It’s telling that, at the recent Americas Lodging Investment Summit, the two experts on stage to discuss what artificial intelligence could mean for the hospitality industry were not hoteliers but rather executives from Google and Expedia. This at one of the largest gatherings of hospitality industry leaders in the Americas.
That reflects that hotels are behind the AI curve, especially compared to Google and Expedia, which have been developing and testing AI capabilities for years, according to PwC partner and hospitality and leisure technology consulting lead Ali Abidi, who moderated the panel.
This fact isn’t lost on hoteliers, either, who still lament that they didn’t foresee the impact online travel agencies, which launched in the mid-1990s, would have on their businesses. According to PwC’s 2017 Global Digital IQ survey of IT and business leaders, two-thirds of respondents from the hospitality and leisure industry said they were making substantial investments in AI, more than any other industry surveyed; 80 percent planned substantial investments within three years.
While AI may seem like the new tech craze, its greatest impact in the hotel industry will be in areas hoteliers have already been contemplating for years.
Optimize for Interactions Before, During & After Trips
The growth of mobile use during the past five years has lifted hotel executives’ skepticism that travelers would never research trips or book using their mobile devices. According to J.D. Power’s 2017 North American Hotel Satisfaction Index Study, 25 percent of online hotel reservations are booked via mobile devices, up from 14 percent in 2014. The past two years have seen vast mobile app improvements and relaunches from the industry’s largest players as they try to stay ahead of the curve or at least in line with it. Hotel mobile apps now enable capabilities like booking, mobile check-in and check-out, pre-arrival room selection, messaging with the front desk and mobile room keys.
But what does mobile have to do with AI? Benjamin Devisme, VP of sales for The Colossal Factory, an AI-based instant communication channel for hospitality companies, said the way travelers expect to interact with hotels has changed as they’ve shifted from Web to mobile. They’ve stopped planning as much, and they rely on their phones to improvise prior to and during trips. “Now the challenge for hotels is to be able to be immediately relevant for the guest and to be able to have lots of relevant interactions with their customers at different moments of the customer journey,” Devisme said.
The Four Chatbot Response Types
API: When a traveler wants to book a room or see what kind of restaurants are in the area, the chatbot pulls up an application programming interface for the hotel’s booking engine or Google restaurant results.
Database Information: The answers to straightforward questions like, “What time is check-out?” or, “Can I bring my dog?”
Special Request: If a guest requests something like an airport transfer, the chatbot will confirm the guest’s information, departing airport and flight time and pass that information to a human at the hotel to fulfill the request.
Unknown Answer: If a user asks a question the chatbot doesn’t understand, the bot alerts developers, who can take steps to improve the chatbot’s knowledge base. Ideally, the chatbot will respond to repeated unknown questions by directing the user to contact the hotel directly.
Source: The Colossal Factory VP of sales Benjamin Devisme
Enter chatbots. They’re designed to understand the intention behind a guest’s question, thanks to natural language processing, one form of AI, and to respond in a relevant way, also using natural language (see sidebar). “It sounds easy,” Devisme said, but guests can have thousands of questions. “I can think of, right now, 10 different ways to say, ‘I want to book a room for tomorrow.’”
Still, hotel companies are working to understand and deploy the technology. While some use white-labeled chatbot interfaces, others have launched via Facebook Messenger, Slack and Google Assistant, leveraging the existing natural language processing capabilities of those platforms and meeting guests where they already interact online.
AccorHotels in 2017 invested in French travelbot startup Destygo and launched a beta of its Phil Welcome chatbot via Google Assistant and Facebook Messenger. Accor SVP of e-commerce and digital services Soumia Hadjali said Phil provides simple information on Accor hotels, such as available amenities, check-in and check-out hours and hotel searches based on simple criteria like “business” or “trendy.” Testing Phil has allowed the company to improve its AI knowledge and its conversational user experience and user interface. “Conversational AI is a no-brainer,” Hadjali said. “In 2020, it will be part of our guests’ life and for sure in their travel experience.”
Here, though, hoteliers are still trailing. Of Booking.com’s thousands of daily customers queries, 50 percent can be settled by the OTA’s Booking Assistant chatbot within five minutes, according to tech website VentureBeat. That’s up from 30 percent when the chatbot came out of beta in December.
