How do you envision AI transforming the hospitality industry in the next year, and more importantly: what should we do TODAY to prepare?
26 experts shared their view
At HITEC Charlotte 2024, I had the opportunity to sit down with over 50 industry experts to discuss the potential transformation AI could bring to the hospitality industry within the next year. The aim was to create some kind of "time capsule" to revisit at HITEC Indianapolis 2025 and assess the accuracy of our predictions. The responses varied widely, from cautious optimism to a firm belief in AI's revolutionary impact. Recurring themes in my conversations included data collection challenges in our traditionally data-siloed industry, privacy concerns, the use of generative AI in marketing content and advertising, enhanced revenue management prediction strategies, and changes in the digital booking journey due to the introduction of SGE travel agents in Google or hybrid search engines/generative engines such as Perplexity.
With these insights in mind, now it's your turn to take a guess: how do you see AI shaping the hospitality industry in the near future, and what are the most critical factors that will determine its success or failure?
The question needs to be reworded to ask how Generative AI (Gen-AI) will transform the industry, as Predictive AI (P-AI) has been core to revenue management / pricing systems for decades. P-AI has also been fundamental to RPA - Robotic Process Automation - which links disparate systems that may not have APIs. Eg UiPath and Automation Anywhere are some of the leaders here, and they have been using pattern matching (P-AI) to read characters from green screens or paper forms and bring the data into more modern systems. P-AI is also already core to some of the better IBEs. RPA is the big opportunity for hospitality, far more than Gen AI, as we have so many labour-intensive processes, especially in finance. My 2025 prediction is Gen AI will have much less impact than the current hype implies. There are none of the fundamental pieces that made WWW/dotcom so impactful eg it offered cheap tech, open standards, decentralised control, and global reach. Hotels and airlines transformed their sales, servicing, and distribution processes in just a few years. Gen AI will be limited to copywriting, SEO, document analysis, and clipart-type image generation. The OTAs will dabble, but will revert to visual search as today.
We will in a world of abundance: destinations, flight routes, accomodations, restaurants. This has created a paradox of choice wherein the discovery process of deciding where to go (for leisure), what hotel to book and where to dine is almost a chore in that it can take up a ton of time. Moreover, traditional search / aggregation tools aren't helping resolve this problem...in fact they are adding to it by revealing even more options!
With this inconvenience in mind, AI can make the greatest impact by acting as a personal assistant in helping narrow the field of view according to some very specific criteria, saving time and delivering trusted results.
For example:
I need a hotel that's within five minutes walking distance from [this convention center], but I also want one that's boutique/luxury, opened or renovated in the past decade and has a vibrant lobby/bar scene. Can you give me the top three?Another example:
I need a restaurant for four people this upcoming Friday around 7:30pm that's suitable for a good business conversation -- highly rated cuisine, too loud, still upscale, good decor. Can I get five options?(and the AI pre-verifies availabilities for that time)
Let’s start with the second question.
First, you need an AI strategy, and an AI strategy holds or falls apart with your data strategy. To use AI, you need to work with good, clean data. For example, suppose your systems are littered with duplicate profiles. In that case, you’re training the AI on incorrect information - training on good data is more likely to produce good results with actual impact.
Today, you should focus on your data strategy. You don’t want to build a house on a shaky foundation; it will inevitably fall apart. By cementing your data strategy, you can trust that foundation to be strong and hold up the rest of your structures.
Now, for the first question.
The guest experience will become fully personalized, and it starts with AI helping you recognize the true value of your guests. From that recognition comes the ability to personalize the guest experience, from the marketing they receive to the booking process to their in-house stay. Right now, RFM models are based on only hotel stays, and there’s so much more to it than that.
Using AI to tie together other data points, such as restaurant visits and spa reservations, you can get a comprehensive view of each guest's true value and then, using Generative AI, personalize every experience. This will allow hotels to recommend the right upsells, customize their guests’ stay to their precise preferences, and ensure all communications are tailored to individual guests rather than mass-produced.
I’m keen to see how AI will transform the hospitality industry. We’re at the beginning of a big shift, and I’m excited to be at the forefront of this new technology.
We work with many hotels that are already using AI today, applying machine learning (ML) to help price rooms, and to improve offer selection and presentation of upsell offers, but there remain plenty of opportunities to improve guest engagement, grow revenue, and optimize operations by more fully leveraging the power of AI.
By synchronizing both generative AI and traditional ML hoteliers can personalize room attributes, products, and services to truly enhance each guest’s experience. The combination of the right price with the right content targeted to a specific guest, will lead to higher conversion and increased revenue.
To prepare today, businesses should invest in modern, cloud-based hotel technology that “brings AI to the data”, not data to the AI. AI should be embedded into every aspect of the hospitality technology stack and not thought of as a separate product. The strategic objective should always be to solve real problems.
