The hospitality industry is always looking for ways to provide a better guest experience and streamline operations. One of the latest and the most discussed developments in the industry is the use of artificial intelligence (AI) technology. In addition, GPT-4 launched recently further fuelled this trend. Increasingly sophisticated language models like ChatGPT and GPT-4 allow extracting more intelligence and specific outputs to increase hospitality business efficiency.
From chatbots and predictive messaging to context and sentiment analysis and automated translation, AI changes the way hospitality businesses operate. We will explore how AI is changing the industry, the benefits and challenges, and real-world examples of AI in hospitality. Whether you’re a hotelier, vacation rental manager, or simply tech lover, here’s your comprehensive overview of AI in hospitality.
Table of contents:
- What is artificial intelligence?
- Why does AI matter to the hospitality and travel industry?
- The impact of artificial intelligence on travel and hospitality industry: the numbers
- What can AI do for hospitality businesses: real world examples of AI in hospitality
- What are the benefits of using AI in the hospitality industry?
- What are the most common AI applications in the hospitality industry
- What are the risks and challenges of implementing AI in hospitality?
- Can AI replace humans in hospitality?
- What is the future of AI in the hospitality industry?
- How can hotels and vacation rentals prepare for the impact of AI on the industry?
What is artificial intelligence?
Artificial intelligence (AI) is the simulation of human intelligence in machines that are programmed to think and act like humans. The intelligent machines can be trained to perform various tasks by processing large amounts of data and recognizing patterns in that data.
Artificial intelligence has the potential to revolutionize many industries, from healthcare to transportation, but even hospitality! It has already made significant advancements in fields such as natural language processing, machine learning, and robotics.
The role of artificial intelligence in the hospitality industry
Artificial Intelligence (AI) has the potential to greatly improve vacation rentals, hotel operators, and everything in between, by addressing some of the key challenges they face.
One key challenge in the hospitality sector is the importance of excellent customer service all while managing a high volume of interactions. AI can help automate and streamline repetitive tasks such as answering frequently asked questions, and assisting with booking and reservation processes. This helps free up staff to focus on more human interactions with guests. AI can also be used for customer data analysis and behavior patterns to provide targeted marketing and personalized experiences for guests.
Another challenge in the hospitality industry is the need to optimize operations and reduce costs. AI can be used to predict and prevent maintenance issues in hotels, as well as to optimize staffing and inventory and revenue management. Additionally, the use of smart hotels, which use sensors, smart locks, and other digital technologies to automate various tasks, is a growing trend that will improve efficiency and reduce costs.
While AI has the potential to automate certain tasks, and potentially replace some jobs, it also has the potential to create new opportunities. Companies will need professionals with expertise in AI to interpret and make decisions based on the insights provided by the AI.
The impact of artificial intelligence on travel and hospitality industry: the numbers
Here are a few examples from various studies that show the impact of Artificial Intelligence on travel and hospitality:
Increases revenue
A study by Accenture found that hotels using AI saw a 5-15% increase in revenue compared to those that did not.
Increases customer satisfaction
A survey by Oracle found that 83% of customers who interacted with a chatbot or virtual assistant were satisfied with the experience, compared to 73% for those who interacted with a human.
Increases efficiency
A survey by Hilton found that AI conversational chatbots saved their customer service team over 1.5 million hours of work per year.
Provides Cost Savings
A study by Accenture found that hotels using AI saw a 15-25% reduction in labor costs compared to those that did not.
Increases bookings
A study by Expedia found that hotels using AI saw a 20% increase in bookings compared to those that did not.
What can AI do for hospitality businesses: real world examples
Let’s start by looking at a few specific examples of what AI can do for your hospitality business:
Increase positive reviews
If you know the sentiment of a guest before they check-out, leverage this parameter to filter out unhappy guests when reminding them to leave a review. Operators can see a 28% increase in positive reviews if they filter out unhappy guests when reminding them to leave a review.
Follow up with inquiries automatically
The number 1 rule of sales is to follow up. In hospitality you are selling a room, a space, an experience. When a guest inquiries, leveraging the context of the conversation to automatically follow up with them a few hours later increases your chances of converting the inquiry to a booking by 18.5%
Change the tone of your responses for each guest
Change the tone of your responses based on guest sentiment to be more apologetic when dealing with frustrated guests vs easy going guests. This increases personalization in your automations, all while maintaining quick response times.
Provide personalized recommendations
By analyzing guest messages throughout all of their stays, we can determine what kind of traveler they are, what amenities they might be interested in, and profile tailored recommendations with a chatbot or in their guest web-app.
