AI is both very real and very hyped. Every vendor is lauding its omnipotence, but on the ground the tools and various ChatGPT agents that have emerged still need a ton of testing, refinement and ‘humans kept in the loop’ to verify their outputs.
So, if there’s the risk for error in this emerging field of AI tools, do you, as a hotelier, wait for the vendor market to deliver products that are 100% trustworthy out of the box? Or do you implement now, incurring costs in installation, ongoing fees and your team’s time?
It’s easy to take a conservative stance by waiting for the features to catch up to the hype and available in a democratized – that is, affordable – manner, but there’s an opportunity cost here.
What are you losing in the form of reduced labor efficiencies, lost revenues and reduced marginal flowthrough by not innovating today?
Advertisements
Once you go through the exercise of adding up all the ‘death by a thousand cuts’ that are impacting business profitability, there’s a strong rationale for implementing various forms of AI today in order to realize some quick wins that will get your feet wet while growing the bottom line.
The primary issue underlying this entire conversation is that hotel tech stacks are fragmented and logjammed with siloed databases. If it were all connected in one massive referential database then we would be in a far better situation. On the ground, it’s messy in deciding which vendors have the right stuff. All the while, proceeding diligently means that hotel teams are still perennially overworked by having to juggle numerous day-to-day, interruptive operations. This ‘busywork’ makes it challenging for them to devote their time to transform and overhaul their processes from scratch to facilitate a sweeping and systematic change that will enable AI-first efficiencies.
What we mean by ‘quick wins’ is that rather than aiming for a massive overhaul, the smarter approach is to focus on small, incremental, continuous improvements, even if they are planned from the outset as workarounds (an eyerolling word for most technologists out there).
Take a task-by-task approach where AI technologies can offer immediate and measurable impact that provides realistic and quick execution. This approach will allow hotel teams to use more of their valuable time to pursue larger-scale projects and initiatives in the future.
And that’s where the real improvements are: time. On paper, real AI is expensive, both for development and for service as a service (SaaS). But automation liberates teams from all the interruptive, monotonous aspects of their work, in turn decluttering the mind to allow for more time to deliberate over quality decisions (instead of constantly battling against the email inbox).
Below, we listed down some recommendations to help you achieve incremental quick wins:
- It’s always best to first think in terms of business process innovation by sitting down with your department heads, asking: “What repetitive processes does your team currently do?”
- Aim to get raw data or cleansed data steaming into a data warehouse (DW), so that the big vision of having all unstructured, semi-structured and structured data accessible for machine learning can be attained.
- To build the data piping into the DW, you may have to scope out a middleware provider or microservice development that can transform data fields between two systems (although be aware of implementation costs from developers with this specific area of expertise).
- A near-term workaround to consider is robotic process automation (RPA) whereby specific cross-system labor functions can be mapped for scalable time savings, especially at the enterprise-level for centralized operations.
- Investigate the migration to more all-in-one systems – instead of thinking in terms of connected best-in-breed solutions – that have built-in data exchange microservices that integrate data points amongst all their various modules into unified guest profiles.
To move forward effectively, our next big recommendation is to evaluate each AI solution individually and commit to one primary use case now, rather than shifting between tools and revisiting the discussion on a quarterly. Time is the enemy, so get your feet wet.
With that, here’s the key areas of interests that must be looked at one by one:
- Predictive maintenance and asset tracking for fewer OOS or OOO rooms
- Automated room cleaning schedules and predictive service orders
- Predictive procurement and automated reordering with threshold spend rules
- Omnichannel communications and virtual concierge
- Website chatbot and voice channel assistants
- Guest dossiers for service teams with generative suggestions
- AI-driven guestroom management systems to save on energy costs
- AI-driven marketing tactics and generative content enhancements
- Lookalike (LAL) audiences for search and Meta campaigns to build the direct funnel
- Adaptive websites and booking engines with dynamic pricing, packages and availability
Lastly, when investing in AI and other related technologies, it is essential to align those operational decisions with overall financial objectives.
There are three primary goals to consider:
- Improved Flowthrough and Flex: It’s all about overall margin improvements (GOP), through growth years as well as the stagnant ones.
- Revenue Growth Per Guest: By looking through the lens of RevPAG, TRevPAR, RFM and CLV, you can use AI for insights that boost ancillary spend or even deploy intelligent, personalized upselling tools.
- Direct Channel Shift: Every hotel hates third-party commissions, so start by modeling what it would look like to shift a certain percentage of guests over to direct channels in year one using AI tools and how those acquisition savings would flow through to GOP.
Overall, these technologies require a lot of work in terms of implementation and continuous baby steps to get some quick wins. Oftentimes, the savings on paper are not realized in year one but start to breakeven in year two. But above all, the invaluable saving is having more time to focus on other solutions and experiential enhancements that give you a stronger company momentum.