Excerpt from Hotel Operations

Technology cannot be evaluated in isolation. 

“AI is a tool and not an end in and of itself,” said Philip Rothaus, Managing Director for Data & AI in Alvarez & Marsal’s Travel, Hospitality & Leisure Practice. “It’s really important to first think about what we are trying to accomplish. What is the industry facing right now?” 

Let’s take a quick look at where we are in 2023 and how this should guide the way we evaluate artificial intelligence.

A need to drive revenue

The ongoing pandemic recovery and global macroeconomic uncertainty as we begin 2023 have put an increased focus on driving revenue growth.

“Protecting RevPAR and generating profit in the face of changing market conditions, changing mix of travelers, and overall uncertainty has driven a lot of the technological change from hoteliers over the past few years,” Rothaus observed.

Hotel tech adoption has always been driven by hotel owners who see it as a path to increased profitability. But as revenue management technology and other pieces of a hotel’s commercial stack have become more effective, owners have increasingly turned to it for driving results.

“Hoteliers today are seeing a direct impact of revenue management systems on optimizing price and increasing Net Operating Income and the total incremental value created for hotel assets,” shared Mike Chuma, VP of Marketing, Engagement & Enablement at IDeaS.

Because of this, hotel owners – and the operators and brands that work for them – are focusing on top-line revenue growth now more than ever before.

A need to focus on profitability 

Driving top-line revenue isn’t enough. 

Ultimately, hotel owners and operators are focused on increasing profitability, which requires also focusing on cost reductions. A tight labor market, supply chain shortages, and inflation have made this more challenging. 

Here as well, hotel owners and operators are looking to technology to cut costs and increase profits.

AI may not be what you think it is

“AI is frequently thought about in the most extreme terms,” Rothaus observes. “It’s either seen as this very scary force that’s going to automate all of our jobs away and change the nature of our lives – or it’s seen as some sort of nirvana that is not attainable for mere mortals. But AI is math, not magic.” 

Yet good technology works and feels like magic, Puorto notes. “You don’t see it. A lot of the potential for AI is working behind the scenes to make processes more efficient.”

Soler agrees. “We’re a long way from robots cleaning our rooms and changing our bed sheets. It would be great to have robots help there, but we’re a long way from that. Instead, the opportunity now in hotel operations is small steps like optimizing room cleaning sequences.”

AI isn’t inevitable 

I constantly hear people talk as if AI is inevitable but many of those closest to the technology, such as Larsen, do not share this belief. 

“This myth assumes that we need only keep chipping away at the challenge of general intelligence by making progress on narrow feats of intelligence, like playing games or recognizing images. This is a profound mistake: success on narrow applications gets us not one step closer to general intelligence.” 

If AI isn’t inevitable, it changes the way we use and plan to use the technology. 

Generative AI vs “Traditional AI”

While DALL·E and ChatGPT have captured our imaginations recently, “traditional AI” still holds the most promise for businesses like hotels.

Investor Rex Woodbury notes this for communication and e-commerce: 

“Much of the buzz lately has been around generative AI, but ‘traditional’ AI still has a lot of room to run. And perhaps no use of AI is more visible to more people than TikTok’s For You Page, the best modern-day analogue to Hyperland’s prescient ultra-personalized internet.”

But this is even more true for hotel operators, where the job is less about creating content and images and more about becoming efficient and effective. 

“Traditional AI” is the biggest opportunity for hoteliers now and in the foreseeable future.

Click here to read complete article at Hotel Operations.

By Josiah Mackenzie | HNR Hotel News