Hospitality and artificial intelligence—a match made in heaven?
At the inaugural Destination AI Summit, the one-day conference, held in Washington, D.C. and spearheaded by Nazpari Aydin (co-founder of the Destination AI Summit) and HOTELS Magazine’s Editor-in-Chief David Eisen, aimed to discuss the effect and influence AI has and will have on the hotel industry specifically.
“Artificial intelligence is not in its infancy, but it continues to evolve and thrust forward at warp speed, becoming smarter and more ubiquitous by the day; so much, in fact, that AI is posited to contribute up to $15.7 trillion to the global economy by 2020,” founders said. “There’s no escaping the impact AI will have on it.”
Speakers from renowned institutions, leading technology firms, tech providers and prominent hotel chains offered insightful discussions and real-world case studies.
The morning began with an effort to level-set the understanding of what AI is, provided by Chris Anderson, professor at the SC Johnson College of Business at Cornell University. Scot Hornick, partner at Oliver Wyman, offered the morning keynote research presentation, "Generative AI's Influence on Leisure Traveler Behaviors," peppered with facts and figures ultimately aimed at answering travelers’ age-old question: “where do I want to go?”
“With the advent of generative AI, it was like, ‘Aha, someone has finally found the key that unlocks this door. Let's see what consumers actually think about that key, and whether or not they're running for that door to be unlocked,’” Hornick said. Talking to more than 2,000 people in North America, they found that “a fair number” of hotel guests and travelers had already used generative AI tools in planning a vacation activity. Thirty-nine percent had used it for inspiring and itinerary planning and were, by and large, very satisfied with the quality of the recommendations. “A large chunk of them had booked more than half of what they had recommended to them. So that's pretty impressive, considering the relative youth of these tools,” Hornick said, adding that most of them said that they would definitely use AI for future travel inspiration, both vacation planning and planning the details of the itinerary.
During the “Generative AI and the Business of Hospitality” panel, moderator Michael Frenkel, president, MCF PR, hosted a candid conversation among panelists Shane O’Flaherty, global director, travel, transportation and hospitality, Microsoft; Chris Hemmeter, managing director, Thayer Ventures; George Roukas, president, Gaipan; and Jess Petitt, SVP commercial strategy, insights and analytics, Hilton.
Specific to hospitality, Frenkel asked, where are we?
“I would say that our portfolio companies are working with AI and generative AI. It's not necessarily—yet—the essence of the business model,” Hemmeter said.
O’Flaherty remarked on the depth and breadth of the current investment that Microsoft is making in AI. “Typically, we spend probably $10 billion a year on research and development. We're spending that every quarter now. The investment and the foot on the gas has been incredible. It's like I'm working a startup inside Microsoft. I've never seen this pace of change.”
“Readiness, from a technology perspective, I think we're getting closer and closer,” Pettit said. “We made a big investment, knowing that this was going to be the direction of things in 2017, 2018, in our core data. As a data-driven organization deciding to invest, we needed to completely restructure to the cloud environment, do all of these things to make our data more accessible… [AI] is not really driving customer behavior yet, but in the next five years, it's going to make a huge impact… For us, we're trying to really be conscious of the investments we make. All the investments that are happening in [this] space, players are going to change dramatically in the next few years. We're doing a lot of testing and see where it goes.”
“If you're serious about generative AI, you really need to build an infrastructure. I'm not talking about the traditional two-year build for anything that has the word infrastructures on it, but you need to have some sort of basic understanding of ‘here are the models we're going to use, here are the tools we're going to use.’ That will provide enough space for Gen AI to grow in a very structured way,” Roukas advised.
To be clear, generative AI has transformative potential for the hospitality industry, with a clear role in enhancing guest experiences without fundamentally altering core services like comfort and hospitality. The panel also highlighted AI's impact on distribution and predicted a shift from traditional search algorithms to personalized recommendations driven by local data graphs.
“At the end of the day, as Chris said, [it comes down to] how well the property is run, whether the bed is comfortable, shower, hot water, the whole experience on premise is exactly what's going to drive people to come back,” Roukas said. "And that, I don't think, is ever going to change. But I think where Gen AI is going to [have a] big impact is on the channel. How do people find out about properties? How do they get brought in?”
Additional sessions covered topics including revenue management strategies with AI, large chains and operators adapting to AI, AI-driven marketing innovations and future trends and innovations for AI in hospitality. This summit was the first of what the collaborative envisions will be “many more” Destination AI Summits in the future.