Additionally, hotels should look for partners who take a disciplined approach to Applied AI – the focus of driving quantifiable business value in either increased revenue or decreased expenses and not waste time on “feel-good” use-cases that ultimately don’t add real world value.
I agree that data collection and normalization will likely be the primary challenge in the next year or so. The hospitality industry has traditionally been very siloed, with data fragmented across various software systems, and creating a more integrated, holistic approach will be challenging. AI, particularly generative AI, relies heavily on the quantity and quality of the data it is trained on. Our industry's challenge will be gathering and normalizing these data for AI consumption. Over the next year, we will likely focus more on data collection and normalization than on pure AI applications, which remain, at least for now, a last-mile discussion.
My take is that, at least in the short run, Robotic Process Automation (RPA) might become a more frequently mentioned term than AI in our industry, especially regarding data normalization and validation processes. Tasks such as creating single-guest profiles and establishing unique sources of truth for AI training are critical. RPA can significantly streamline these processes, ensuring the data fed into AI systems is accurate and reliable. Thus, while AI holds immense potential, its success will depend on our ability to effectively address these foundational data challenges.
Can we do it in one year? Not sure...
There has been a lot of buzz and heated discussions about the role and impact of AI in the hospitality industry and travel in general. I have no doubt that AI will lead to a complete overhaul of the hotel tech stack and help solving labor shortages in hospitality.
Except for the major hotel chains, hotels do not have the financial, technological or talent resources to select, train, implement and maintain AI applications on their own. We have to give kudos to hospitality tech vendors for the speed with which they have implemented AI in their existing technologies.
So, what should hoteliers do in 2024 to prepare for AI-dominated future?
Hoteliers should start asking their existing or potential vendors - PMS, RMS, CRM, CRS, CMS, marketing, operational and back-office technologies - a simple question:
Are you implementing AI in your applications, when are you going to do it, and how will that help my business?If there is no clear and definitive answer, fire the vendors or don't hire them.
As a matter of priority in 2024, on the property website I will implement an AI-powered hotel-specific chatbot like Asksuite and Quicktext to handle 24/7 customer service, trip planning and booking assistance.
Absolutely! AI is poised to revolutionise hospitality, and by 2025, we can expect AI-powered hyper-personalised experiences to even be the norm. Chatbots and virtual assistants will understand guest preferences, recommend activities, or even tailor room settings in real-time. This, combined with AI-powered dynamic pricing, will transform how guests book and experience their stay.
Yet, unlocking AI's true potential requires addressing some critical considerations. We must first address the fear of embracing AI; pilot programs with chatbots or targeted marketing are excellent ways to experiment and see the benefits firsthand. Staff training bots, in particular, will help employees become familiar with AI usage and even help resolve training needs or knowledge gaps regarding enterprise solutions in use.
To fully leverage AI's potential, it also requires standardisation and seamless integration to avoid data silos—clean, consolidated data is key to effectively harnessing AI in any industry. In preparation, we can see the hospitality industry moving away from best-of breed-systems to all-in-one platforms with a single source of truth! Finally, we must establish clear protocols that ensure data security, privacy compliance, and, ultimately, guest trust. By proactively addressing these points, hospitality businesses can embrace a future of truly personalised guest experiences.
As we are seeing in broader business application of Artificial Intelligence in all of its forms will emerge into the hospitality industry. If technology is about creating efficiency as it aids us in business, then we have no shortage of inefficient options.
When focusing on the next year, what could it be and what to do about it then my position is as follows;
- AI is another layer of computing capability that lays on top of existing computing capability.
- To be ready we have to get ready. Baden Powell said it best - Be Prepared.
- The general challenge to overcome is that technically we are not prepared for the latest because we are trying to catch up to the last.
Two opportunities;
- Analysis of customer information - macro and micro perspective. Behavioural data and Personal behavioural data. To prepare you must have locations that currently hold this information. If not, time to start.
- Consolidation and analysis of disparate and siloed information. To prepare, the information must exist. Start today using existing toolsets to learn things about your business that could never be produced from line of business applications.
Start simple with some quick wins. Get the house in order for the future.
AI will shape the hospitality industry by enhancing guest experiences, streamlining operations, and optimizing revenue management. Success depends on building a strong foundation with the team through education and engagement, ensuring they understand AI as a supportive tool rather than a replacement. Providing hands-on training and continuous learning opportunities will help staff embrace and effectively use AI.
Leveraging existing solutions that have AI components to their fullest capabilities, integrating them seamlessly into current systems, and training staff to maximize these tools are critical steps. Identifying and prioritizing high-value, feasible use cases while assessing associated risks is essential. Piloting and experimenting with these use cases, refining and implementing the most impactful solutions based on feedback and results, will determine the overall success of AI integration in the hospitality industry.
