Embracing the future: AI revolutionising operations and consumer engagement

The continuous advancements in Artificial Intelligence (AI) are fundamentally reinventing how travel and hospitality businesses operate and engage with consumers. As the industry transitions from AI adoption to value generation, new developments like Generative AI (GenAI) are driving the need for further investment and presenting new complexities. This article explores the impact of AI-enabled technologies, providing examples of applications that can fuel these transformations.
 

Personalisation and customisation

At the core of AI's impact is its ability to personalise an experience, which has the potential to transform service models across the hospitality sector. Content generation is an excellent example of how businesses can create personalised and dynamic content for guests. This includes tailored welcome messages, in-room guides, and interactive entertainment options. Additionally, businesses can deliver interactive and immersive storytelling experiences for travellers, allowing them to engage with the history and culture of the destination. A global hotel group launched a Generative AI-powered travel planning service to help guests book stays with the group's rewards app. The app provides guests with recommendations and information such as dinner options near a particular hotel, things to do locally or whether a property allows pets. When asked about the biggest Generative AI opportunities, Deloitte's 2023 European Hotel Industry survey, found that respondents were more likely to view the technology as a tool to enhance customer engagement, including creating customised marketing campaigns (56%) and providing automated personalised content (40%). As while many last year mentioned there is a clear opportunity for AI to support marketing activities and customer service in the 2024 Deloitte European Hotel Industry and Investment survey, the data showed that only two third of respondents’ report that their organisation is either exploring or not yet considering AI solutions. Only one in ten organisations are currently implementing AI solutions and one in five are at the piloting stage. The findings demonstrate the size of the opportunity but also the need for better understanding of how to implement AI at scale. These findings indicate a cautious approach to AI adoption, with many organisations still assessing its potential benefits and challenges before committing to full-scale implementation.

AI also allows for customised marketing, for example, when a generative AI travel assistant proposes experiences. In this case, businesses can craft timely, targeted marketing campaigns by generating content that resonates with specific customer segments, leading to higher conversion rates and customer satisfaction. By implementing a secure and scalable AI platform, a global travel retailer was able to significantly reduce itinerary generation costs by nearly 80%. The platform enabled them to quickly organise their content and deliver cohesive, highly accurate travel recommendations in a matter of minutes.

AI can provide support for product design, such as generating innovative menu items, personalised itineraries, and tour planning of local attractions tailored to each traveller's interests and dietary restrictions. Additionally, AI can assist in designing visually appealing and functional room layouts based on customer preferences and the latest trends, creating custom decorative elements that align with a brand's aesthetics, and enabling businesses to offer unique experiences. A global hotel chain used machine learning and Generative AI capabilities in its travel assistant to learn from and observe guest preferences, allowing it to cater to the needs of multimodal guests who combine business and leisure experiences on the same trip. By engaging guests in a tailored discussion, as well as crafting and refining a proposal of experiences designed to enhance their journey, the chain can recommend rooms, activities, special offers, and experiences, such as wellness, food, and beverage choices, that guests might overlook in a traditional search.
 

Customer service

Customer interaction can be improved using AI by providing faster support with real-time translation, using fewer staff, and suggesting the best approach to handling complex issues based on customer needs and available solutions. Customer service can benefit from AI in various ways, such as automating customer support, translation services, and analysing customer behaviour to drive growth. AI enables automated communication with travellers by promptly providing relevant answers to their queries and summarising conversations to facilitate smooth customer interactions. A global airline that implemented an AI-powered chatbot has been able to reduce the number of support staff required to handle routine enquiries, freeing up staff to focus on more complex issues. The chatbot can provide real-time translation in multiple languages and has improved response times, providing immediate support to customers without having to wait for a support agent.

There is also an opportunity to improve traveller engagement by using AI enabled tools for social listening, sentiment analytics, and automation of guest engagement. By analysing and querying customer reviews at an aggregated level, AI enables businesses to obtain recommendations for querying data and generating new ideas.
A customer experience management platform uses AI to analyse customer feedback and provide insights to hospitality companies, helping them identify areas for improvement, track customer satisfaction over time, and improve guest loyalty. Deloitte 2023 European Hotel Industry survey found that 52% of executives in the hospitality sector view Generative AI as a tool to enhance and provide personalised customer support, and 44% see it as a means for automated guest communication and engagement.

