LONDON — The growing prevalence of artificial intelligence and predictive software technology has raised interest and some questions in the global hotel industry.
A big question is whether hotel revenue managers are still relevant. Speakers at the recent IDeaS Global Hotel & Client Summit grappled with the answer to that question throughout the event.
“There is data everywhere, and it is disconnected,” said Tom Ray, principal business intelligence architect at revenue management solutions firm IDeaS, referring to the scale of the problem for humans.
AI conversations in the hotel industry include how data will continue to be analyzed, and whether it is the data newly generated by AI or the revenue-management team’s judgment of that data that will lead strategy.
Shane O’Flaherty, global director of travel, transportation and hospitality at Microsoft, said revenue managers “need to fail now, fast fail and continue to innovate.”
He added that AI will “play a major part not just in the operations experience but also in the customer experience and labor experience.”
The internet has so far generated 410 billion units of information, which equates to 60% of all information from the dawn of time, O’Flaherty said. Information gleaned from books, which have been around a great deal longer, equates to only 12 billion units of information.
“We now can produce limitless generation with just a few lines of text,” he said.
The time savings, benefits and initiative that can result from AI will revolutionize the industry, said Andrew Rubinacci, executive vice president of commercial and revenue strategy at Aimbridge Hospitality.
He added inevitably hotel industry departments will change.
“The solution is a commercial strategy approach with more data and fewer people, a prioritized, targeted strategy. If we don’t embrace AI, we will be left behind,” he said.
Rubinacci predicts that silos will disappear completely; AI will see each customer as a “segmentation of one,” and no question will be left unanswered.
“AI will help meet all the needs of every traveler. A failure to embrace this? Well, we are leaving a lot of money on the table,” he added.
New Heroes Needed
Hotel firms already are employing a new breed of computer- and AI-savvy revenue managers who may not fit the traditional mold.
Joe Pettigrew, chief commercial officer at Starwood Capital Group, said the new wave of “revenue optimization” employees often share three traits.
“They are naturally curious and cannot stand the status quo. Then, they do not wait. They will take hotels off [online travel agencies] just to see what will happen,” Pettigrew said. “That is often not a very good idea, but the conversation will always be there if you do not try it for at least one or two hotels. Lastly, they are persistent and resourceful.”
He said such traits can dramatically push the returns spelled out in an asset’s underwriting.
“Revenue optimization equals making the most out of what you have, but asking for maybe one thing in addition, then you are making the most out of what you could have had,” Pettigrew said.
Rubinacci said sales managers have goals to hit and can be tempted to book whatever business they can, which often puts them at odds with revenue managers.
“Revenue managers must hit budgets, so they manipulate rates and available, open channels to fill holes, which often undercuts groups,” he said.
AI could help smooth ruffled feathers by simplifying organizations in regard to communications, more usable data and advanced revenue-management capabilities, commercial platforms and dashboards, Rubinacci said.
“Such a strategy requires better communications for alignment. Revenue managers will need to be strategists,” he added.
Guest Gains
O’Flaherty said AI will also allow the guest to be more demanding.
“AI will automatically generate responses to customer inquiries and ... personalized content for websites. Classification, sentiment, entity extraction, summarization and email generation — the five stages of looking after a guest — will be automatically pinpointed to each of them.
“Guests will say, ‘You should know what I want next!’” he said.
The benefits are that such endeavors can increase brand value and result in a “30% to 50% reduction ins supply-chain risk,” O’Flaherty said
“That will come with the extraordinary, an ‘always-on’ service for instant assistance and fast resolutions that nurture experience,” he said.
One problem might be that AI-generated content will need to be “turned down” a little, or it risks not rising to the expectation of guests or fulfilling what they desired from their actual experiences, O’Flaherty said.
There are still many legal ramifications and processes requiring legislation and agreement, he said.
The hotel industry is not in the podium places as far as AI is concerned, Rubinacci said.
“The airline space is leading the charge, and online travel agencies are not far behind. Hotel companies are just starting to dip their toes in the waters,” he said.
He said one major difference is that airlines, unlike hotels, have very little that they can package up.
“The new employees have a culture of entrepreneurialism, daily testing and ‘doing,’ and they have no shame,” Pettigrew said.