The importance of increasing digitization in the hotel industry

The pace of change continues to accelerate, with advances in artificial intelligence (AI) and machine learning (ML) technologies expanding automated personalization capabilities. But that doesn't mean hotel technology has kept up.

Most hotels have yet to fully unlock their full digitization potential. It's not for lack of trying: AI marketing is endorsed by 75% of hotel chain C-suite executives, yet only 36% of all chains implement automated personalization strategies.

So where are the gaps? And how can we build bridges to a fully realized digital future for hotels? The latest H2C Global Automated Personalization Study  surveyed a global sample of hoteliers across all categories to explore these questions and illuminate the paths toward delivering digitization in a meaningful and impactful way. 

Opportunities
When it comes to AI-driven automation, there is an inherent tension between operational efficiency and individual relevance.
Hotels want to benefit from the automatic personalization of every 1:1 touchpoint, but that precision can't sacrifice guest individuality. Even if they accept the need for automation for business today, guests still want relevant communications that feel authentic and genuine.

But achieving automated personalization without sacrificing guest individuality is incredibly difficult due to competing priorities and lack of knowledge.

40% of hotels do not seek to apply custom automation due to lack of knowledge, while 39% lack the knowledge to take advantage of the technology.

Even with these obvious challenges, the opportunities are numerous if automation is embraced:

• Enhance the guest experience – From more relevant marketing offers to a more personalized property experience, AI-powered technologies can improve each guest's interaction.
• Increase profitability – Matching guests to their ideal offers has a positive effect on conversion rate, and better price-to-segment alignment makes every booking more profitable.
• Reduce Operational Cost – Automation saves money in several ways. From self-service tools that reduce front-desk work to implementing text messaging so guests can communicate with staff more efficiently, automated tools can not only personalize the experience, but also streamline operations.

Increase Retention – Staff are more productive and happy when they don't have to perform tedious tasks like manual data entry. Automated tools illuminate those types of tasks so staff can focus on guest interactions. 

Challenges
Standardizing AI technologies in hospitality is not without its challenges. These include:

• Data Collection – 83% of hotels struggle to collect accurate and clean data. Without clean, organized data, there are real limitations to successful AI.
• Systems integration – With limited data provided by third parties and internal systems that don't always work well together, data remains siled.
• Cross-Channel Communications – As guests communicate through more than one channel, it becomes increasingly difficult to manage and personalization can be less reliable unless data is captured across all touchpoints.

These challenges reduce the effectiveness of AI, as personalization is less relevant and accurate, and implementation becomes a steep hill to climb for overburdened staff with limited budgets. To overcome these challenges, there are some clear action points that need to be taken.

Action Items
Even once hotels implement automated personalization, success is not guaranteed. It requires a dedicated implementation approach that is structured to overcome the challenges of automated customization.

There's a reason only a third of respondents in the h2C study use automated personalization technology: It's difficult to deliver at scale across a hotel operation, and even those who manage to implement automated AI systems aren't always successful. , as the study found that 80% of chains are challenged by automated personalization technology.

Successful implementation of these new technologies requires thoughtful action informed by a clear strategy. Some action items to consider:

• Focus on systems integration – First, align internal systems with third-party inputs to collect clean data. As the backbone of automation, clean data is what ensures marketing, sales, distribution, and front-line operations run off of granular data aggregated into a single source of truth.
• Be cross-functional: Don't make AI and emerging technology an isolated IT responsibility. Bring IT, e-commerce, distribution and revenue, marketing, and operations together into a single AI pool to unlock its full potential across the entire operation. No silos means more visibility and more effective implementation.
• Strive for 1:1 marketing – The majority, 60%, of chains plan to implement a one-to-one marketing strategy, but face a lack of technology and budget. Take the time to create a budget that allows your hotel best-in-class technology.
• Support attribute-based selling – A whopping 64% of chains plan to use narrow segment pricing to improve booking profitability. That requires automated tools that process data in real time to provide accurate prices to specific segments.
• Invest in training staff – Upskilling for automated technologies is essential. Even when staff cuts reduce capabilities, training remaining staff should be prioritized. Once fully up and running, automated customization will improve productivity and profitability.

With each of these action items, your hotel will be well-equipped to successfully implement automated personalization and other AI-powered technologies.

Looking Ahead
The imperative to invest in and harness these technologies is also accelerating. With COVID -related labor shortages coupled with evolving guest expectations, AI has the potential to put your hotel in a more competitive position, increasing productivity and operational efficiency.

But there are some areas for improvement that could benefit from AI automations. The top five priorities for respondents in the next 24 months are:

• Messaging apps – With guests increasingly turning to messaging apps to communicate, 46% of hotels plan to use AI to automate messaging across channels.
• Loyalty Programs – Connecting with guests by sending personalized offers to engaged loyalty users is planned for 38% of hotels.
• Search engines – From Google Hotels to Bing and other search engines, automatic offer personalization is a priority for 36%.
• Hotel Apps – Surprisingly, only 25% of hotels currently use AI-automated tools for their apps. That will change in the next 2 years, with a prioritization of 35% of hotels.
• Check-in Terminal – To accommodate the rise of self-service, many hotels have installed guest kiosks. With 35% of hotels intending to expand personalization capabilities at these kiosks, the channel is emerging as a core asset in automated personalization.

As hotels become more comfortable with AI-powered technologies to automate personalization, the benefits more easily accrue to the bottom line. The guest experience will also benefit from more accurate, relevant and timely communications across all touchpoints.