Revenue Strategy Report: The Real Potential for Artificial Intelligence in Hospitality

Anybody who’s been to my house or Duetto’s offices would know I’m a huge “Star Wars” fan, but lately, the conversations I hear about artificial intelligence and how it might disrupt hotels and casinos remind me more of “Blade Runner.” Do we need to act like Harrison Ford hunting replicants and disable AI before it creates some dystopian future? No, I don’t think so.

I won’t weigh in on the larger debate about how AI is shaping the future of work. Elon Musk and Bill Gates are doing plenty of that already. I can only really speak to the potential AI has for the hotel and casino industries, where I’ve spent my whole career.

Given how much AI already is changing the way consumers shop for travel, interact with brands and expect a certain kind of convenience, it’s safe to say it’s not going anywhere. Hotel brands and their technology partners will need to figure out AI and invest in solutions. Owners and asset managers can’t be expected to foot the bill for that R&D, but they’ll adopt AI in all the ways their guests will demand.

The bigger worry for many hotels, of course, is what AI means for staff and management. A robot butler dropping off a room service order is a cute fad for now. But what happens if all service and concierge staff are one day replaced by robots, kiosks and apps? For hotel Revenue Strategy, AI could make forecasts and pricing algorithms even more sophisticated, but would it render a human revenue manager obsolete?

What AI Means to Hotels — and What It Doesn’t

Even before I co-founded Duetto, I have been calling for this industry to adopt Revenue Strategy, rather than revenue management. The latter is inefficient, because all the manual, rote tasks for collecting data and entering new room rates across a bunch of legacy systems robs a revenue manager of the time she could be using to think up a new strategy.

Revenue Strategy embraces data and cloud technology to optimize the process of yielding hotel inventory. The value of incorporating predictive analytics into hotel pricing and distribution has always been a greater ability to use dynamic sets of information, way beyond just historical data from the PMS, to accurately forecast demand.

Through a Revenue Strategy application, a hotel can automate much of what takes up too much time for a revenue manager.

But while artificial intelligence helps in the automation of many revenue management tasks, it isn’t meant to replace revenue manager jobs — at least not in the way Duetto predicts. It’s not about wringing every last ounce of productivity out of a DORM; it’s about extracting the maximum value out of every last byte of information the hotel ingests and creates. Revenue Strategy is knowledge work, and AI augments and assists the revenue strategist.

There’s an art and a science to Revenue Strategy, and the art is the judgment on the part of a DORM. Without wasting time on easily automated tasks, the DORM is free to look for patterns in her hotel’s demand and find opportunities to drive more revenue. She and her counterpart in sales or digital marketing can work together better, with the same set of data, to execute campaigns that create and convert more demand.

This person also has the experience to understand when demand conditions change and when to second-guess or override pricing or distribution decisions put in place with the help of an algorithm.

Autopilot works great in modern air travel, but pilots take over in extreme turbulence or when it’s time to land. Similarly, a well-trained DORM always can and should manage by exception when conditions change for certain booking dates.

Imagine a Better Booking and On-Property Experience

I am calling on the hospitality industry to invest in solutions for artificial intelligence — it already lost the race in online and mobile bookings to OTAs and doesn’t need to miss another opportunity — but also to invest in its people and their skills. It’s not a zero-sum game of people versus machines.

Let’s not wait for job displacement caused by AI to hit hotels and casinos, only to plow money into retraining so our employees find work in other industries. Let’s train our staffs up now, while giving them the latest data and technology to excel in revenue optimization and guest service today.

How could data-driven Revenue Strategy help you make a difference on the bottom line? More importantly, what bold moves and strategies could you implement? There is still a wide-open opportunity to bring true personalization to the booking process and the on-property experience. Think you can achieve it with Excel spreadsheets alone?

More likely, your property will need a strategy for adopting “cognitive computing,” something IBM’s Bret Greenstein will talk about at RSF London next month.

Consumers will only put more pressure on the hospitality industry to figure this out. AI has already made the way we all search more complex and personalized, especially through voice assistants like Alexa or Siri. Guests will expect the way they book and their stay to be intuitive and customized, with the right options served up in real time.

In only a few years, those expectations will probably be common in your revenue management department as well. The DORM of the future likely will be able to interact with a Revenue Strategy solution just like you would today with Alexa or Google Home.

Your employees should be able to see AI as their reinforcements, not their replacements.




Marco Benvenuti, Chief Marketing and Strategy Officer and Co-Founder

As co-founder and chief marketing and strategy officer for Duetto, Marco guides product vision, direction and implementation. Prior to Duetto, he was Executive Director at Wynn and Encore resorts in Las Vegas, where he founded and managed the Enterprise Strategy Group. Marco was also recently named the Entrepreneur in Residence at Cornell University’s School of Hospitality Administration, and can be seen speaking or lecturing at industry events and hotel schools worldwide.

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