Executive summary
This report assesses AI’s current and future role in the hospitality industry. AI is a rising technology in terms of adoption in various industries. This study bases its analogy on the support of theories such as innovation disruption, UTAUT, and TAM, which outline the reason for AI adoption and how it will progress in the future. The study concludes that AI’s role in the present is based on boosting security, personalization and prediction, and decision-making. AI could be used in the future by boosting virtual assistance adoption, using AI for autonomous vehicles, and attaching AI to VR and AR. Organizations in the industry need to be aware of the privacy risks that could air with AI. As recommendations, developing strong internal controls encompassing training and pushing for a worker-technology fit is essential.
Introduction
Artificial intelligence is an innovation based on giving a computer human-like functionalities that can aid it in making decisions and becoming rational (Ertel, 2013). This technology and its adoption are rising in various industries, and organizations see it as a way to boost organizational performance and operational efficiency (Ertel, 2013). This is also the case for organizations in the hospitality industry, in which organizations have started to adopt AI in various operations, which is also aiding in boosting organizational performance. AI and the latest innovations are also associated with some challenges and issues that organizations need to address before adopting this technology is effectively integrated into companies. It adds to optimal organizational and consumer value.
Literature review
AI’s present role and adoption in the industry are associated with the innovation disruption theory developed by Clayton M. Christensen and is popularised by his book Innovator’s Dilemma (King and Baatartogtokh, 2015). The proponent shows how new and novel innovations can disrupt an industry, and organizations failing to implement them can go bust. Christensen provides examples of organizations in the entertainment industry, such as Blockbuster and its inability to move with the times, which contributed to its low performance and, once a behemoth, now has a single branch in the USA (Christensen and Raynor, 2013). The organization was replaced by Netflix, which could innovate and move with current innovations and become a global leader in the industry. This theory is applicable in tourism, which shows why organizations in the sector are adopting recent innovations such as AI. This is based on supporting operational efficiency and ensuring that they remain relevant and in accord with competition in the industrial era. AI is a recent trend associated with the fourth industrial revolution, which is the current state of affairs and includes such technologies (Christensen and Raynor, 2013; Dalenogare et al., 2018).
AI and its adoption are expected to rise as organizations study its importance. The future role and adoption of AI in the hospitality industry are supported by theories such as the Unified Theory of Acceptance and Use of Technology (UTAUT) and the Technology Acceptance Model (TAM). UTAUT shows that technology adoption and acceptance are based on performance expectancy, effort expectancy, social influence, and facilitating conditions (Ammenwerth, 2019). Thus, users will accept a particular technology if their performance expectations match its capabilities and the effort required to use the innovation. A low effort is preferable in this case (Ammenwerth, 2019). Also, they will check on issues such as how their peers and other members of society support the use of the technology and what support factors or infrastructure is there to facilitate adopting the said innovation.
On the other hand, TAM shows how people accept various technologies and what influences their actions in this case and is closely related to the UTAUT model (Ammenwerth, 2019; Bawack and Desveaud, 2022). The approach provides two factors; perceived ease of use and usefulness (Ammenwerth, 2019). Thus, a person will accept a particular technology if it is easy to use and it aids in supporting performance or is fit for purpose (Ammenwerth, 2019; Bawack and Desveaud, 2022). These theories can then outline and support the future adoption of AI in the hospitality industry as it boosts ease in doing operations, is perfectly fit for purpose, and its social standing is excellent, with many using it for personal reasons such as in homes and support of intelligent technologies and accessories such as smartwatches. The infrastructure is also another which supports the use of AI, and countries are supporting its adoption. For instance, the rise in smart cities, fiber optics, and open-source software supports its growth, and countries such as the UAE have established a position for the minister of AI.
