By Mike Webster, Founder and CEO of Arvoia
Artificial intelligence (AI) is helping the hotel sector move to an on-demand, customised approach for every guest. While well-publicised AI applications include robot concierges and chatbots, which prove popular with a lot of guests. Arguably even more significant are the predictive AI technologies which drive commercial growth particularly those that augment the digital guest journey to provide customised experiences during the booking and retailing process.
In the age of Netflix, Amazon and other digital platforms, customers demand convenience and instant results on their apps and mobile devices. For the past two decades, the Online Travel Agents (OTAs) have generally been better at providing the level of convenience consumers want. In 2019, for example, US hotels splurged US$28 billion on OTA commission fees. Selling rooms via these third-parties was a costly but necessary strategy for hotels.
But hotels have begun to fight back. During the pandemic more guests felt less happy with their experience of OTAs. In Europe, direct bookings rose to 59.7% from 54.5% and the OTA share fell from 29.4% to 28.7%. But hotels have to build on these trends, or the OTAs will find a way to win back the lost business.
Innovative AI helping hospitality companies
The good news is the type of predictive AI used by the OTAs, as well as Netflix and Amazon, is much more affordable than it used to be. Predictive AI recognises individual preferences and responds with personalised content. Using AI means hotels can offer visitors to their websites a more sophisticated experience. Potential guests will receive offers and prices that are relevant to them rather than generic.
No two guests are the same. Whether they are travelling for work or leisure, with family, for a business conference, guests have diverse expectations. Hotels have to respond quickly and efficiently to those personal needs.
AI makes a big difference to revenue. Studies show that improving a guest’s online experience increases conversion rates and booking value. Hotels that use AI in their booking engine experience have seen up to 10% increases in monthly revenue and 30 times the return on investment (ROI) within the first six months.
The benefits of predictive AI don’t end there. It increases average lead times, reduces the time from search to book and encourages repeat bookings. It delivers deeper insights into visitor behaviour and booking patterns. Predictive AI is also self-learning and its models learn to adapt to individual requirements over time.
Insights from AI help hotel marketing too. They can be used to improve loyalty recognition, upselling and offers. These processes will be automatic, leaving staff to focus on strategic planning, or providing guests with face-to-face interaction.
Google data shows huge potential for hotels to win back business from the OTAs. Of visitors who book via an OTA, 52% check the hotel’s website as well. The problem is that a lot of hotel websites are not up to scratch. They load slowly and they don’t cater well enough for individual preferences. Google data shows 53% of customers will abandon a mobile site that takes over three seconds to load. When that happens, visitors go hurrying back to the OTA.
Fortunately, it’s surprisingly easy to integrate AI into existing platforms. A single line of computer code can be enough. And hospitality providers don’t need to worry about building complex solutions. Existing platforms are able to run thousands of AI models at once, all self-learning in real time.
How AI is applied throughout your hotel stay
Once a guest arrives at your hotel, AI has many other applications that can enhance the stay. It depends on the guest so it’s best to give them a choice. Some prefer face-to-face interaction with people. But an increasingly large proportion of guests embrace everything digital.
Some hotels are using AI concierges to check guests in and answer questions 24/7. Meanwhile, chatbot translators in international destinations are able to identify multiple languages quickly and provide simultaneous translations.
AI can also be used to enhance the guest experience: in bedrooms, AI can operate smart TVs, sensors, auto-curtains, coffee machines, advanced lighting and heating systems.
The work of a hotel’s AI continues after guests depart. Data analytics help shape guest profiles. AI takes into account previous visits to make personalised offers. It suggests customised services to new guests based on previous visitors with similar profiles. And it analyses the big data from visitor behaviour to make overall improvements to hotel services.
In the past, hotel tech stacks have tended to make life complicated for hotel staff and, at times, guests. Solutions like pop-ups and banners have fragmented the guest journey. With AI, hotels no longer need to show blanket offers to online visitors, providing a more tailored and customised digital experience.
Now is the time for hotels to recognise we’re living in a new era of travel booking. Buying and consumption have been disrupted by digital-first tech companies, propelling the internet to Web 3.0. From simple search and book, Web 2.0 introduced OTAs, metasearch and smartphone apps. However the new generation is shaped by on-demand, direct and convenient digital retail.
Ease of use is critical and hotels who use AI to personalise the guest digital experience are in a much better position to win back a far higher share of direct business.
About the author
Mike Webster is CEO and founder of Arvoia. Driven to forge a new way of using behavioural data for economic and social good through the ethical and democratic application of powerful technology, Mike is an advocate of hospitality and travel businesses of all sizes having access to purposeful AI. He holds a Bachelor of Technology from the University of Limerick, an MBC from the Michael Smurfit Graduate School of Business and completed the summer strategy programme at Harvard Business School.
Arvoia uses the power of AI to return hotels to the forefront of the traveller experience by fuelling behaviour-based retailing. Their solutions facilitate a closer relationship between hoteliers and guests, cementing customer experience at the heart of hotels. Find out more at arvoia.com