Today, AI dominates many conversations across different industries, and AI in hospitality is no exception. It is redefining the notion of a ‘norm’ and what guests expect. The volume of AI-related news continues to grow exponentially, making it difficult to filter through the noise and understand its impact. However, being informed is critical for business success, as the ability to adapt will form a sustainable competitive advantage. Based on recent media insights, the key AI moves in hospitality can be classified into two interrelated areas: customer-facing innovation and backend operational transformations.
Enhancing Guest Experience With AI
As artificial intelligence becomes increasingly integrated into hospitality operations, its role in enhancing service delivery is gaining strategic importance. AI-driven tools are now central to reimagining the guest journey through greater efficiency and personalization.
Guest Experiences Are All About Hyper-Personalization and Automation
Basic services are no longer sufficient for increasingly demanding customers, and AI offers a solution. Today, AI enables hyper-personalized experiences by analyzing tons of guest data - from their preferences and behavioral patterns to social media habits - to anticipate their needs even before they enter a hotel.
One fresh example is Otonomus Hotel, the first AI-powered hotel in the US, which will open in Las Vegas this summer. The hotel is pioneering AI-driven guest experience through platforms that allow guests to customize rooms, services and amenities based on their likes and dislikes. They plan to create digital twin avatars, gamify the onboarding experience and use tracking systems to refine personalization over time.
The attribute-based booking system implies that guests can select a base-price room and then customize it with additional features such as noise-free location or pool proximity. In addition, AI allows you to adjust the ambiance in a room: lighting, temperature and other preferences, while it also tracks energy consumption to offer sustainability-based discounts for energy-conscious guests. As one representative of Otonomus noted, “The days of the one-size-fits-all experience in hospitality are really antiquated.”[1]
AI Agents, AI Assistants, Digital Workers and Other Virtual Helpers
Gone are the days when a popup chatbot with its “How can I help you?” was considered an innovation. AI assistants these days have become more advanced than one could have expected. In addition, they work 24/7 to address all guest requests and optimize services. We are also seeing increasing examples of new AI agents working alongside employees. Hotels are integrating AI in many traditionally customer-facing touch points such as front desks, concierge services and reservation systems, ensuring seamless support and improved efficiency.
There are even some proponents saying that automation might replace the human workforce with human interaction becoming a premium service for which guests may be charged. But overall, hospitality experts are emphasizing the importance of balance in the human-AI story. We know that speed matters when it comes to customer service, and AI often can help us turn a frustrated customer into a happy one quickly. Indeed, the faster the better - but as one expert explained, since “the AI revolution is here, instead of fighting it, it’s about finding harmony with it”.[2]
AI in Hotel Operations
The integration of AI into hotel operations marks a pivotal shift in how the hospitality industry approaches efficiency and guest satisfaction. From front-of-house services to behind-the-scenes optimization, AI technologies are rapidly evolving to support smarter, more responsive hotel experiences - while still keeping the human element intact.
Revenue Management and New Ways of Marketing
While revenue management with AI is not new, its capabilities are advancing significantly. AI can analyze demand patterns, market trends and guest behaviors in real time optimizing pricing and maximizing revenues, while also offering personalized upselling opportunities.
Moreover, AI is transforming travel marketing and it is driven by customers. More and more users search for a new travel destination and make travel plans using AI-driven tools such as ChatGPT, Claude, Perplexity and many others. Through conversational AI, users get recommendations and the entire planning process becomes much easier. 30% of travelers say that they are likely to use AI for their travel planning.
These AI tools can include direct links to hotel websites, making it much more convenient for guests to make a direct reservation. Perplexity AI has already changed its approach to pricing by introducing the cost-per-thousand impressions model (CPM), which reflects a strategic shift in digital marketing.
What does this mean for hoteliers? It is a golden opportunity for hotels to reclaim direct bookings through AI optimization. There is early evidence that a new valuable AI-based booking channel can lead to a significant increase in website referrals.