Embrace the global aspect of hospitality
Communicating with guests in any language makes the traveler’s life easier, and the unique experience better. It reduces the chance of guests not understanding important information, but also shows another layer of personalized effort that they will certainly appreciate.
Provide Amazon-like retail experiences
People are used to having access to everything immediately. From one-click pay, to same-day shipping, guests expect instant responses. A reduced average response time has a direct correlation with increased reservations.
Be more proactive than reactive when dealing with unhappy guests
Being able to filter your tasks based on key parameters will increase your efficiency in day to day operations. Prioritize responses of unhappy guests that are checking in very soon.
Target the right audience with marketing
Context analysis will allow you to understand areas of the business that can be improved. It will also provide you with a more holistic review of the types of guests you might be attracting. This way you can better position your marketing and drive more direct booking guests.
Automatic room assignment for hotels
Leveraging guest preferences, context of booking added notes, and existing property management system data, you can automatically assign rooms to guests based on their preferences and needs. This can save your team hours every morning, reduce the workload of staff, all while ensuring that guests are placed in rooms that meet their precise requirements.
Predictive maintenance
When a guest complains about not being able to access the front door with their code, is it because they didn’t follow the instructions properly, the code isn’t working, or the smart lock wifi bridge is disconnected? This information is usually available and can be leveraged, in combination with chatbots to proactively, and instantly address maintenance needs – improving the overall guest experience and reducing costs for the hospitality business.
More revenue per guest
Automated upselling and cross-selling – knowing if a room is available the night before allows you to automatically approve early-check-ins. Using AI to suggest additional amenities or services based on past guest bookings and preferences can increase revenue all while improving the overall guest experience.
Train your team
You can also leverage context, sentiment, and response times to understand the performance of your team and identify areas where employees may need additional training or support. This will help your hospitality business improve the overall quality of the service provided and increase guest satisfaction.
What are the benefits of artificial intelligence in hospitality?
By adopting AI, hospitality businesses can gain a competitive advantage by improving efficiency, enhancing the guest experience, and increasing revenue. Improved efficiency by streamlining the guest journey from booking to checkout. Enhanced guest service through chatbots, personalization and recommendations Increased revenue through optimized pricing, marketing and upselling
Improved efficiency in operations
AI technology can streamline many routine complex tasks, such as guest verification, check-in, checkout, housekeeping and more. This can free up staff to focus on higher-value tasks and reduce wait times for guests.
Enhanced guest experience
Chatbots and predicted responses can provide instant assistance to guests, answering questions and providing information on demand. AI can personalize the guest experience by providing recommendations based on guest data, preferences and history.
Increased revenue
Hospitality businesses can optimize pricing, marketing and upselling by analyzing guest data and predicting demand with AI. This improves the bottom line by offering the right products and services to the right potential customers at the right time.
What are the most common AI applications in the hospitality industry
Among the most common AI applications in hospitality are chatbots, predictive messaging, context analysis, sentiment analysis and automated translation. GPT3.5 also known as ChatGPT, followed by GPT-4 has become the new big thing in the hospitality industry, like it has in other sectors as well.
GPT3.5 and GPT-4 can be used by hospitality teams for sentiment recognition, context analysis, content and message creation, or translation. Fine tuning the AI, and adding rules will increase accuracy and reduce limitations or frustrations hospitality professionals might encounter.
Auto-generating responses, understanding the sentiment of conversations, and automatically translating them to any language is the essence of hospitality AI.
Chatbots
A great algorithm for Chatbots: Chat GPT3.5 and GPT-4
GPT, or Generative Pre-training Transformer, is a type of artificial intelligence (AI) language model developed by OpenAI. It is designed to generate human-like text by predicting the next word in a sequence based on the context of the previous words.
GPT can be used for a variety of natural language processing tasks, such as language translation, question answering, and text generation. It can also be used to train chatbots and other conversational AI systems. GPT is trained on a large dataset of human-generated text and can generate text that is coherent and often indistinguishable from text written by a human. It is a powerful tool for language processing and has been used in a variety of applications, including chatbots and virtual assistants.
For example, let’s ask the algorithm again to explain this to a person who doesn’t understand AI at all again by prompting it: “re-explain that to someone who doesn’t understand AI”:
“GPT is a type of computer program that is designed to generate text that is similar to how a human would write or speak. It does this by looking at a large amount of text that has been written by humans and trying to understand the patterns and rules of the language. Then, when it is asked to generate text, it uses what it has learned to come up with something that makes sense and flows like human language.
What is a Chatbot for the hospitality industry?
A chatbot is a computer program designed to simulate conversation with human users, especially over the Internet.