Natural language processing also plays a key role in Internet of Things rollouts as hoteliers test AI-enabled virtual assistants like Amazon Echo and Google Home in guest rooms.
Best Western Hotels & Resorts is testing the Echo, also called by its persona, Alexa, at six properties. Best Western SVP and COO Ron Pohl sees the Echo as a way for guests to ask basic questions about their stays, such as, “What time is breakfast tomorrow?” and as a way to make special requests of the hotel staff. The hotel also will be able to track how quickly it responds to requests.
“It’s not often in our business that you find a technology or something of this nature that is both a satisfier or delighter for a customer and at the same time is more efficient for a hotel,” Pohl said. “We don’t have to have the front desk clerk trying to answer a phone and respond to a customer when Alexa is doing that for us.” Pohl said the company is seeing customer satisfaction increases as high as 10 points. That’s from guests whose pre- and post-trip interactions with the hotels are via mobile messaging, not AI, and whose interactions during their stays are via the Echo.
Marriott, too, is testing virtual assistant technology in its IoT Guestroom Lab. For instance, users could ask virtual assistants to wake them up at 6:30 a.m., display a yoga routine and start the shower at the temperature preference stored in their customer profiles and could request additional housekeeping services—all by voice or app.
Finally Allow Hotels to Leverage Their Data
Big Data is hardly a new concept; companies for years have been trying to glean insights from their massive amounts of data, but that’s easier said than done.
In PwC’s 2017 Global Digital IQ survey, only 13 percent of IT and business leaders from the hospitality and leisure industry said their companies effectively use all the data they capture to drive business value, placing it last among the industries in the survey. “Big Data is something that is kind of a buzzword in the hospitality industry, but very few people have it. Booking.com, Expedia, Amazon—they have a fair claim to Big Data,” Devisme said. “Hotels … they don’t even have data.”
A number of industry players are looking to change that, particularly by updating their decades-old technology stacks with dynamic, cloud-based systems that will enable AI applications. “AI machine learning is critical for the industry,” IHG CEO Keith Barr told BTN last year, prior to the launch of the IHG Concerto cloud-based global reservations system. “It’s something that we’re going to be leaning into pretty heavily going forward.”
Choice Hotels International, Wyndham Hotel Group and Radisson Hotel Group are also among the hotel companies that have updated or are in the process of updating their technology systems and shifting them to the cloud to provide more opportunities around AI and Big Data.
The greatest area of focus for these hoteliers is applying AI to revenue management to realize predictive pricing. Choice president and CEO Patrick Pacious said it’s about tying in more factors that influence hotel stays, such as weather. “There are markets we have where if it rains on a Friday, and then Saturday people cancel their reservations because they were planning to go to the beach.”
AI also factors into another industry buzzword: personalization. As hoteliers are better able to track, understand and use the data they collect on individual guests, they will be able to cater experiences to guest preferences. For instance, hoteliers soon might be able to predict whether a guest is likely to take advantage of on-property dining, room service or event programming and thus could tailor its communications with that guest accordingly.
The personalization that will be possible has helped to fuel the hotel industry’s push toward loyalty program enrollment. Hilton president and CEO Christopher Nassetta said as much in in 2016 when announcing discounts for loyalty members booking directly. “The ultimate objective is … about having direct relationships with our customers,” he said. “We want them to get the best value that they can get, get the best experience.” The loyalty programs will create a flywheel of sorts in which data will be collected from loyalty members, that data will be used to personalize to that loyalty member, that personalization will drive a better experience and increase loyalty, and that experience will incentivize others to join loyalty programs.
Can the Industry Get Out of Its Own Way?
The oft-cited reason hotels are behind in technology is that hotel owners want to see the ROI before they embrace something new. That’s a problem for innovation.
Devisme said large, established companies looking to launch technology often end up with a Benjamin Button situation, in which they try to give birth to a fully-grown adult. They don’t understand, he said, that they need to go through a learning curve; things only need to be good enough, not perfect. For example, Booking.com’s ability to resolve customer inquiries within five minutes may not seem like much right now, but that time will only improve.
PwC’s Abidi is optimistic that the industry is finally understanding the need to embrace technology. Industry sentiment is going to pivot, he said. “Analytics, AI, IoT, connected solutions—from a technology standpoint, it’s going to drive and enforce the agenda. What we’re going to see is hospitality and hotels embracing technology a bit more than they did before.”