Analysis
The present role of AI in the hospitality industry
Security:
Organizations in the industry are using AI to support security and boost their strategies to keep property and clients safe. Security is essential for these organizations, especially those offering accommodation, as it could lead to various legal and profitability risks. Therefore, organizations are looking for technologies that can aid in boosting efficiency and preventing crimes such as theft (Gaur et al., 2021; Abid et al., 2021). AI has aided in providing services to the industry, such as facial and biometric recognition, to prevent unauthorized access to various parts of the business. AI is also predicting and preventing fraud and making it easy for organizations in the industry to control their risk management initiatives (Galun, 2018). AI surveillance is also possible with smart CCTVs, aiding organizations in real-time protection and response to various problems (Galun, 2018). Various hotels in the hospitality industry are using AI for security purposes and enhancing this functionality. The Radisson Hotel Group uses AI-enabled fraud detection tools, which aid in analyzing transactions and customer behavior and indicates various cases of fraud (Alex Soft, 2018). Wynn Las Vegas is using AI to support corporate surveillance and detect the relevant authorities in case of suspicious activities (Wang et al., 2022). Marriott International Hotels group also uses facial recognition, aiding workers to operate and gain access to the right areas especially restricted ones (Marriott International, 2018). With the rising cybercrime issues, InterContinental Hotels Group is using AI to detect and prevent cybercrime and protect data from access by third and malicious parties.
Personalization:
Organizations in the industry are also using AI to personalize services and products, which adds to customer value and satisfaction. Therefore, hospitality industry organizations use AI to boost customization, such as AI-powered chatbots and assistance to give customers what they want based on their behavior and patterns (Kaul, 2022; Hollander, 2023). AI allows organizations to offer customers recommendations specific to their needs and show them that they value them (Hollander, 2023). For instance, Ritz-Carlton uses AI to offer customer recommendations, and suggestions are based on analyzed data and the customer’s past behavior (Shorty Awards, 2019). The Aloft Hotel in Cupertino, California, has used AI to uphold room customization based on the customer’s needs (Uiga, 2023; Hall, 2016). The system is called “Project Jetson,” in which customers have various options when in a room, such as using AI to regulate lighting and room temperature and order room service (Hall, 2016). Hilton is also using AI for data analytics and using the same to offer personalized rewards and benefits to customers (The Strategy Story, 2023). AI has also aided in the personalization of marketing. That is, organizations in the industry can use AI for data analytics and use the provided insights to direct their advertising and other promotional activities to the proper channels to reach the right market (Limna, 2022; Hotel Speak, 2023). For instance, Hyatt Hotels uses AI to promote marketing by using big data to understand the customers and direct the right marketing strategies to them more efficiently and effectively (Chandramohan, 2016). AI-powered chatbots have had a significant role in providing recommendations to organizations and customers. They have aided in offering 24hr service to the clients and supporting them at various levels. They also offer personalized recommendations on the organization’s website, where they can show which room could suit the client or the meals which a client could order (Barton, 2019).
Predictive and decision-making capacities
AI is boosting forecasting and equipping organizations in the hospitality industry with the right insights to support decision-making. AI’s predictive capacity makes it possible to perform other critical AI roles (Infosys, 2019). For instance, AI is supporting demand forecasting and making it possible for organizations in the hospitality industry to analyze large sets of data on pricing, inventory, staffing, and other events (Atalla, 2019; Infosys, 2019). For example, Marriott International uses AI to predict the future and design the right pricing strategies for the market (Marriott International, 2018). AI is also used to determine and identify equipment that needs to be maintained, track operations, or ensure that machinery is fit for purpose (Peter, 2023). AI is also assisting in churn prediction, as is the case for organizations such as Caesars Entertainment Corporation, using AI to predict churn rates and determine how customer behavior and preferences change (Fayyad, 2022). Also, as indicated, AI and its predictive abilities enable organizations to reduce and prevent crime, such as fraud (Galun, 2018; Alex Soft, 2018). AI is giving critical insights and strategy recommendations to organizations in the hospitality industry and boosting performance and operational efficiency.
