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The hospitality industry is no stranger to digital transformation. It was once enough to have cable—now, WiFi is as indispensable as a comfortable bed. And the pace of technological transformation within hospitality has only accelerated.
Using modern cloud software solutions, hotels now streamline operations and boost revenue with features like mobile check-in and checkout, digital tipping—redefining what it means to provide a five-star guest experience. But even in this tech-savvy industry, many hoteliers are still unsure about AI and its potential.
Our team of technology and hospitality experts put together this guide to demystify AI, illustrate top use cases and opportunities and outline potential risks and implementation considerations for hoteliers.
Key takeaways:
Today, hospitality stands at a pivotal juncture, with artificial intelligence (AI) ushering in the next era of innovation. PwC reported that AI could contribute a staggering $15.7 trillion to the global economy by 2030—more than the estimated output of Japan, Germany, the UK and India combined.
We’re already familiar with certain AI applications, like virtual assistants, autonomous vehicles, online customer support, chatbots and fraud detection in banking. As AI technology becomes increasingly accessible, we aim to answer the question we get asked all the time:
The short answer: AI has tremendous potential to provide massive benefits for both hospitality professionals and guests when adopted in the right way for your property.
AI in the hospitality industry refers to the use of artificial intelligence technologies to streamline operations, enhance guest experiences and drive smarter business decisions. From chatbots that handle guest inquiries to systems that personalize marketing offers, AI helps hotels deliver faster, more tailored service.
Behind the scenes, AI powers tools like revenue management systems, predictive analytics and sentiment analysis. These technologies analyze large volumes of data to forecast demand, adjust pricing and improve service delivery. The result is a more responsive, data-driven approach that helps hotels stay ahead in a competitive market.
That was the question first proposed by Alan Turing, a British mathematician, in his 1950 paper Computing Machinery and Intelligence. Turing broke the Germans’ Enigma code in World War II and inspired the eponymous Turing Award, the highest accolade in computer science.
After 70-plus years of experimentation, engineering, setbacks, and success, AI has evolved tremendously. Today, it can defeat a Chinese Go champion, drive cars, assist in diagnosing diseases and generate art.
But it can also improve how hotels serve their customers, manage their workforce and plan for the future at a fraction of the cost. We live in a world where guests are used to getting what they want when they want, which leaves hotels running to catch up. Understanding AI and how it can help us evolve is key to meeting new customer demands.
To understand artificial intelligence in the hospitality industry, we first need to look at predictive and generative AI. These two approaches are related, but both serve distinct purposes and functions.
Predictive AI studies historical data, identifies patterns, and predicts what is likely to happen in the future—for instance, weather models and predicting future weather. In a hotel setting, predictive AI can recommend add-ons based on guest data or identify future occupancy levels.
Generative AI, on the other hand, uses the data it was trained on to create something original—like music or art. Think of a painter who uses other pieces to inspire their own. This approach combines deep learning neural network techniques and algorithms to generate content.
Today, AI for hotels has evolved to the point where hoteliers can realize major benefits from utilizing it. And this is because of a combination of factors, such as:
AI has rapidly evolved over the past few years. Generative AI exploded onto the scene in 2022. Tools have also become more user-friendly and cost-effective. Cloud computing and open-source AI frameworks and libraries reduce the need for expensive proprietary solutions.
Predictive AI and generative AI are too broad on their own to be especially useful to the hotel industry. To respond to this, technology companies have built customized AI tools for hotels to address their specific needs. This has already begun and is advancing rapidly.
Technology advancement in the hospitality industry has been historically slow due to complex, inflexible legacy systems. AI solutions integrate with existing hotel management systems to streamline and optimize critical processes for running hotels.
Hotels don’t have enough staff to properly operate their hotels. This has been a long-term issue with no foreseeable light at the end of the tunnel. AI provides a productivity boost for hoteliers who are short-staffed.
As a hotelier, providing a stellar guest experience is a top priority. But as guest expectations rise, meeting higher standards becomes more difficult. This is where AI can be your friend. There are numerous ways to elevate the guest experience by leveraging AI for hotels.
These factors have made AI available to hoteliers for the first time, providing opportunities to build a competitive edge. Meeting rising guest expectations isn’t just about elbow grease and hiring more talent—AI tools let your staff work smarter, not harder.
The right technology supplements staff operations and customer service with personalized recommendations and upselling or real-time messaging and assistance, for example.
Investing in AI now will position you for success in the rapidly changing hospitality industry. It will also ensure you remain relevant and profitable. But what are some specific ways AI benefits your hotel?
Messaging, recommendation systems and voice-controlled devices are all ways AI can strengthen the guest experience.
AI tools for hotels can automate repetitive and time-consuming tasks, such as room assignments, inventory management and customer data processing. This enables hotel staff to focus on more strategic and guest-centric activities.
Hotels can use AI to save on labor costs using automated guest services, predictive maintenance or inventory management.
AI can process and analyze large volumes of data to extract valuable insights into guest preferences, behaviors and trends. Hotels can use this data to tailor marketing efforts, improve services and optimize revenue management.
