Understanding Artificial Intelligence in Hospitality: A Closer Look

Bryan Michalis
Bryan Michalis
February 16, 2024
February 16, 2024
Understanding Artificial Intelligence in Hospitality: A Closer Look

For as long as there’s been technology, hospitality businesses have evolved alongside it. In 1894, The Netherland Hotel in New York City introduced the first in-room telephones. To this day, guests expect in-room telephones in every hotel.

That’s how it works: technology comes along, hotels adopt it and guests expect it. And today’s biggest advancement, artificial intelligence (AI), is no different. It’s been the talk of the town now for a while, and for good reason. AI improves the guest experience, improves efficiencies across the board and saves you money. So, what could it do for your hotel or hospitality business?

What Is Artificial Intelligence (AI) in Hospitality?

Before we look at how AI works within the hospitality industry, let’s go over the basics – because it can get confusing, real fast. What is AI? How do hospitality businesses use it?

AI is the development of computer systems that perform tasks requiring human intelligence, such as learning and problem-solving. Put simply, these computer systems are trained to think and learn like humans.

So how does this help hospitality businesses? You can hand over various tasks to AI (especially ones that are boring or time-consuming) and increase your workforce’s focus on customer service and other vital areas.

Explore AI fundamentals, use cases and risks in the hospitality industry in our ebook The Ultimate Guide to AI in Hospitality.

Predictive and Generative AI – Do I Need to Know the Difference?

Predictive and generative AI are two similar approaches to AI serving distinct purposes and functions within a hospitality business.

Predictive AI studies historical data, identifies patterns and predicts likely outcomes — like offering personalized recommendations to customers based on their purchase history, for example. Generative AI creates new data based on prompts or existing data. Think Chat GPT or Google’s Bard.

Modern hospitality businesses are no strangers to technology. From the early- to mid-1900s, when telephones and air conditioning hit the market, to self-check-in and guest messaging in the 2000s, hotels have never hesitated to adopt the latest advancements that promise to enhance the guest experience.

Predictive vs. Generative AI

Understanding the Power of AI in the Hospitality Industry

According to a PwC estimate AI could contribute an eye-watering $15.7 trillion to the global economy by 2030. IndustryARC says thatTravel and hospitality AI, is estimated to surpass $1.2 billion by 2026, as hotels and hospitality venues all over the world leverage AI to pad their bottom lines and power more efficient workforces.

This means understanding how AI benefits the hospitality industry – and your hotel – is vital.

Today, AI helps your teams work smarter, not harder. This is because of several factors, including:

Technological advancements

In the past few years, AI has become more user-friendly and cost-effective for hotels. This is because cloud computing and open-source AI frameworks and libraries reduce the need for expensive proprietary solutions.

More customizations for hotels

On their own, predictive and generative AI is too broad to be useful for hotels. In response, technology companies like Canary have built AI solutions with hotels’ specific needs and challenges in mind.

Better integrations

Inflexible legacy systems within the hotel industry have slowed technological advancement. Instead, AI solutions integrate with existing hotel management systems and bring flexibility to your technology stack.

Time-saving automations

AI provides hotels struggling with staffing shortages with a way to automate processes and lessen the burden placed on overworked employees. This not only creates better guest experiences but also lowers staff turnover.

Machine learning for personalized experiences

By using machine learning algorithms, hotels can analyze data on guest preferences and behavior to create more personalized experiences. This not only increases customer satisfaction but also boosts brand loyalty.

Infographic: 12 Ways AI Helps Hotels

12 Helpful Uses for AI in the Hospitality Industry

AI has a wide range of uses across various facets of hospitality. Think about where you’d most like to streamline operations: front desk, catering, events, maintenance, housekeeping or revenue management, for example. The good news is that every department has an AI application!

1. Guest Messaging and Chatbots for Customer Support

Implement AI-powered messaging or chatbots. This technology improves the customer experience by enabling your venue to assist guests digitally, such as answering FAQs and providing information about hotel amenities.

Wyndham Hotels & Resorts recently invested in Canary AI to help their hotels “free up time to focus on offering personalized guest services through a more streamlined check-in process or gathering valuable feedback upon checkout.”

2. Concierge Robots

Offer AI-driven concierge robots that provide recommendations for dining, entertainment and activities based on guest preferences and behaviors. Take Connie, for example, Hilton’s AI robot concierge developed by IBM. She’s programmed to interact with guests and respond to the questions guests would commonly ask the concierge. With each interaction, Connie learns and adapts to provide more detailed answers.

3. Instant, Tailored Responses to Guest Reviews

Responding to guest reviews is an important part of managing your online reputation, but it’s important to reply to reviews on time. There are two ways AI can help you here. It can suggest responses that you edit and post yourself, or it can automatically generate and post an appropriate response.