Chatbots can be integrated into messaging applications, websites, mobile apps, or used to enable voice or text interactions with customers through a variety of platforms such as social media, messaging apps, and phone systems.
Chatbots are often used to automate customer service and sales processes, provide information, and assist with tasks such as booking and reservations. They can be powered by artificial intelligence (AI) and machine learning algorithms, allowing them to understand and respond to user inputs in a natural language; or can be hard coded to lead users through a specific path.
Benefits of using chatbots in the hospitality industry
Increased Efficiency
Chatbots can automate routine tasks such as answering frequently asked questions and improving booking experience and reservation processes. This helps free up staff to focus on more personalized interactions with guests. This can help increase efficiency and productivity in the hospitality industry.
Cost Savings
The use of chatbots can help to reduce the need for a human customer service agent, potentially resulting in cost savings for the business.
Improved Customer Experience
Chatbots can provide quicker and sometimes more convenient assistance to customers, helping improve the overall guest experience. They can also be trained to understand and respond to customer inquiries and requests in a natural language, providing a more personalized experience.
Challenges and limitations of chatbots and GPT
Limited understanding of nuances
Chatbots and GPT are based on algorithms that can recognize patterns in data. However, they can also struggle to understand the context and nuances of human language and communication. This can lead to misunderstandings or inappropriate responses, which can be frustrating for users.
Lack of human interaction
Chatbots and GPT can certainly assist with tasks and provide valuable information, however they may not always be able to provide the level of personalization and human interaction that some users are looking for.
Dependency on large amounts of data
Chatbots and GPT rely on huge datasets of human-generated text in order to learn and improve performance. If these datasets are not diverse or representative of the intended users, the chatbot or GPT may not perform well and may generate biased responses.
Ethical concerns
The use of chatbots and GPT raises ethical concerns, such as the lack of accountability for businesses.
How can hospitality professionals benefit from chatbots despite the limitations?
Because of these limitations, hospitality professionals are hesitant to rely exclusively on chatbots for guest service. They are best used as a supplement to human staff, not a replacement. They may not be able to provide the same level of service as a human staff member. This is why the best way to start employing AI for guest service is by controlling suggested responses. This will keep the humans in the driver’s seat while significantly increasing their efficiency. It can also be great to change the level of human dependency according to work hours. For example, it is better to provide robotic guest support during night hours rather than none at all. With the learning curve and advancement of the technology, the team will be able to rely more on AI helpers.
Predictive messaging
What is predictive messaging?
Have you ever seen Google predict your sentence as you are typing your email? This is the same idea but for your hospitality unified inbox.
Instead of automatically responding to guests with AI generated responses, like a Chatbot would, let your guest service team know what the best response could be. Put them in control to confirm and send the message.
These suggestions can be based on patterns or trigger keywords identified in previous messages and can be used to assist with customer service or other tasks involving language processing.
Benefits of using automated message suggestions in hospitality
The advantage of taking a “suggested message” rather than a “full chatbot” approach is the ability to remove the chatbot limitations. This is while maintaining a high operational efficiency.
Increase information processing speed
While it may take a few minutes for your guest service team to find the relevant information requested by a guest, this allows for more accurate suggestions that can skip this wait time and make your team more efficient.
Reduce copy-pasting errors
Context switching, especially in vacation rentals where each property, owner, and guest is different, can lead to human errors. The most common one is copy-pasting the wrong information from a different data source. This type of error can lead to more frustrations by both guests and hospitality managers.
Limitations of using predictive messaging in hospitality
While suggestions are quite accurate (82% accuracy in Enso Connect), they still involve manual interaction to verify and contextualize content. These messages can be perceived as artificial if sent out without a delay.
How can hospitality professionals benefit from predictive messaging despite the limitations?
Properly set up and managed automated message suggestions can provide the “middle ground” between automated and personal hospitality.
Context Analysis
What is Context Analysis?
A context analysis algorithm is a computer program that is designed to analyze the context in which a piece of information is being used or produced. This can include analyzing the words and phrases used, the tone, and sentiment of the communication, and any other relevant factors that might provide insight into the meaning or intent behind the information. The goal of a context analysis algorithm is to help you determine the overall relevance, accuracy, and meaning of information in the context in which it is being used or produced.
In the hospitality industry content analysis can be enhanced with other data points to maximize accuracy. For example, a guest could be talking about not being able to open the door. While this could be categorized as a maintenance issue, pairing this information with the guest check-in date and time allows you to proactively raise an issue around check-in that could not necessarily involve maintenance.