AI, Gen AI, and AGI will transform our world. However, despite the rapid pace of change, this transformation will need time to mature. Currently, we are experiencing what Gartner describes in its Hype Cycle for Emerging Technologies: we are descending from the Peak of Inflated Expectations to the Trough of Disillusionment. While many companies have piloted AI projects, far fewer are in deployment. This is partly a matter of time, but also a recognition that LLMs, though impressive, may not yet be fully practical products.
AI and Gen AI encompass much more than LLMs. Focusing on other AI-powered applications could be key to transforming the hospitality industry.
We won't revolutionize hospitality next year; it will be a mid-term transformation. To prepare, companies should implement robust data governance and transparent policies to build trust with guests. They must overcome data silos, as collaboration and data sharing among stakeholders are essential for leveraging AI's full capabilities. Investing in AI-driven technologies and infrastructure is crucial; launching many proof-of-concept projects and maintaining persistence despite failures is key. Finally, developing a methodology to test impacts and measure ROI will help evaluate how AI integration affects processes, adding intelligence to technology rather than just digitalizing it. These steps will help companies prepare for the AI-driven transformation in the hospitality industry.
Prince Thampi, CEO and Founder of Hudini, predicts that AI will make a notable impact in these key areas of the hospitality industry: personalized guest experience, chatbots, revenue management, predictive maintenance, operational efficiency, enhanced security and market analysis.
Related article by Prince Thampi
Key themes included data collection challenges, privacy concerns, generative AI in marketing, better revenue management, and changes in the digital booking journey. To shape the future of hospitality, it is crucial to overcome data silos by integrating data systems for a complete picture of guest interactions, use advanced analytics for better decision-making, and leverage first-party data to personalize services. High-density based clustering can uncover hidden patterns, while addressing privacy concerns and enhancing revenue management through better predictions and pricing. AI-powered travel agents and hybrid search engines will personalize and streamline the booking process. These innovations promise personalized guest experiences, improved operations, and maximized revenue.
No matter if we talk about GenAI, machine learning, or other facets of AI, they all share a common trait: AI performs better with more data. The volume of training data is vital to the success of any AI initiative. Therefore, hotel companies must create a central pool of data, often referred to as a Central Data Management (CDM) System or Customer Data Platform (CDP), to consolidate data instead of having isolated data lakes scattered throughout the customer journey.
However, merely gathering data is insufficient. Data must be standardized, cleaned, and continuously managed. Otherwise, the "garbage in, garbage out" rule applies to AI as well.
So, how can you evaluate if a vendor truly excels at data cleaning? It's straightforward: assess whether the vendor corrects, overwrites, and manages data in your PMS system or other operational tools. Only vendors who do this truly believe in their processes. You may be surprised to find that only a handful of companies offer robust data cleansing functionalities. Managing a Central Guest Profile (CGP) is the most challenging task in our industry, but it is essential for leveraging AI effectively.
AI will change sales, marketing, operations, but only if the setup is correct.
Over the next 12 months I believe we'll see further advances in agentic interfaces from Apple Intelligence, Microsoft Copilot+ PCs, and Google's agents on Gemini. These interfaces will create an entirely new shopping and booking channel that enables the AI agents to create complete itineraries (and customize them) with deep personalization that will not likely be available via other, current booking channels. The personalization of these itineraries will be based on what the AI agent knows about the traveler(s) from previous bookings and interactions with brands. Instead of starting their travel planning with Google searches, travelers will ask the AI agent to do the work.
How to prepare? It's time to tune up that loyalty program! When the agent builds an itinerary, it will preference brands with which the traveler has a favored relationship. If the traveler has a history of engagement with ABC Hotel brands, the AI agent will favor that brand in the search recommendations. Where will the booking go? The AI agent will likely ask the traveler to help it understand how they value tradeoffs between price vs. loyalty points and stay credits, etc. and use that knowledge to present the best options.
Related article by George Roukas
AI can and will empower hospitality businesses, enabling them to make intelligent decisions about pricing, inventory management, guest communication, revenue, occupancy, and marketing. These are multi-dimensional data problems, and AI is well-suited to tackle them, but not all AI innovations will be successful.
AI will only be useful if complete datasets are available to the AI to be utilized and leveraged. Already today tools exist to help hoteliers cut through the noise and identify changes in patterns that require their attention and action. These tools are becoming smarter and more capable every day.
To prepare we recommend hoteliers to design the scalable data structure providing a single, comprehensive and real time repository of information and avoid disparate silos scattered across a 20-vendor tech stack which ultimately leads to a loss of information. Hoteliers should use an operating system that is part of a fully-integrated, unified platform that can integrate and leverage comprehensive data, transforming how they manage their operations.
Cloudbeds does this. Intelligence that improves our customers' hospitality businesses is here and more is coming.
Information Technology
Your content on Hospitality Net?
Hospitality Net membership explained
