome you. They anticipate what you’ll be feeling when you arrive. You may be coming off of a long flight, you may have had delays, and there might have been bad weather. Maybe you’re traveling for work or with your family and young children. You’re going to be stressed, you’re going to be tired. They know it’s their job to get you checked in and let you know the room might not be ready until 4 pm, but they’ll anticipate how to do this in a way that makes you feel welcomed and respected. That’s the core of hospitality.”
Focus on experience creation
“What will thrive in the future is unique experiences, high touch that AI can’t give us,” Paterson says.
“It used to be that you could go to a hotel and it was an experience, it was something that you couldn’t get at home. Now, the whole experience for 90% of hotels is pretty bland and boring. That’s a huge opportunity is to automate the administrative work, and put the time, energy, and creativity you saved towards service because AI is never going to overtake human touch and human service.”
Experience matters so much now that emotion is replacing traditional brand standards, Sean O’Neill writes as a 2023 Skift megatrend.
That’s why you see brands like Fairmont running campaigns like this one:
Hotel operators can learn from people like Richard Fertig, who are innovating in the short-term rental industry.
It used to be that hospitality just meant consistency. That’s boring today. Nobody talks about having a really consistent experience. We take consistency for granted and expect a baseline of quality, cleanliness, and service. But that’s not all we seek. We also seek experiences, adventure, and excitement.Richard Fertig, founder, Stomp Capital
“When you create something different and unique it’s memorable, and people spread the word for you,” Fertig shared.
In a world increasingly driven by AI, experience matters more than ever.
Double down on your unique perspective
As AI spreads, the need for individuality will increase.
The best way to be irreplaceable is to double down on your unique experience and perspective. I appreciate what Samantha Hardcastle shared with me on this:
“Brand concept relies so much on having a vision, and having a strong belief that stems from something greater than oneself.”
“I always like people to fill in the blank: people in this world need more _.”Samantha Hardcastle
What do you believe to be true? Double down on living that out in the way you provide hospitality.
Create something original through research and collaborations
Originality can happen from creating from your point of view, and it can also come from the research and collaborations you do.
Jeremy Wells is one of the leading experts in doing this, as Managing Partner at Longitude°, a branding group that has helped companies like 21c Museum Hotels, SALT Hotels, and Real Hospitality Group showcase their unique approach to hospitality.
There are two (short) episodes of Hospitality Daily I encourage you to listen to from Wells on this. As the author of Future Hospitality but also a hotel developer and owner himself, I found the advice he shared on how to stand out and differentiate useful.
To become irreplaceable, create something unique through research and collaborating with others.
Actions you can take to benefit from AI today
We’ve looked at actions you can take on a personal level to prepare for an increasingly AI-powered world. Let’s look at some steps you can take to help your hotels thrive in this environment.
Clarify your priorities
“The first place to start is to look broadly at what your business priorities are,” Rothaus advises.
“What are you trying to accomplish and how much value does that drive? Then, ask where data and AI applications can support that. That allows you to fund the things that matter so that you can provide the best experiences for guests, employees, and owners.”
McKinsey agrees. “Before launching pilots or testing solutions, step back and take a holistic approach, creating a prioritized portfolio of initiatives across the enterprise for AI and the wider analytic and digital techniques available. It is important to develop an understanding about which use cases and domains have the potential to drive the most value for a company.”
Remember you’re building for humans
I can’t tell you how many times I’ve seen technology initiatives that totally missed this.
“Always remember that you are building things for humans,” Sax said. “You’re not building things for robots. Use your judgment as a human and your own experiences, especially during the pandemic.”
“Ask yourself: just because a robot can do this, does this serve me? Will it serve our guests in a way that makes them feel better and more connected?”David Sax
“Hoteliers and technology teams should start with questions like ‘How can we make work for our housekeepers easier? What would the ideal state look like?’” Soler added. “It’s a tough job, and housekeepers know that, but it’s the surprises that lead to burnout. It’s things like the door being shut on them 5 times out of 10 that make hard work harder. Solving problems like these would reduce staff turnover.”
