How AI in Hospitality Can Enhance Personalized Customer Experience

How AI in Hospitality can Enhance Personalized Customer Experience – Image Credit EHL Hospitality Business School

From AI-powered room service that knows your guest’s favorite midnight snack to chatbots that give travel advice like a seasoned globetrotter, artificial intelligence (AI) in hospitality is like having a unicorn in your hotel garden. You can use it to attract customers, wow them with unique, personalized experiences, and learn more about your business and customers to stay ahead of the game. Whether you’re running a hotel, restaurant or travel service, AI is the technological assistant that can set you and your brand apart.

Artificial intelligence is already making its mark on the industry, particularly in guest experience management. There, it transforms customer interactions and provides instant, around-the-clock assistance to guests. At the same time, it’s freeing hotel staff to spend more of their time on the little details that delight customers and make them smile.

Here, we delve into the data-driven world of AI to discover how it’s reshaping the industry and enabling diverse hospitality businesses to offer personalization throughout the customer journey , ultimately enhancing the guest experience.

Customers Crave Personalized Experiences

Customers’ preferences in hospitality are constantly shifting, and at the moment, personalization is the dish of the day. One study of over 1,700 hotel guests found that personalization was directly linked to customer satisfaction, with 61% of respondents saying they were willing to pay more for customized experiences. However, only 23% reported experiencing high levels of personalization after a recent hotel stay.

Another study found that 78% of travelers are more likely to book accommodations that offer personalized experiences, with nearly half of the respondents willing to share the personal data required to customize their stay. This desire for personalized experiences is particularly prevalent among millennials and Gen Z, two demographics that are spending big on travel in 2024. Given these insights, it’s clear that failing to offer personalized elements is a lost opportunity to differentiate your brand and give customers what they want.

Where Personalization and AI Meet

There’s a demand for unique hospitality experiences tailored to individual needs, and many travelers are willing to pay a premium for them. Customized recommendations, services, and amenities can all help create a memorable experience and enhance customer satisfaction, and generative AI is one tool you can use to deliver them.

AI can automate insights and actions by analyzing large amounts of customer data and learning from user interactions. From customized travel recommendations to personalized room settings, AI can deliver a vast and varied range of previously unattainable customization to redefine how companies approach customer service.

The benefits of using AI in this way are compelling. We’ve already discussed the link between personalized experiences and customer satisfaction, and that’s what AI can give you. Creating memorable experiences for your customers builds emotional connections with your brand. Your customers feel like you understand them, enhancing trust and loyalty and making them more likely to return to your hotel and recommend it to others.

What Exactly Is Artificial Intelligence (AI)?

In its simplest form, AI is the technology that enables computers to simulate human intelligence. AI consumes data to understand the world around it better. It can then use those insights to perform tasks, interact, and solve problems in a way you’d usually only associate with a human mind.

And AI is no longer the technology of the future. It is very much here and now, with many common examples of AI already changing our daily lives. You can see the influence and convenience of AI in smart home devices, digital voice assistants, and vehicle automation systems.

AI Personalization Techniques in Hospitality

The hospitality industry is already using some AI personalization techniques, but some are more innovative and are only starting to be explored.

Customized Recommendations

Recommendation engines use AI algorithms to analyze a customer’s past preferences and behaviors and provide personalized recommendations for services and experiences based on that data. Typical examples in the hospitality sector include suggestions for customized travel packages, dining recommendations for guests, and tailored room amenities based on individual preferences.

One such tool, the Guest Experience Platform tool Duve, is already being used by over 1’000 brands in 60 countries.

Around-the-Clock Customer Service

AI-powered virtual assistants and chatbots can handle many customer service requests and are becoming increasingly sophisticated in the queries they can answer and the assistance they can provide. They offer a 24/7 response system, can provide personalized recommendations, and reduce the number of calls that go to the front desk staff. That allows employees to spend more time on customer service issues where the human touch adds value.

Enhanced Room Environments

Imagine walking into the perfect temperature hotel room lit just how you like it, your favorite box set has been preloaded, the drink you love is waiting on the table, and the mattress and pillow are just the firmness you like.

That might sound fanciful, but it’s already possible with AI. By integrating artificial intelligence with Internet of Things devices, you can automate the control of thermostats, lighting, and entertainment systems to match your guest’s preferences.

Personalized Booking

The guest’s experience with your brand starts long before they check into your hotel. AI can deliver a more personalized booking service by analyzing customer data, suggesting specific hotels, or recommending add-ons that match their preferences.

This tactic has been used to good effect by the hotel giant Hyatt. It partnered with Amazon Web Services to use customer data to recommend specific hotels to its customers and then suggested add-ons that would appeal based on their preferences. This project alone boosted Hyatt’s revenues by nearly $40 million in just six months.

Tailored Dining Experiences

AI-powered software combined with machine learning can also create personalized dining experiences for specific tastes and requirements. For example, if a guest has dietary restrictions, AI can help you deliver customized menu options. You can also ensure regular guests get their favorite table and even personalize the lighting and music.

Complete Journey Mapping

With AI, you can even plan a guest’s entire stay based on their past behavior and preferences. You can provide them with hotel amenity suggestions, room types, airport transfer options, dining experiences, and activities they can enjoy during their stay. That can even include recommendations based on factors such as the time of the day and the weather.

The Limitations of AI in Hospitality

Despite its potential and successes in many areas, AI in hospitality still has limitations and difficulties. One challenge is the potential for job displacement as AI and automation take over certain tasks. This could lead to employee and union resistance and concerns about the impact on local economies.

Personalization, which is crucial in the hospitality industry, can be challenging for AI to achieve at the same level as human staff. Understanding and responding to complex human emotions and needs is still an area where AI has limitations.

There are also concerns about data privacy and security. AI systems in hospitality often rely on large amounts of customer data, raising questions about how this information is stored and used. Lastly, there’s the issue of cost and implementation – integrating AI into existing hospitality systems can be expensive and may require significant changes to infrastructure and processes.

A delegation of EHL students attended the 2023 HITEC Conference in Dubai as part of EHL’s Educational Travel Program. The conference, part of The Hotel Show, brought industry leaders together through panels, talks, and seminars. The students had the opportunity to participate in keynotes and discussions and assist with administrative responsibilities. The conference focused on leveraging technology for revenue generation and addressed challenges in the hospitality industry, such as artificial intelligence, green technology, and big data.

Reflecting on this experience, students concluded that technology isn’t the answer to everything in the hospitality industry:

We saw how technology is being harnessed to enhance efficiency and the guest experience: analyzing big data allows hoteliers to gather more insight and thus proactively customize their guests’ journey. However, we recognized that hospitality professionals’ warmth, empathy, and individualized care remain invaluable and irreplaceable. The human touch makes guests feel appreciated and leaves an indelible impression on them.

Balancing Automation and the Human Touch

At its heart, the hospitality industry is all about serving people, and AI, when used carefully, can help you do that better. By using AI to personalize the guest’s journey, you can build customer loyalty, enhance satisfaction, and boost revenues. However, the human touch is still essential. By using AI to complement the human touch rather than replace it, you can create meaningful connections and deliver customer experiences that matter. Perhaps then, it is time to include AI in your hotel innovation strategy and start putting it into practice.