The benefits of context analysis in hospitality
Enhanced efficiency
Context analysis algorithms can help your hospitality business quickly, but accurately identifying and prioritizing important customer messages – such as the issue preseted above with a guest check-in.
Better decision-making
By analyzing customer messages in context, you can gain valuable insights into customer behavior, preferences, and trends, which can inform better business decisions. Think of it almost like a mind map of key data points about your guests.
Personalization
Context analysis algorithms can help you tailor messaging and communication with specific guests better, improving the overall guest experience.
Increased revenue per guest
By understanding and responding to customer needs and preferences, as per the personalization point above, you can improve the ability for upsells, and cross-sells, leading to increased sales and revenue.
Sentiment Analysis
What is Sentiment Analysis?
Sentiment analysis is the use of artificial intelligence (AI), and machine learning algorithms to automatically identify and extract subjective information from text or speech data. It is used to determine the sentiment or emotion expressed in text: positive, negative, or neutral.
To perform sentiment analysis, an algorithm is trained on a large dataset of human-generated text that has been annotated with labels indicating the sentiment of the text. The algorithm then uses this training data to learn the patterns and rules that are associated with different sentiments.
The benefits of sentiment analysis?
While sentiment analysis can have inaccuracies due to nuances not fully understood by the algorithms, the importance of knowing the sentiment of your guests is vital to building a solid hospitality business.
Be more proactive with your guests
By analyzing guest messages, you can identify areas of improvements in your process. Filtering unhappy guests to prioritize those interactions is an important part of hospitality that front desk agents and guest service managers already do naturally. This simply allows you to be more efficient and less biased when handling happy or unhappy guests.
Improve Marketing and Branding
By analyzing the sentiment of social media posts and online reviews, hospitality businesses can gain insights into how the brand is perceived by potential guests. This can help businesses adjust their marketing and branding efforts to better align with guest sentiment and preferences.
Only get positive reviews for your vacation rental or hotel
By knowing the sentiment of each guest, you can filter your unhappy guests from your happy ones and only ask for reviews from those that had a great time. While all guests have the opportunity to leave a review, there is no point in reminding unhappy guests to do so – this significantly increases your chances of getting only positive reviews.
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What is Automated Translation?
Automated translation is the use of AI and machine learning algorithms to translate text or speech from one language to another. Trained on large datasets of human-generated translations, the system analyzes inputs (a message), and breaks it down in a smaller unit (words or phrases). It then compares these units to the corresponding units in the target language that is desired to generate a translation based on the patterns and rules it has learned in that other language.
The Benefits of Automated Translation
While automated translation systems can provide fast and convenient translations, they may have limitations in terms of their ability to accurately translate idioms, slang, and other language nuances.
However, being able to communicate in a guest’s preferred language is a vital way of enhancing the guest experience. It shows that you care about your guests, that you are making an effort to accommodate potential language barriers, and creates less friction throughout the guest journey.
Using an automated translation software solution helps your staff communicate in multiple languages without having to make mistakes when using Google Translate.
Content creation with generative AI
Using AI tools in marketing and content creation can be a great help for busy hospitality operators. These tools help minimize time and effort for generating content such as blogs, emails and posts for social media platforms. Natural language processing algorithms, such as ChatGPT and Jasper, etc., are useful make the copy writing process faster and more structured. With DALL-E and Stable Diffusion hospitality marketers can produce images and graphics, prompting the software to exactly what they need for specific projects. Tools such as Descript can be used to create high quality video products.
Of course these tools have to be used with caution because of their limitations in understanding the context, nuance and cultural sensitivities in human communication. To avoid inaccurate or inappropriate content, as well as to comply with regulations and search engine standards, never fully rely on AI to create your content.
What are the risks and challenges of implementing AI in hospitality?
There are some risks and challenges to keep in mind before or while implementing AI in your hospitality business. They are cost and implementation challenges, dependence on technology as well as potential for job displacement and automation bias.
Cost of implementation
Implementing and maintaining AI systems can be expensive, and it may not be feasible for smaller hospitality businesses. The cost of training staff to use AI systems can also be a challenge.
Dependence on technology
Implementing AI in hospitality can make businesses dependent on technology. This can be a challenge if there are system failures, network issues, or technical glitches. A breakdown in new technology can lead to a loss of productivity, as well as frustration for guests.
Integration with existing systems
Integrating new AI technology with existing hospitality systems used in a business can be a challenge. It is important to ensure that the new systems work well with existing systems and that data can be easily transferred between them.
