The big brouhaha on the internet for the past several days has been revolving around Delta Air Lines and whether or not it is, or is planning to use artificial intelligence (AI) to set prices for airline tickets.
Delta Says “No” to AI Pricing — For Now
Last week, the airline told lawmakers that although it plans to partner with Fetcherr, an AI pricing company, to deploy AI-based revenue management technology across 20% of its domestic network by the end of 2025, it has not and will not use AI to set prices for individual consumers. Lawmakers appear to still be skeptical and U.S. Transportation Secretary Sean Duffy was quoted as saying, “To try to individualize pricing on seats based on how much you make or don’t make or who you are, I can guarantee you that we will investigate if anyone does that. We would engage very strongly if any company tries to use AI to individually price their seating.”
So there.
Hotels Are Saying “Yes” to AI
Meanwhile, while airlines are saying they’re NOT using AI for pricing, hotels are happily and openly using AI for a variety of tasks, including the pricing of rooms. Here are some ways you may or may not have seen AI at work at your hotel brands of choice:
Revenue Optimization
May as well start with the one that’s related to Delta Air Lines’ current problem. Many hotels use dynamic pricing algorithms, such as Duetto’s, which have helped hotels optimize room rates based on real-time demand, competitor pricing, and guest behavior. Hotels are reporting a 6-10% increase in revenue, per room, thanks to this AI intervention.
The pros of this technology include, of course, more money for the hotelier, plus staff being able to work on other tasks while the AI does the work.
The cons include us guests paying more per room per night.
AI Chatbots
Many companies, even those beyond the travel sector, are using AI chatbots to help with basic questions. For hotels, that means employing AI-powered Assistant chatbots like Velma to handle guest questions in real time.
Pros: increasing guest satisfaction and saving money on paying humans to do the work.
Cons: AI chatbots aren’t always as helpful for more difficult questions, along with humans preferring to interact with humans.
Personalized Marketing
People stay at hotels for different reasons. Business. Vacation. Gatherings. Using AI-powered CRM (customer relationship management), hotels can better segment guests and send personalized offers. That, in turn, can increase the hotel’s return rate.
Pros: increasing guest retention and making stronger loyalty programs.
Cons: the decrease in human interaction, which is still preferred.
Voice-Activated Assistants
Many U.S. homes have welcomed Alexa over the years. With Alexa so popular, it made sense for “her” (and AI like “her”) to start making their way into hotel rooms, too. Voice-activated assistants like Alexa for Hospitality allow guests to control room settings (lighting, temperature, etc.), order room service, or ask for recommendations without ever having to call the front desk.
Pros: Voice-activated technology is familiar for guests who use Alexa at home, and fun for guests who don’t. It also helps increase staff productivity.
Cons: A certain segment of the population is not comfortable with voice-activated assistants in their room. Having one could drive them away from future visits.
AI-Enhanced Room Service
Some hotels have embraced using AI-powered robots to autonomously deliver items like towels, snacks, and toiletries to guest rooms.
Pros: Besides saving staff time from having to make these deliveries themselves, robots are still “new” enough in the U.S. to be considered a pleasant novelty. The robots may also be faster than having to wait for a person to deliver the item.
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