Look outside the hospitality industry for inspiration
O’Flaherty is a 20-year vet of the hospitality industry and says he still looks outside the industry for inspiration. “Look at industries like retail or gaming.” Since Microsoft owns Xbox, he has a unique view of what’s happening in that industry that I found to be a helpful example.
“If you think of how gaming creates emotional connections with consumers using microtransactions of content to create better consumer journeys it’s an amazing thing. If there’s a single player, they make X amount of dollars per player but if it’s a multiplayer game with five or six people playing who don’t know each other – they’ve just created their own sense of community there – they get a significant amount of more revenue.”
“I think the travel industry has been very transactional oriented, selling the seat, selling the hotel room, selling the upgrade. That does not create an emotional connection which I think the consumer is looking for in their journey. Many times at a hotel we arrive and may use the mobile check-in – and then there’s zero digital engagement from there.”
If you look outside to an industry like gaming, you’ll be inspired to create a better in-journey experience, provide microtransactions of content and experiences that create a better guest stay and will drive more ancillary revenue for you.Shane O’Flaherty, Global Director of Travel & Hospitality at Microsoft
Vet your tech vendors on their use of AI
AI will likely continue to be a layer in existing technology such as the property management system, instead of a separate application.
That means you need to be thoughtful about what tech you’re using and which providers you are partnering with.
My research showed tech implementation failures were common:
As an evaluation tool, the request for proposal is being jettisoned in favor of bake-offs because the latter approach offers a more hands-on, efficient approach to finding solutions that will meet organizational needs.Robb Wilson
Wilson advises an alternative to the traditional RFP. “The fastest way to find out if and how a solution can be applied to the problems you want to solve is to see it in action, solving those problems. Comparing the same proof of concept on multiple platforms is a great way to find the one that fits.”
He also suggests questions such as:
- Have you successfully automated internal processes?
- Are your internal machines integral to your own operations? (Or are they just window dressing?)
- Are employees within your organization clamoring for more machines because they see automation working?
- What skills and use cases have you tackled? Can you show us?
All tech isn’t created equal. Work with partners who can help you thrive in the age of AI.
Improve your ability to collect, store, and use data
Data is the fuel for AI.Philip Rothaus, Managing Director for Data & AI in Alvarez & Marsal’s Travel, Hospitality & Leisure Practice
“AI initiatives fall apart when there’s not a foundation of reliable data that’s available to train the models,” Rothaus told me. “All AI and machine learning and advanced analytics models run on data.”
This was key for Remington Hotels, which began its journey to AI-powered insights by ingesting data from leading standardized sources, including ProfitSword for financial systems, Smith Travel data for benchmarking, and sales performance from sales systems.
“Overall, we have 42 data sources that support around 170 jobs,” Remington CCO Raul Moronta said. “Where we could get standardized data feeds, we pushed our partners to provide those. But there were a few areas of our business where data needed to be collected and uploaded manually, so we did that. If there is data that’s important to our business we will find a way to digitize it, upload, and store it for reporting and analysis.”
“One of the hardest parts of our industry is how siloed data can be,” Messina shared. “We’re getting data across five different brands and data for our independent hotels used to sit in a lot of different places.”
Until you can get your data all in one place and start normalizing it, there’s really not a lot AI can do with it.Jacob Messina, SVP of Technology & Innovation at MCR Hotels
For Messina, partnerships with technology companies like myDigitalOffice that had existing integrations with property management systems were a way to accelerate data aggregation.
Digitize your operations
AI won’t be able to benefit an area of your business that isn’t digitized.
“Hotels have invested in guest-facing technology, but haven’t invested in employee-facing technology,” observed O’Flaherty. “So many hotel employees are trying to make do by using consumer apps to get the job done, which creates huge privacy and security risks and misses out on opportunities to drive efficiency.”