The Future Role of AI
Increased adoption of AI-powered assistants: Organizations such as Google, Apple, and Amazon spearhead the development of AI assistants, and organizations in the hospitality industry are adopting these in their operations. This could rise in the future as users demand more personalization and customization of service. Thus, integrating such an innovation in the future will boost organizational customer satisfaction and response to the customers (Boston Hospitality Review, 2021; Saul, 2021).
Self-driving vehicles: AI is being applied in the development of autonomous vehicles, and also it is integrated into such vehicles, as seen with Tesla’s electric cars. The technology is still in its infancy and is yet to gain traction. Thus, the future could be characterized by using autonomous vehicles to transport clients to various locations from the hotels or to the hotels and also accord personalization (Chowdhury, 2022; TSS Customer Service, 2018).
AI-powered Augmented Reality (AR) and Virtual Reality (VR): organizations in the hospitality industry are using these two innovations to boost immersion and give virtual tours to their clients. As effective as this is, AI could play a role in the future by boosting personalization in this case, improving the quality of the experience in preceding operations, and committing to visiting or dining with a specific hotel (von Ende et al., 2023; Eddie, 2021).
Global trend implications
Geographical context: AI can raise hospitality reach to various regions through AR and VR, offering virtual experiences to customers in many regions. Also, providing personalized experiences can boost market share for organizations (von Ende et al., 2023; Eddie, 2021).
Economic context: AI can boost the profitability of organizations in the hospitality sector. This is based on its ability to uphold cost savings and reduce waste. Also, its ability to boost customer experience can lead to high market share and visitation, which would turn to high revenues. It will make organizations more competitive and productive (Kaul, 2022; Hollander, 2023).
Social-cultural context: businesses in the industry will have the capability to provide personalized experiences, and this will uphold customer engagement by supporting their likes and preferences (Kaul, 2022; Hollander, 2023).
Impact
AI has a high impact on the hospitality industry. This is based on its ability to enhance customer experience and add value. This is also associated with its ability to uphold personalization (Hollander, 2023). However, it could lead to job displacement, with jobs conducted by human workers being performed by AI (Howard, 2019). AI is also under the threat of cybercrime and people with malicious intent accessing large data sets and using the same for inappropriate reasons. Various organizations have fallen victim to this, with hackers accessing unauthorized details of customers and other parties, such as InterContinental Hotels Group (Jones, 2022). Thus, organizations in the hospitality industry need to keep this in mind by ensuring that their AIs are adequately secured to reduce the risk of legal redress and reputational damage.
Contemporary debates
Sustainability: sustainability is an ongoing debate and the hospitality sector organizations’ ability to reduce wastage, water, and energy use and emissions. Thus, AI will provide insights and track emissions (Limna, 2022).
Labor market and technology: the application of AI is involved in the current debate on its impact on the job market and some technical skills. It will replace various skills in the future and contribute to high unemployment rates (Howard, 2019).Top of Form
Recommendations
Organizations in the hospitality industry need to adopt AI in their operations as this technology is associated with many advantages. They need to ensure that the development of AI is prioritized and its application is also prevented from cybercrime issues. This should be associated with training and development for the workers to boost their efficiency in the process and while working with the new technology. Also, they should be careful while adopting AI as it could replace various human jobs, which could have negative repercussions (Khakurel et al., 2018). Therefore, it is essential to integrate the technical and human aspects while adopting new technologies such as AI. This is also made possible by ensuring the workers have the proper training to work in unison with AI.
Conclusion
Organizations are using AI in the hospitality industry to whether the adverse effects proposed in the disruptive innovations model. Therefore, currently, AI is applied in various aspects of organizations in the industry. These align with boosting security and using big data and predictive analytics to support decision-making in increasing personalization and adding to customer value. The future of AI is also bright in the industry as supported by the UTAUT and TAM theories in which AI perfectly fits in terms of use, ease, fit and social aspects which will make its role still relevant in the future. Therefore, organizations will use AI to boost the role of virtual assistants and self-driving vehicles and use AI-powered VR and AR systems to boost convenience.
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