The fear of replacing humans in hospitality
There is a valid concern that AI will replace humans, displacing their jobs. Technology allows hospitality businesses to reassess the efficiency of their processes and optimize operations. While this reassessment will reduce the workload for the hospitality teams, it will also create new opportunities. This will help reduce the labor shortage, hurting hospitality businesses and create the need for new skill sets.
Can AI replace humans in hospitality?
While AI is reducing the workload for hotel staff and rental teams, it’s not possible to completely replace humans. Hospitality is a people-oriented field, and guests often value the personal interaction that comes with staying at a property.
AI can certainly assist in streamlining operations and enhancing guest experience, but it can’t substitute the warmth of human interaction. The systems are designed to perform tasks, but they lack the emotional intelligence and empathy of real people. Additionally, people are better equipped to make complex decisions based on nuances that may be difficult for AI to interpret. These tasks require creativity and problem-solving skills that AI is not yet capable of replicating.
The technology should work in conjunction with humans in the travel hospitality industry. AI performs tasks that are repetitive or require data collection and analysis, while humans handle personal interactions. This combination can provide guests with the best possible experience and hospitality operators – with increased performance.
What is the future of AI in the hospitality industry?
With the release of large language models, such as GPT3.5 and ChatGPT, the sky’s the limit. We can get a glimpse into the future of modern hospitality and expect the big comeback of the chatbot trend of the last decade. But this time, the chat bots will be more advanced and able to provide a higher level of service. With the advancement of natural language processing and the availability of large language models, they will be able to understand and respond to a wider range of customer inquiries, and in multiple languages. The new chat bots will be able to provide instant support, personalize recommendations and make guests feel like they have personal virtual concierges, dedicated to their needs.
Also, the adoption of AI technology will go deeper and will become a standard in the field. Same way as every successful hospitality company today is a tech company, they will have to become AI-driven businesses to stay ahead of the curve.
”AI is not going to replace people, but rather those who use AI will surpass those who do not.
Evan DolgowHead of Predictive Hospitality, Aidaptive
Predictive Hospitality: the True Capabilities of ML, AI and GPT-4 Read webinar recap
How can hotel industry and vacation rentals prepare for the impact of AI on the industry?
Artificial intelligence is already impacting hospitality operators, and this impact will continue to grow in the coming years. Hotel owners and vacation rental managers should prepare by investing in new technologies, training employees and developing data strategy.
Invest in AI technology
Hospitality companies can invest in AI technology to improve their operations and customer experience. For example, they can use AI to automate check-in and check-out, personalize guest experiences, and optimize pricing and inventory management.
Train employees on AI
As AI becomes more prevalent in the industry, it’s important for hotels and short-term rentals to train their employees on how to use AI tools and systems. This will help ensure that employees are equipped to work effectively alongside AI to provide the best possible service.
Develop a data strategy
AI relies on data to function effectively, so hospitality operators should develop a data strategy that allows them to collect, analyze, and use data to inform decision-making. This will help them make better business decisions and provide more personalized customer experiences.
Frequently asked questions
What Impact is Artificial Intelligence Having on the Hospitality Industry?
AI is revolutionizing the hospitality industry by automating tasks, enhancing guest experiences, and optimizing operations. This includes chatbots for customer service, predictive messaging, context and sentiment analysis, and automated translations. AI’s use leads to increased efficiency, reduced costs, and improved guest satisfaction.
How Does AI Improve Guest Experiences in Hotels and Vacation Rentals?
AI improves guest experiences by personalizing interactions, streamlining processes like check-in and reservations, and offering tailored recommendations. For example, analyzing guest sentiment helps in providing custom responses and services, leading to higher guest satisfaction and loyalty.
What Are Some Common AI Applications in the Hospitality Sector?
Common AI applications in hospitality include chatbots for customer service, automated messaging for quick responses, context analysis for personalized guest interactions, sentiment analysis for understanding guest emotions, and automated translation for multilingual communication.
What Are the Challenges and Future Trends of AI in Hospitality?
Challenges include integration with existing systems, the cost of implementation, and the risk of over-dependence on technology. Despite these, the future looks promising with advances in natural language processing and AI becoming standard in hospitality. Upcoming trends include more advanced chatbots, deeper AI integration, and AI-driven business strategies.
Conclusion
If you are in the hospitality industry, you should be aware of the importance of Artificial intelligence. It has the power to transform your operations and help you deliver personalized experiences to your guests.
Artificial Intelligence can do many things, from processing customer data to analyzing it, and even providing recommendations based on customer preferences. This can help you stay on top of trends and learn from your guest interactions. Additionally, using AI, you can eliminate human error and improve customer service.
Learn more about how Enso Connect leveraging AI to help hospitality operators to maximize and monetize guest experience.