AI enables targeted marketing campaigns based on guest data, allowing hotels to deliver personalized offers and promotions to specific guest segments— increasing the likelihood of conversions.
AI can optimize energy usage by monitoring and controlling HVAC systems and lighting based on occupancy levels, contributing to environmental sustainability and cost reduction.
By now, you understand the basics of AI (predictive vs. generative AI), why it’s becoming popular and the benefits. You may be wondering, “But how can I actually use AI in my hotel?”
There are a number of real-world use cases where AI impacts the hotel industry, transforming various aspects of hotel operations and guest experiences—all without compromising on the human touch.
To help you make informed decisions about AI technology in the hospitality industry, we’ve ranked top use cases based on the level of impact to hotel operations, guest experience, and revenue.
When guest requests come in, it can be difficult (and time-consuming) to prioritize them. Typically, teams respond with a first-in-first-out approach. But this approach often leads teams to respond to lower-priority issues before higher-priority ones. This can result in unhappy guests and lower guest satisfaction ratings.
Using AI to prioritize guest requests can help you identify and address the most pressing needs. For example, a water leak is more important than a guest who’d like another bottle of wine delivered to their room (although that’s also important!).
AI tools for hospitality can analyze sentiment, such as the tone of guest messages, to determine urgency. If a guest is expressing frustration, AI can detect that and help prioritize the guest's request first over a guest with a neutral or positive tone.
Most people today keep their phones close by at all times. It’s not surprising that most guests want to communicate with hotel staff via SMS or a messaging application instead of over the phone, email or in person.
Predictive AI can be utilized to help your team categorize and summarize guest messages, and in many cases can automatically respond to your most common questions.
For example, if a guest sends a message saying they’re having trouble signing onto the WiFi, AI can help identify that the guest needs directions on how to access it. Your team can either directly respond or utilize pre-set, customized automatic responses, providing a near-instant answer for the guest.
Although these models can’t respond to 100% of guest inquiries, they are extremely powerful for hotels, as the most common requests make up more than 50% of all guest questions. Based on Canary’s own proprietary data, we’ve found that the five most common guest requests are:
Want to see it in action? Learn more about Canary Guest Messaging today.
Generative AI can go a step further and provide suggested or automated responses to guests with completely new content, which does not need to be pre-set. Suggested replies allow hoteliers to first review the AI-generated response before replying to the guest.
Once reviewed, hoteliers can opt to send the message as-is or edit the message as desired. On the other hand, automated replies immediately send the guest AI-generated responses.
Generative AI’s ability to create intelligent guest replies is almost limitless. For example, if a guest were to ask, “Do you have any sushi restaurant recommendations nearby? ”, a generative AI model would be able to leverage all the data that it was trained on, which includes online reviews of local restaurants near the hotel.
The model can take the contextual information of where the hotel is located and offer restaurant suggestions nearby that are highly rated. As a personalized AI concierge tool, generative AI can provide service to guests at all times of day. Your human concierge can take a breather during busy periods.
Your reviews are critical to your hotel’s success. And it’s not just the reviews themselves that matter—it’s also your responses. But replying quickly, consistently and in a way that represents your brand is easier said than done.
There are two main ways AI tools help with reviews. It can suggest responses that you then edit and post yourself. This takes slightly longer but gives you greater oversight over the content. Or it can automatically generate and push appropriate responses based on the content of the review.
Internet reviews help travelers decide where they’ll get the best guest experience for their money. But the content of these reviews also helps hotels understand where they’re going wrong and right. It becomes tricky to glean insights when you have hundreds or thousands of reviews to analyze.
Hotels can quickly scan hundreds of reviews with AI to summarize common highlights and areas for improvement without having to make a spreadsheet or spend hours on the task.
Upselling is vital for increasing revenue and improving the guest experience. But you can’t learn good upselling techniques overnight. And unfortunately, not all hotel front desk workers are natural-born sellers.
Predictive AI models increase your upselling success by pushing the right offers to the right guests at the right time. Upselling tools with AI built in can consider guest preferences, interests and purchase history when making suggestions. For example, guests with children can be offered local amusement park tickets, while couples can be offered a bottle of wine.
Relying solely on manual processes to gather travel ideas can be challenging in a fast-paced and technologically advanced world. Creating unique, personalized travel itineraries for guests can be difficult without up-to-date knowledge. Without AI for hotels, staff must spend time manually researching ideas to fill a guest itinerary and rely on their own research to gather information and suggest destinations and activities to guests.
Hoteliers can automate guest bookings through AI chatbots trained on LLMs. Instead of manually searching for the best deals or attractions, chatbots use the information given to them—like your guests’ pre-existing data plus the information they provide—to generate highly personalized itineraries.
Hospitality is an industry fraught with data breaches and fraud, resulting in lost revenue and hours spent on fighting claims. Fraud detection AI can help hotels identify fraud before it happens.
AI fraud detection models are becoming more sophisticated at utilizing multiple data sources to determine if a credit card transaction is likely to be fraudulent. Past card behavior, flagged individuals and even email addresses that have little to no history can be used to identify potential fraud.
