How the hospitality sector can create opportunities from artificial intelligence
The hospitality sector is witnessing significant innovations and disruptions, thanks to the coming of age of artificial intelligence. A fast yet steady pace of advances in AI-based technologies is enabling considerable innovation and disruptions in travel and hospitality—giving rise to digital transformation across the value chain —rearranging the roles and presenting more intricacy into the value chain between travelers and destinations.
Creating opportunities from data
Digital technologies supply a massive amount of data for travel companies. Many travel companies are developing advanced analytics capabilities necessary to capture the full potential of this data – offering enormous opportunities and possibilities for every travel and hospitality company. AI capabilities will soon reach the cusp where many travel companies can generate tremendous value by applying AI at scale in their day-to-day operations. The rise in computing power, lowering costs for data storage, and increased maturity in technologies such as machine learning, deep learning, natural language processing, and video recognition will accelerate the pace of AI in the hospitality sector. Some hospitality companies have already started to deploy AI in pilot projects. New experiments, innovations, and rapid prototyping will likely persist as emerging technologies evolve.
While the jury is out on how AI technologies will shift the travel and hospitality sector, several unique opportunities are likely to emerge. The purpose of this article is to bring these possibilities to light.
- Hyper-personalization through predictive algorithms
I often jokingly (well, half-jokingly) mention that Amazon knows what I want even before I know it. Such is the intelligence of technology companies that are already proficient at predicting what consumers want to buy and then recommending the appropriate products.
Hospitality companies embarked on the personalization journey a while ago. They have now started to explore the use of predictive algorithms to address customer needs and preferences proactively. An illustrative use case of personalization in hospitality using predictive algorithms can be seen where hotel chains create highly targeted loyalty program promotions based on the guests’ prior buying patterns, demographics, purchasing behavior as well as interests based on data in the public domain such as social media platforms.
With the help of artificial intelligence and predictive algorithms, hospitality companies will be able to create special offers and experiences in real-time and at a scale that appeals to the needs and desires of each guest.
- Boost revenue via customized product recommendations
Hospitality companies are beginning to converge predictive algorithms with geolocation data to deliver practical recommendations in real-time through mobile apps. For instance, hotel companies can pilot a program to drive ancillary revenues through algorithms to sell recommended products. These algorithms can look at historical data to determine guest preferences – whether the guest travels with family, enjoys pizza, or shopping and then use geolocation data to deliver a special offer just as the customer walks by the hotel restaurant.
Use cases for analytics and artificial intelligence go beyond mere promotions and coupons. The same use case can extend to proactive engagement with customized offerings. Consider a scenario where a hotel brand is able to recommend destinations to a traveler for a spring break vacation that actually fits in with the travelers interest. Other application of a similar use case could be prompting the guest for pre-ordered room-service dinner as the guest enters the lobby. Likewise, use of geolocation data to deliver more curated offers and services in all areas could enable leaders in the sector to craft more efficient service operations over time.
- Enhanced customer service through NLP
Several enterprises across the hospitality value chain, from agents, and intermediaries to global brands and individual properties, are exploring possibilities to simplify service throughout the customer journey by introducing AI chatbots. Under the umbrella of conversational interfaces, these AI chatbots include messaging platforms powered by AI. For example, automated chatbots can assist customers with simple queries such as identifying upcoming travel plans and proactively suggesting transport and lodging options for those dates. If the question gets too complex, the chatbot can move the conversation to a human agent for faster resolution.
With NLP and machine learning, chatbots will be adept at conversing with users and addressing all the phases in the travel journey from research to booking to stay. During the conversation, AI chatbots can analyse user’s travel preferences based on past bookings, reviews, social media activity, to make valuable suggestions on destinations, lodging options, restaurants, events, and anything else that might appeal the user.
For example, chatbot functionality on several platforms, including a voice bot on Alexa for travel research and booking, is already quite popular. A hotel’s AI-powered concierge comes with the ability to look for exciting activities nearby and to book the tickets within the platform, all with a few simple voice commands.
- Virtual assistants that cater to connected guests
Hospitality companies are already exploring innovations to extend the travel experience through virtual assistants and voice-activated devices connected to the Internet. For example, hotel rooms with Amazon’s Echo speaker are equipped to give guests the ability to control their hotel room features via the Alexa virtual assistant.
Similarly, virtual assistants like Alexa and Siri will do a better job at letting guests control smart room functions via voice command.
Like chatbots, virtual assistants are set to emerge as a travel booking platform in their own right. As millions of consumers use these devices and get comfortable conversing with virtual assistants, technology companies are coming up with a range of travel apps for these platforms.
These virtual-assistant platforms will challenge travel and hospitality companies and consumers to think differently about the travel experience. Curated results powered by AI will be critical to their success.
- Smarter pricing management via machine learning
Although revenue management was perhaps the first function to deploy advanced analytics in the travel sector, the industry has been slow to adopt AI to evolve into more dynamic pricing. Advancements in machine learning will, in the near future, improve hotels’ ability to optimize pricing through more accurate analysis and predictions based on market demand signals, availability of rooms, and an in-depth understanding of the individual customer. Add to this the ability to price based on attributes rather than just room types. This trend toward personalized pricing offers the flexibility to instantly serve up highly curated products with personalized pricing to match.
In parallel, advances in predictive analytics will drive improvements in forecasting throughout the value chain, from global hotel brands to technology start-ups. As demand forecasts become accurate, pricing strategies can become more sophisticated to capture a greater value. With the help of self-learning algorithms, companies can predict future price movements based on multiple factors, including trends, fluctuations in demand, special seasonal offers, weather patterns, events, consumer preferences, and purchase patterns.
Experiments in predictive price in the travel and hospitality sector are already in practice. The best example of this is, travel websites offering a view on whether airfare will go up or down and advice on when to book.
As artificial intelligence increasingly powers these predictions, we would expect to see a new surge of pricing and revenue-management strategies come into play. These advances in natural language processing, facial recognition, analytics, and machine learning will continue to open many new opportunities.
From the above examples, the leaders in the sector can be certain that innovations powered by Artificial Intelligence using an extensive ecosystem of supporting digital technologies offer unprecedented opportunities for growth. A comprehensive unified data platform powered by artificial intelligence will transform the way hospitality delivers superior guest experience and simplifies operations. All you need is the right partner to identify the right use case in the organization and deploy the right solution to deliver maximum impact.
Tech4TH, a global digital solutions and services company combines its expertise in the latest technologies, domain knowledge and consulting to deliver intelligent engagement to enterprises in hospitality.