How hotels are turning to AI

Hotel rooms are starting to feel like they were made just for you.

Personalized music plays when you open the door. Lighting and air-conditioning are set to your ideal levels. A menu of the family’s favorite movies pop up on the TV, while the mini fridge is free from any food allergies.

Behind it all: a hotel industry racing to deliver unique guest experiences fuelled by new technologies and artificial intelligence.

“If knowing your guest is a priority to winning loyalty and increasing spend, then AI has tremendous potential in helping build guest profiles,” says JLL’s hotel asset management expert Ross Beardsell. “If a guest is known for having an exacting fitness regime, a penchant for fine dining, or a requirement for state-of-the-art technology services, using AI to build a comprehensive guest profile can allow a hotel to grow yield.”

The push for technology is happening throughout the ranks of hotels, from budget hotels for the cost-conscious with kiosk-style check-in technology, to five-star premises where technology can ensure a customised visit for the repeat visitor.

The challenge is how to leverage the right technologies to deliver a seamless experience for guests while also generating bottom-line benefits.

Howard Phung, director of digital, data and technology at Pro-Invest Group, which invests in hotels and commercial property assets on behalf of global institutional investors, says investing in agile technology is key; there is no one technology that will last forever, no “one-size-fits-all.”

“It is important to understand what problems you are solving for your customers,” Phung said at the No Vacancy hotel conference in Sydney. “If you're going to just be whacking in technology left and right, things that you saw in a magazine, it's not going to work for you. So just really taking a long-term approach. That's the key to successful technologies." 

Phung and other speakers highlighted Citizen M Hotels as one example of a hotel operator making technology a focal point of its “affordable luxury” offering, designed for tech-savvy always-on-the-move guests. Citizen M swapped form-filling for self-service check-in at touch-screen terminals, and room keys double as payment method at the hotels’ canteens.

The company used an enterprise middleware with the customer data platform that houses that data, Phung said, getting the technology and architecture design just right.

Touch screen check-ins can also simplify the upselling process of offering a guest breakfast, or upgrading to a deluxe room, and QR scanning for food orders leads to guests typically ordering more than if they are served by a person. Both are “simple quick wins that are very revenue driven,” said Heidi George, director of operational excellence at TFE Hotels, at the event.

“What music people want, it's pretty hard to clarify the dollar return on that,” George said. “But when you can see the straight revenue from an upsell, that's the simplest. QR code ordering as well. Every vendor out there will tell you when people don't have to verbally give you your order and you're just choosing online, you order more than you would if you were saying it to somebody.”

The technology isn’t just for guests. Phung says that biggest challenge for hotel operators is energy consumption, followed by wage costs. Technology can provide better monitoring of those costs through data aggregation, systems talking to one another and dashboard technology, he says. “If you're not reviewing those costs in real time, you're going to lose money,” he said.

JLL research shows that sustainably built and designed hotels perform more efficiently and generate utilities cost savings, lower future regulatory capex requirements as well as creating greater financing options by being able to tap green financing. There is increasing evidence that investors will pay more for hotels with a high level of ESG credentials such as these due to higher performance during operation.

“ESG is becoming a key due diligence workstream for acquisitions that did not exist 12 months ago,” Beardsell says.

As an example, Royal London Asset Management, a leading UK investment firm, experienced significant improvements in HVAC operations and energy efficiency in an 11,600 square meter commercial office building by implementing JLL’s AI-powered Hank technologies.

It’s AI and generative AI that will be a game-changer for the industry, Pro-Invest’s Phung said. “Statistically, they're saying that you're going to be 40% more efficient. So companies that don't embrace the technology will be left behind, and their cost and the bottom lines will blow out.”

JLL's 2023 Global Real Estate Technology Survey shows that over 80% of real estate occupiers, investors and developers say they plan to increase their real estate technology budget in the next three years.

Robots may be able to help perform repetitive manual work, such as cleaning or food service, says George of TFE Hotels. That sort of technology could redefine workforces. At Citizen M, staff are completely multifunctional: they can help you check in and or make a cocktail. These “ambassadors” can be concierge, receptionist, or bar staff.

In the end, it will be the revenue potential of AI that probably drives innovation in the hotel industry, JLL’s Beardsell says. AI will always struggle to make a bed, make a decent cappuccino, or clear the function room for the next session but it may ensure competitive advantages in many areas of hotel operation.

“There will always be a conflict between our industry’s renown as a “people business” and the need for automation to increase efficiencies and reduce costs,” Beardsell says. “The reality is that building innovation and technology proficiency does not have to mean reducing personal contact. The key is in the balance.”