Pro tip: Canary’s Digital Authorizations and Mobile Check-In can both be equipped with Canary’s industry-leading fraud tools to help reduce fraud and chargebacks for hotels.
Staff scheduling and resource allocation aren’t always an easy task and can impact operational efficiency, staff satisfaction and overall guest experience. Fluctuating demand, unforeseen events (such as illness), skill matching, labor regulations and employee preferences are just a few challenges you might face.
AI software can help by leveraging data analysis, predictive modeling, and optimization techniques. AI can track the highest and lowest volume times of day and dates of the year to suggest an appropriate level of staffing to cover those needs.
Managing maintenance issues across tens or hundreds of rooms at a property can quickly become a headache. Your maintenance team juggles routine equipment checkups, HVAC maintenance, painting and touch-ups and fire safety checks, just to name a few. And they must do all of this efficiently and safely.
AI predictive maintenance is a good way to cut down on workload. This is because it reduces the likelihood of emergencies and surprise malfunctions. The technology leverages vibration analysis, oil analysis and thermal imaging to help detect and prioritize potential issues before they become a problem.
AI presents hotels with solutions to multiple challenges by freeing time, saving money and enhancing staff and guest satisfaction. But without understanding the implications for your business and workforce, AI adoption could be risky.
Your AI’s performance, accuracy and ability to achieve its intended objectives are only as good as the data it’s trained on. In the context of AI, large language models (LLMs) are specialized machine learning models designed to understand, interpret and produce human language. When it comes to generative LLMs, you have two options: open source or proprietary.
Open-source LLMs are released under a license and allow you to alter, distribute and commercialize them. You can customize these models according to your specific needs. While open-source LLMs are flexible, they require technical expertise and substantial hardware resources.
Proprietary models are created by a specific company. They are often developed and optimized for specific tasks or industries, and that means better performance.
Although proprietary models involve upfront or ongoing fees, they remove the need for technical know-how or extra hiring. LLM providers often offer dedicated customer support and managed services. They also often come with prebuilt integrations and APIs, which makes it easier to incorporate them into your existing systems and technology.
Proprietary models are trained on large sets of industry data otherwise unavailable to hotels. This is done using a technique called structured training, where the AI watches and imitates human behavior. As a result, the AI matches your hotel’s tone and brand.
Prioritizing data security and privacy when implementing AI is not only a legal requirement, but it’s a fundamental aspect of responsible and trustworthy AI adoption. Any AI system used to collect and process guest data must comply with data protection regulations such as PCI DSS. This is important for a few reasons:
Hotels may face financial and reputational losses in the event of a data breach, leading to potential legal liabilities and damage to their brand image.
Guests expect you to handle their personal information with care and confidentiality. Demonstrating a commitment to data security and privacy can become a competitive advantage.
Hotels must use AI ethically. Here are a few ethical considerations to be mindful of:
AI models trained on biased data can perpetuate and even amplify existing biases, leading to unfair treatment of guests. Tracking data sources and ensuring they represent a broad pool of information can help create a diverse and representative dataset, reducing the risk of biased outcomes.
Clearly define roles and responsibilities for AI system oversight, maintenance and decision-making. Establish accountability to ensure that AI-driven decisions are traceable and auditable. Many AI models are meant to be used by people to assist them in their roles, not necessarily replace their own reasoning and judgment. Setting clear expectations is critical.
Strive to make your AI algorithms transparent to guests and employees. Provide clear explanations of how AI is used, what data is collected and how it impacts decisions.
Whether you use open source or proprietary LLMs, pressure-testing your AI system for potentially inappropriate or irrelevant outputs is vital. It’s an important method of evaluating robustness, security, data quality and compliance. Here’s how Google used adversarial testing in the creation of its AI tool, Bard.
If you want to benefit from AI, it must work seamlessly with your existing technologies and systems. This will result in a better guest experience, operational efficiency, and data utilization.
While today’s AI is easier to implement than ever, there are still challenges to be aware of. Data compatibility issues may arise as the AI communicates with your current systems, especially if they’re legacy ones. Additionally, as the volume of data and AI usage increases, ensuring the scalability of the integrated AI system becomes crucial.
Fortunately, it’s possible to work through these barriers. Work closely with AI vendors and other technology partners to ensure compatibility and interoperability. Choose vendors with a track record of successful integrations and responsiveness to customer needs.
Artificial intelligence has the potential to revolutionize the way hotels operate. From personalized chatbots and improved upselling to better staff scheduling, AI has many practical uses throughout your hotel.
It’s also important to remember that AI is still a relatively new technology that can cause concern for some. Many might wonder if artificial intelligence for hotels could take their job. We think it’s unlikely that AI would cause the hospitality industry to reduce its workforce. And there are a few reasons why:
That said, AI should only be implemented after careful consideration and planning. With this in mind, here are four action items for you to take away:
By integrating AI in a strategic way, hotels can unlock powerful efficiencies behind the scenes while elevating every guest interaction. The result? A smoother, more profitable operation and a guest experience that stands out.
Ready to see how Canary AI and our full suite of guest-facing tools can help you stay ahead of the curve? Request a demo today.
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