Hoteliers are finally on track to delivering improved customer personalization options thanks to a renewed focus on automated technology and a desire to rework operations from the ground up. These capabilities have been the “white whale” of the hotel industry for decades, and today, it is possible to personalize a guest’s stay from beginning to end before their arrival.
Hotels can further leverage their expanded knowledge of guest preferences and booking habits to improve profitability, but they aren’t doing so manually. It has become clear that automation and artificial intelligence are necessary for creating decentralized traveler profiles, leaving operators and revenue managers to optimize the experience based on these findings.
Gains in generative AI have made profiting from guest insights second nature to hotels. Improvements in object and speech recognition, machine reading, machine translating, conversational question-and-answer skills, and image capturing allow AI to reason over data collected across multiple arenas. When these tools can create a data lake fed by streams of unique customer data sources from each hotel department, operators can act on more impactful insights and create more personalized guest experiences at the right price.
Generative AI has already been used to improve revenue capture and sales strategies across hospitality, specifically by creating more targeted messaging based on accurate audience profiles. When done correctly, hotels can enhance their marketing messaging to a degree that allows them to target their most desired guests for promotions. Each of a hotel’s audiences can be marketed to based on their length of stay, preferred amenities, the timing of their stay, and other factors.
Reacting to these factors manually can be challenging and requires significant time to execute or maintain. This is how AI influences hospitality as a stabilizing force, by connecting guest needs with hotelier action.
Do You Know Your Guests?
It’s easy for hotels to personalize the guest experience when prepared, but this is rarely the case in practice. In 2023, 50 percent of all transient bookings have been made in a zero to seven-day booking window. This is a difficult window to apply revenue management practices, but there are still opportunities to improve personalization and optimize revenue at a moment’s notice. Keep in mind, personalization could be as simple as a lower nightly rate for a guest looking to spend more on-site during a conference or as complex as a unique gift or experience during check-in.
Guest personalization and revenue management weren’t always so complex. Determining the ideal price for a room, restaurant menu, event space availability, and spa treatments isn’t simple, but it can be resolved with some effectiveness manually. But what about hotels looking to implement attribute-based selling strategies to improve guest personalization and profitability? When hotels consider the price elasticity of each unique attribute (or pricable feature) within their hotel, things get complicated quickly.
Hotels must decide what is and is not an attribute of a property and then isolate an ideal value for each. This process gets even more complex when factoring in attributes that hotels do not typically charge for access but provide undeniable value, such as the hotel pool. Furthermore, assigning a value to items that previously had none creates inherent price sensitivity changes. Operators must find the marginal revenue and optimal rate for each attribute and then potentially offer it as a package to guests based on their desired personalization.
In attaining hospitality’s desired level of guest personalization, hotels need to create decentralized guest IDs uncoupled from branded ecosystems. Hotels can already see the limitations of operating in a data-siloed environment, which limits their ability to share information and react quickly enough to capitalize on short-term data.
Breaking Down the Silos to Evolve More Quickly
Savvy hoteliers are looking for ways to drive improved customer experiences using targeted, intelligent offers that start with understanding their wants and needs. This ability is limited in a siloed hotel environment and further complicated when considering the broader lack of visibility for guests traveling between hotels. Revenue management opportunities would be even more robust if these barriers ever come down.
Revenue management is an evolving discipline that uses data analytics to solve real-world challenges in hotel operations. However, only some things can be modeled, and operators must control for innumerable unaccounted factors in the real world. AI and machine learning are helping business owners account for the unexpected, try innovations, fail fast, and iterate again. This is the essence of what is required to improve guest personalization across hospitality. Once hotels are on that path, they can rethink the ceiling of their potential revenue optimization opportunities.
Geoff Roether is a regional solutions engineer at IDeaS.