Optimizing for AI Algorithms
To fully benefit from AI, companies need to optimize for AI. In fact, there are many unknowns in AI algorithms, but several key steps can be named:
- Develop a stronger online presence: Be on OTAs, keep your website updated, engage with Tripadvisor and Google profiles;
- Optimize content for conversational queries: Use FAQ on your website to mirror real guests’ inquiries, optimize the content for natural language, including detailed descriptions of all amenities, services and offerings;
- Leverage reviews and user-generated content: Encourage guests to write positive reviews on Google, OTAs and Tripadvisor, respond to all reviews, engage with user-generated content on social media and your website;
- Maintain accurate information and employ SEO best practices as it is done today for search engines.
As one expert noticed in relation to the power of data: “Hoteliers must make their websites SEO and AIO (AI search)-friendly, and ensure they are feeding real-time rates and availability directly to emerging AI tools. Otherwise, they risk being overshadowed by more agile or data-rich competitors.”[3]
Streamlining Processes Without Losing the Human Touch
What we see today is that AI is transforming hotel operations in all directions. The predictive analytics approach is applied to maintenance, making it possible with the help of AI to anticipate system failures, minimize downtime and optimize operational costs. AI-enabled tracking systems monitor carbon footprint, automate inventory management, manage waste and optimize resource consumption. Many hotels use AI for guest communication, content and marketing.
Automation and robotics can be useful for some dangerous (e.g., window and roof cleaning) and repetitive tasks. Housekeeping robots clean guest rooms 20% faster and public areas 80% faster than human staff. In addition, AI already streamlines administrative processes in accounting and payments, reducing wait time.
At the same time, we face a new challenge in this reality: we need to redefine the content of those tasks that can be replaced by AI and give them new value and meaning. It is an especially difficult reality for hospitality, which is known for being technology-averse, to find a good balance between achieving efficiency and keeping the human touch.
The warmth of a smile, the intuition of a well-trained team member and empathy are irreplaceable for customer experience. These elements are the heart and soul of hospitality because hospitality is all about making people feel seen, valued, cared for - and we want to keep this vibe.
AI Readiness Level & Data-Sharing Ecosystems
Despite many promised benefits, the hospitality industry remains divided on the readiness to embrace AI, and it is not surprising. Many hotels rely on their outdated legacy systems, which limit their ability to integrate modern AI solutions. They keep bringing new add-ons to their already heavy and obsolete PMS systems, ending up with 50 different ‘tools’ but little (if any) positive impact. The maintenance costs of these systems become unsustainable and, over time, the situation will deteriorate. Future-thinking companies are investing heavily in AI today, auditing innovative AI strategies and adjusting their infrastructures.
- To stay competitive, hospitality leaders need to approach AI from scratch:
- Assess the current AI readiness and identify areas for integration;
- Invest in data management and cloud-based platforms to ensure seamlessness integration of AI;
- Train the workforce to work alongside with AI to enhance (not replace) human interaction;
- Prioritize privacy to ensure transparent policies that respect guest data privacy.
It is critical to understand that we cannot put a cart before the horse. Before investing in AI, companies need to invest in strong and sustainable data that, for example, aggregates guest information across all touchpoints. Without it, the AI will underperform resulting in a very poor personalization.
The Benefits of Data Collaboration
According to PR Newswire, 77% of hoteliers plan to invest between 5% and 50% in their IT budgets into AI tools this year. Due to the increasing role of data, data collaboration across the travel ecosystems will increase. Imagine a situation when your flight is delayed and your hotel, restaurant and car rental company automatically adjust your reservation. Amazing, right? Companies developing data-sharing ecosystems will be in much better positions to deliver positive customer experiences – especially now, when travelers expect seamless and responsive experiences.
AI is not a fiction or futuristic concept; it is a new normality which is shaping the industry today. Leaders embracing and leveraging AI-driven innovation will emerge as pioneers in this new era of hospitality, where the winning formula will be to strike the right balance between efficiency and human touch. Some questions however remain. Will hotels cling to their outdated strategies and models, or will they take this as an opportunity for renewal to secure a sustainable competitive advantage for the future? The AI revolution is here. You decide. Many are already in the game.