When you digitize your operations on purpose-built tools, you set the stage to take advantage of the power of AI for your operations.Shane O’Flaherty, Global Director of Travel & Hospitality at Microsoft
Reneson Hotels Chief Operating Officer Scott Curran uses what he calls “lightweight tech” to digitize operations, providing both data and accountability.
“Every morning I get an email that summarizes the key points of everything that’s happened at our hotels. I can see pass-along logs and all maintenance items – and how long they took to process. My managers get the same thing. Reading through this allows me to understand everything going on without making my team feel like I’m micromanaging them. It also provides a sense of accountability to our teams knowing that our operational performance is transparent to everyone, including our company’s president.”
Digitizing elements of your hotel operations is a foundational step to preparing for the use of AI.
Develop your change management capabilities
Benefiting from any technology comes back to an organization’s ability to change.
“Many AI initiatives fall apart through a failure of adoption,” Rothaus shared. “A classic example is in revenue management where revenue managers have this feeling they can outsmart demand forecasts because they don’t understand how they are made. To avoid this, you need to make sure everyone is brought in from the start on what it is that we’re doing and why. You also need to share how the data and AI models are put together.”
Co-creation is the secret sauce.Robb Wilson
“It’s critical to get your team away from the land of centralization and silos and toward the co-creation mindset,” Wilson says. “Because, while it’s true that certain [AI automation] will only serve certain departments, its evolution is a company-wide endeavor.”
“If I were CEO of Best Western again, I’d immediately implement a recurring agenda item for AI in our weekly meetings,” Paterson said. “I’d have each member of my leadership team present what they found over the last week that could make their job better or make their teams jobs better. It would become an integral part of the weekly conversation. That’s how you get started with change like this. What that process would uncover would be phenomenal.”
Pilot AI internally before using it externally with guests
AI shouldn’t start with the guest experience.
“Start working internally,” Wilson advises. “Start by automating tasks, not jobs. With most organizations, starting internally is the fastest way to accelerate your path to AI adoption.”
“By focusing on employees—on helping them accomplish more and experience more satisfaction with their jobs—you are focusing on your customers. The simpler you make your starting point, the sooner you can test and iterate. The sooner you test and iterate, the sooner you can roll out an internal solution. By rolling out an internal success, you’re demonstrating the process by which AI will get trained and are closer to beginning testing for customer-facing applications.”
O’Flaherty believes using AI-powered chat interfaces to give employees easy access to information is a big opportunity. “If I’m an employee I’m asking questions like ‘how much vacation time do I have left?’ An AI-powered chatbot could instantly recognize who I am and say have 26 hours left.” That’s just one use case but shows how chat could become a new way to interface with technology and give team members instant access to questions they have.
Whatever path you take, don’t make guests your testing ground. It can create expectations that you may not be able to deliver on and hurt your reputation.
Start using AI internally among your teams first.
The future can be bright for hotels and hoteliers using AI to provide hospitality
As we’ve looked at in this guide, the use of AI in hotels and the way we provide hospitality isn’t a magical fix to all of our challenges. Instead, it’s an opportunity to enhance our humanity, delight our guests, and increase the profitability of our businesses.
“There is a world within reach where everyone has access to technology and no one is left behind—where soul-sucking jobs are a thing of the past, and companies are increasingly self-driving. In this world, people are free to work together on the most interesting, creative problems, and not only within the confines of large companies.”Robb Wilson
“Humanity and tech aren’t in competition. They’re in cooperation,” Puorto said. “The better you adopt technology, the more human hospitality can become because staff can spend more time taking care of guests – not taking care of software.”
That’s a future I’d like to see.
I’ve attempted to give you the most balanced overview of the uses and applications of AI in hotels today, but I’m sure I’ve missed some points. If you have comments or suggestions about what we’ve looked at here I’d love to hear from you. Please message me on LinkedIn or email me: firstname.lastname@example.org.
Thanks for reading, and I can’t wait to see what you’ll build with AI this year.