The Role of AI in Transcending Vertical Limitations

• The hotel industry’s reliance on traditional vertical technology architecture creates unnecessary complexity and hampers innovation. Transition to horizontal architecture is crucial, paving the way for greater efficiency and operational insights powered by AI.
• AI can be exploited in various ways in the hospitality sector, from personalized customer experiences and targeted marketing to forecasting, revenue management, and supply chain optimization.

Tim Davis, Founder and Managing Director of Pace Dimensions, says in an article on PhocusWire that the hospitality industry has long relied on technology, with standalone applications employed at almost every stage of the customer journey. However, these applications often result in a fragmented system that causes unnecessary complexity and duplication of work.

To move forward, small and large hotel companies must rethink their technology architecture, focusing on open platforms, cloud technology, and horizontal architectures. In essence, artificial intelligence (AI) will be instrumental in ensuring the success of future business operations.

The transition to a cloud-based system does not require a complete overhaul. Instead, it entails a gradual shift from traditional technologies toward a modern architecture and a cloud-based platform-enabled ecosystem. The advantages of a horizontal architecture are numerous. It introduces an integration layer between every single transaction a customer or channel generates, abstracting customers from channels and channels from systems. This abstraction allows innovation without the need to consider the complexity of multiple other applications.

AI holds tremendous potential for enhancing hotel performance. From highly personalized customer experiences to targeted advertising, there are numerous ways in which AI can be exploited. In the premium hospitality sector, where anticipation is a key differentiator, AI can be used for forecasting and revenue management, marketing and customer profiling, data analytics, virtual assistance, personalized customer experiences, operational efficiencies, supply chain optimization, and fraud detection and security.

In terms of revenue management, AI can analyze historical patterns of demand to determine optimal pricing and inventory availability. AI can also optimize room rates in real-time by analyzing market conditions, exchange rates, competitor pricing, and demand around calendar events. Additionally, understanding likely demand can help determine the conditions of sale for a particular room.

In marketing and customer profiling, AI can target specific customers and communicate with them more relevantly. For instance, if a hotel needs to boost suite sales, AI can identify customers likely to purchase a suite, allowing for a more focused marketing effort.

AI can also streamline operations and enhance customer service. For example, AI chatbots can answer queries, assist with bookings, and provide local information, offering 24/7 customer service. Additionally, AI can create personalized experiences, such as adjusting room lighting, temperature, and entertainment options based on guest preferences.

From an operational perspective, AI can monitor equipment and predict when maintenance is needed, optimize staff schedules based on historical data and expected guest numbers, and manage the procurement and distribution of perishable goods. Furthermore, by monitoring transactions, AI can help prevent fraud and ensure secure payments.

The key takeaway is that the hospitality industry needs to stop spending on standalone applications that duplicate content and functionality and instead plan for a cloud-based future. By leveraging data from big tech companies, hospitality leaders can create a single view of the business. Modern, abstracted, and scalable horizontal technology architecture can develop economies of scale, enabling hotels to grow profitability and not just scale.

Discover more at PhocusWire.