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Tim Peter Thinks

Why AI Will Change Hospitality Marketing Forever

AI will change hospitality: Woman using AI powered search to find travel

[Updated: February 23, 2022]

Bill Gates once wrote, “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.” And that was before we got hit with a global pandemic. We’ve lived through ten years of change in just the last two. That’s even more true when it comes to new technologies. One clear is example is the way artificial intelligence — AI — is radically reshaping hospitality marketing and our industry at large. Forever. The hotels and brands that use AI effectively are closer to two years away from success than ten. And given the labor shortages we’re dealing with — and likely will be for the next couple of years — putting technology to work in the right way may be the difference between profitability and problems.

But to understand why AI will change hospitality marketing forever, we need to look at artificial intelligence in hospitality in more detail.

For many of us, our first exposure to AI in the real-world came when IBM’s Watson won “Jeopardy.” That was all the way back in 2011, followed by the Watson-powered travel startup WayBlazer in 2014. While WayBlazer didn’t last, the trail they blazed certainly has. Using those dates, we’re at least eight years into Bill Gates’ 2 to 10-year curve. And, as with most technology, things speed up the longer they’ve been around. AI isn’t the future. It’s happening all around you right now.

For example, an insurance-industry startup called Lemonade used AI to set a record for customer service, resolving and paying a claim mere seconds after their customer submitted that claim for consideration. According to Airnguru, Singapore Airlines is applying AI to its marketing and customer service campaigns to improve profitability and performance. Revinate acquired an AI-powered communications platform in November, 2021. Expedia announced an AI-driven “…virtual agent for partners and travelers” and how it’s using AI to improve search in Asian languages. Booking.com has an entire public-facing blog that details the many ways they’re putting AI and machine learning to work.

None of this is science fiction. I’m not talking about the “Star Trek” computer or the ship’s android, Data, answering every possible question and solving every possible problem. Those types of AI are called “artificial general intelligence” (AGI), and are probably quite a long ways away, if they’re even possible at all. I’m talking about AI used to solve very specific problems, called “narrow” or “weak” AI. Narrow AI is real. It exists today. In addition to Lemonade and Singapore Airlines, Amazon’s Alexa, Google Assistant, Apple’s Siri, and a host of others represent real-world examples of narrow AI in practice.

More importantly, narrow AI represents to businesses today what the Internet represented in the late 1990’s: A green field of opportunity to reinvent how business works and how you’ll interact with customers in the coming years. As I see it, there are at least four categories where AI matters for your property that you must recognize:

  1. Search. Google uses AI to determine the highest-quality pages within its search results and will increasingly depend on AI when choosing “the best page” to answer customer questions. This is important not only for voice-driven searches where the search giant can only offer one or two responses, but for all searches, especially as guest behaviors continue to change. These leads all users to a better answer set. Google’s use of BERT in the search algorithm, along with its advancements such as SMITH and GLaM offer several examples of how they’re deploying AI, machine learning, and natural language processing (NLP) to improve customer experience — just like hoteliers want to do for guests.
  2. Analytics and measurement. Data is what makes artificial intelligence, um… intelligent. Machines can’t learn without a healthy diet of data to help them understand how to answer the questions their users pose. But AI’s natural affinity for data also makes it a powerful tool to interpret that information. As I once heard Ed St.Onge from Flip.to remark, “AI makes big data little.” Sophisticated technology players are using AI to comb through massive amounts of data and gain understanding about customers and their journeys that once simply would have been impossible to discover.
  3. Guest experience/personalization. Of course, that measurement then enables better, more personalized experiences to customers. Sabre and Google announced a partnership before the pandemic to put AI to work personalizing travel experiences and has deepened its investments ever since. As mentioned earlier, Booking.com and Expedia have talk about the ways they’re looking to use AI to improve customer experience every day. And since better customer experience usually drives greater revenues, that’s something we all should care about.
  4. Pricing. Finally, pricing information represents a very particular form of data that must account for seasonality, competitive pressures, macroeconomic effects, and guest preferences, among others. Today, ill-fitting algorithms may leave money on the table or sacrifice lifetime customer value in favor of a short-term perceived “win.” We’re seeing AI enable smarter algorithms that account for all the variables — as well as those human revenue managers often wouldn’t have the ability to recognize as factors — to present improved pricing alternatives and increase property revenues in both the short and longer-term.

Of course, most hoteliers aren’t going to run right out and start building their very own version of HAL. Instead, here’s what you can do to put AI to work for your property in the near-term:

  • Ensure you’re continuing to develop quality content for your property. One of the most common places you’ll encounter AI over the next few years is within search results on Google and others. As mentioned previously, Google is rapidly introducing AI into its algorithm to determine the best answers in search. Its AI doesn’t have to rely on links and keywords to determine the right answer to searchers’ questions; it will simply “know” the right answer. And, in this case, “the right answer” means a page with high-quality, highly-relevant content that answers guest questions effectively. Imagine asking Siri or Alexa where you should stay tonight, knowing it can only provide a single answer. Does your content help present you in the best possible light? Or does it leave your customers wanting more? If people can’t agree on the best possible answer, no machine ever will. Help make that machine’s job easier by providing all the information necessary to answer guest questions. Even better, this will help with how you perform in search today while also setting you up for the future.
  • Ask your vendors about their plans for using AI. Airbnb, Expedia, Booking.com and others are already using AI to improve customer experience and drive more business. Your vendors need to help you compete with those experiences and deliver on guest needs. While your vendors don’t need to have fully-baked solutions today, they must prepare for the future. If AI isn’t on their radar at all they’re creating problems for their business down the road — and for yours.
  • Stay on the lookout for potential threats from new entrants. Most hotel companies failed to recognize how new players would leverage the Internet fifteen years ago to attract, convert, and retain guests, an oversight whose effects we continue to feel today. AI represents a similar situation. While it’s far too soon to predict who will emerge as the dominant players — in the Internet era, Travelocity and Yahoo predated Expedia and Google for instance — it’s not too soon to keep an eye for who’s shaping the dialogue and direction AI will take. Pay attention to how AI continues to evolve to protect your property’s position in the longer-term.

Again, it’s easy to overestimate how much change we’ll see in the next two years here. But it’s far more dangerous for your business to underestimate changes over the next ten. AI isn’t science-fiction or fantasy. It’s reality. Travel companies are using AI to connect with customers and create memorable experiences every single day. And, ultimately, isn’t that what we’re supposed to do as hoteliers? The machines won’t win. But the people who use those machines most effectively will. And that’s a prediction that’s always been true.

You might also want to check out these slides I had the pleasure of presenting about the key digital trends shaping marketing. Here are the slides for your reference:

Finally, you will definitely want to check out some of our past discussions about how to make digital work for your hotel, including:

Note: A version of this post originally appeared on Hotel News Now, where Tim Peter writes a regular column for the magazine’s Digital Tech Impact Report.

Tim Peter is the founder and president of Tim Peter & Associates. You can learn more about our company's strategy and digital marketing consulting services here or about Tim here.

This Post Has 2 Comments

  1. AI in hotels is amazing. I was looking at Level5 Travel and the information they show on both guests and staff is off the charts. You can see everything about a guest’s activity from what drinks they like to food allergies. Your statement, “Pay attention to how AI continues to evolve to protect your property’s position in the longer-term.” is soooo true, new ideas and blockchain stuff is growing at a rapid pace.

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