Investment and revenue generation

Finance functions can leverage AI to improve efficiencies such as investment analysis, for example, evaluating potential property assets or renovations for hotels, indicating a move towards more strategic human resource utilisation. Scheduling and resource allocation can be optimised with AI to improve asset management and operating costs. A North American hospitality brand uses a hospitality operations platform that uses AI to optimise staffing levels and job allocation for its hotels, helping them improve operational efficiency, reduce labour costs, and improve guest satisfaction.

Pricing optimisation can be achieved with AI by generating dynamic models to adjust pricing at a granular level, ensuring optimal utilisation and maximum revenue generation. A global hospitality chain increased its revenue per available room (RevPAR) by adopting an AI-enabled revenue management tool that uses machine learning algorithms to analyse data, including historical booking patterns, competitor pricing, and local events, therefore providing real-time pricing recommendations.

Financial teams can also benefit from AI to help businesses make more informed investment decisions. Deloitte’s European Hotel Industry study suggests that 25% of executives in the hospitality sector see GenAI as a solution to support finance teams in analysing financial data, detecting anomalies and fraudulent activities with higher accuracy, and generating new financial models. AI is also able to assist with contract review and generation by drafting legal documents and reviewing supplier contracts.

Optimising operations
 

AI can support performance management and training by identifying skills and performance gaps and suggesting personalised training for employees. A talent management platform helps hospitality companies improve employee performance and reduce turnover by providing targeted training and development opportunities. It uses Generative AI to continuously update roles and skill taxonomies, automates job and skill data creation, and saves teams time, while giving them the knowledge to adapt to changes.

AI has the potential to simplify monitoring, expedite coordination, and amplify transparency with dynamic fulfilment. It can generate insights by analysing data to drive decision-making and identify opportunities, for example, peak period design and traveller flow planning at airports. Synchronised planning can be achieved with AI, enabling resource scalability and effectiveness, as well as better utilisation of data, for instance, by automating core operational workflows to solve problems on shipping routes. The use of AI has helped a UK airport reduce delays and improve on-time performance by detecting the events that make up an aircraft turn around process. This includes synchronising the activities of more than 10 stakeholders to optimise the overall process and minimise turn-around time. It also launched a new initiative that will use Artificial Intelligence to find local businesses to supply goods and services.

Preventative measures can also be addressed by using technologies like digital twins to enhance operational efficiency or use generative AI to create contextual, personalised day-of-travel engagement during travel disruptions. An American airline uses digital twins to quickly detect and alert on operational discrepancies, ensuring on-time flight departures. The digital twin monitored in-flight food consumption and provided insights to catering teams based on cost, waste rate, and passenger satisfaction.

AI is capable of aiding with internal documentation by assisting users in navigating through content libraries to locate reports, processes, and insights. This makes it simpler for users to find specific information quickly and efficiently. Additionally, AI can accelerate technical product development, including creating and debugging code, producing use cases, and generating new ideas for product features. AI has the potential to enhance internal meeting productivity by offering intelligent summaries, automatically generated meeting notes, suggested tasks, and personalised highlights. This feature is even available for users who were unable to attend the meeting. Deloitte's 2023 European Hotel Industry survey, found that 15% of executives in the hospitality sector view Generative AI as a solution for internal support and performance management.

Industry executives will need information, clarity, and expertise to harness the opportunities being created by broad, rapidly advancing, converging forces. Investment in AI will continue with as much vigour as years prior, particularly in technological advances such as Generative AI and large language models. However, the challenges of accessing talent, technology, transformed processes, and risk mitigation also persist. Each business will need to determine its mix of strategies and tactics to maximise the value that AI has to offer.

Key considerations

• How mature is your digital and AI journey?
• Do you understand how AI advances, such as Generative AI, are impacting your industry?
• What specific business problems or challenges can AI help solve for you?
• How can AI be integrated into existing systems and processes to improve efficiency and productivity?
• What are the ethical considerations that need to be considered when using AI, such as bias and discrimination?