Artificial intelligence (AI) is yielding results for hotels as brands move from experimentation to deployment.
Early adopters report improvements in areas including revenue, efficiency and resource management, according to a recent report from Boston Consulting Group (BCG). These gains come as travel companies grapple with AI investment decisions and how best to measure ROI.
Some companies are already reporting compelling AI returns. Hotels are seeing revenue per available room gains up to 15% after implementing AI-powered pricing systems that adjust prices in real time based on demand signals such as booking pace, competitor rates and local events.
In operations, predictive housekeeping models are helping hotel operators to minimize the impact of rising labor costs. The Ritz-Carlton San Francisco reported a 20% increase in room-cleaning speed via an AI system that optimizes housekeeping schedules based on checkout timing, guest preferences and staffing levels. And at the Four Seasons Peninsula Papagayo, AI waste tracking tools in eight months yielded a 50% reduction in food waste.
While fewer than one in 10 hospitality companies are leveraging cutting-edge AI to produce big results, a larger share of hotels is approaching AI as a work in progress.
“Twenty-five percent of hospitality firms fell into the ‘AI-scaling’ category, meaning they have an AI strategy that is starting to produce real returns across multiple organization activities,” reads BCG ’s AI-First Hotels: Faster to Build, Leaner to Operate, and Richer in Customer Experience report.
These AI-scaling companies have prioritized using AI across several operational areas, including marketing and revenue management, guest engagement and property operations. Applications range from hyper-targeted offers and dynamic pricing to chatbots and tools to optimize staffing, inventory and maintenance.
The report predicts the next coming phase of AI adoption will target additional parts of the hotel value chain. Emerging applications include systems designed to strengthen risk management and safety processes and tools that help companies improve construction planning and capital allocation.
Scaling AI across hospitality
While early gains are emerging, the report cited several structural challenges as barriers to broader AI adoption.
With many AI applications still untested, hotel companies remain hesitant to invest in the AI fundamentals that could eventually yield the most significant gains. Competing priorities may produce faster and more obvious results, but data cleaning and standardization and system integration are essential.
Many hotels also companies operate with fragmented technology systems, including separate platforms for property management, point-of-sale transactions, customer relationship management and loyalty programs. Hotels will need to integrate these systems and build a centralized data platform that creates a single source of truth, according to BCG.
Hotels also face staffing challenges, with the tourism sector lagging behind other industries in AI talent. Just 2.9% of full-time travel and tourism employees are skilled in AI, compared to 21% in technology and media. However, the tourism workforce is growing increasingly AI savvy. The share of full-time hospitality workers with AI skills is increasing nearly 5% year over year.
Investment in AI-forward technology and employees will drive the next stage of AI development and gains.