Once you have a way to respond to reviews, you can implement processes for collecting more of them. For example, Canary’s contactless checkout encourages guests to leave positive reviews through a brief, customizable survey you can automate to send after they vacate the room.

4. Personalized Guest Experiences

No two travelers are alike, making knowing what to upsell is a difficult job. Predictive AI allows you to push offers throughout a guest’s stay according to their preferences.

For example, offers sent to a family of four should differ from those sent to a business traveler. Upselling tools with built-in AI consider preferences, interests and purchase history when making suggestions.

5. Automated Translation

Most hotels host international travelers and guests, but what happens when no one speaks their language? AI translation helps eliminate language barriers and could even attract more international guests.

For example, Profitroom’s AI Translator enables hotels to translate their marketing and offers into any language in seconds.

6. Revenue Management

Skift says that AI will make room pricing more profitable by producing automated rate recommendations. Instead of leaving revenue managers to interpret tables and spreadsheets, AI algorithms can analyze market demand, competitor pricing, and historical data to adjust room rates in real time, creating optimized prices and maximizing revenue and occupancy rates.

7. Predictive Maintenance

Use AI to monitor equipment health and predict maintenance needs. This enables you to proactively address issues before they cause disruptions to guest services and hotel operations.

Sensors, IoT gadgets and AI platforms, such as papAI, monitor and gather information about the health of your equipment. Then they look for patterns and predict trends.

8. Tailored Marketing Campaigns

By enlisting AI to analyze guest data and behavior, your team can create targeted marketing campaigns that are more personalized to the guest. Segmenting your outreach helps increase engagement because your offers are more tailored to guests’ interests. If your guest frequents the spa each visit, AI could generate an email promotion encouraging them to return to your hotel for a luxurious spa weekend.

9. Feedback Insights

Guest feedback doesn't just help travelers decide where they want to stay, they also help hotels understand their strengths and weaknesses. But gleaning insights from reviews becomes tricky when you have hundreds or thousands to analyze.

Use AI to summarize repeat mentions and highlight areas for improvement. The result? A treasure trove of insights and a whole lot of saved time for you and your team.

10. Better Understanding of Guest Profiles

AI can analyze guest data to create detailed profiles, including preferences and spending patterns. This allows hotels to better understand their guests and tailor their marketing strategies accordingly.

For example, AI can identify which guests are most likely to take advantage of a spa package or book a room upgrade, allowing hotels to target those individuals with personalized offers.

This not only increases the chances of converting these guests into paying customers, but also helps create a more positive and personalized experience for them during their stay.

11. Smart Energy Management

In today’s climate-conscious world, monitoring and limiting your energy consumption has numerous benefits for hotels. Accenture suggests that AI adoption in the energy sector could increase energy efficiency by 20% by 2035.

So, how could you use AI to cut costs and become more sustainable? Recognizer, for example, monitors all areas of your hotel, ensuring the air conditioning is only used as needed.

12. Enhanced Security and Safety

The average cost of a hospitality data breach is 3.4 million. AI can help hotels protect guest data and enhance security. AI algorithms can detect and prevent fraudulent activities like credit card fraud and identity theft..

A Two-Sided Coin: AI Implementation Considerations

When understanding the impact AI can have on hospitality, it’s important to understand it from a holistic perspective.

AI could have a tremendous impact on the success of your business, but there are risks and downsides to consider. Having these in mind while adopting AI will help you do it effectively and ethically.

1. Training your AI model

When it comes to AI, you have two core choices: open-source large language models (LLMs) and proprietary models. Open-source LLMs require technical expertise and hardware resources, while proprietary models are developed and optimized by a specific company for a specific industry. Read more about this in our ebook.

2. Data security and privacy

Implementing AI within your hotel comes with certain responsibilities, including protecting your guests’ data. The AI system you use must comply with data protection regulations such as PCI DSS.

3. Ethical guardrails

If you choose to implement AI, it’s important to use it ethically. That means, for example, training your AI model to avoid discrimination and biases. It’s also a good idea to define roles and responsibilities for AI system oversight, maintenance and decision-making. Lastly, make your AI algorithms transparent to guests and employees and pressure-test your AI for robustness, security, data quality and compliance.

4. Integration with existing systems

Implement AI systems that integrate with your existing technologies and systems for a better guest experience, operational efficiency and data utilization.

Make Artificial Intelligence Your Next Superpower

AI is a new technology, so we understand if you’re hesitant to jump on board. Research is key. And remember: use AI to supplement, not replace. There is a way to leverage technology without losing the human interactions that make hospitality so great. Canary understands how important this balance is. Canary AI is tailored to the hospitality market, helping your business streamline guest communication, personalize interactions and prioritize requests. Schedule a demo today.

Learn How Canary Can Help Your Properties Thrive

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