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Artificial intelligence in hotels: here are the 4 most common fears (and why they are fictions)

Learn how you can leverage AI to effectively improve price management in your hotel

The 4 most common fears about artificial intelligence and hotel revenue management | Smartpricing

Among all the recent technological innovations, artificial intelligence (AI) has emerged as the undisputed protagonist, creating a debate as wide-ranging as it is heated: from excitement about the incredible opportunities it offers, to concern about its impact on the future of countless workers.

In our opinion, this is why clarity is needed to understand exactly what artificial intelligence is, how it affects hotel revenue management, and what the main fears are when it comes to artificial intelligence applied to an accommodation's pricing strategies.

What is artificial intelligence

Artificial intelligence (AI) is a discipline that studies how to make computer systems capable of simulating human intelligence.

While to date computers excelled at simple, repetitive tasks (such as handling a large amount of calculations or welding sheets of metal the same way every time), the goal of artificial intelligence is to enable computers to tackle much more complex tasks, which include the following capabilities:

  • Reasoning - Analyze information and draw logical conclusions
  • Learning - Acquire new knowledge and adapt to new situations
  • Planning - Define a series of actions to achieve a goal
  • Creativity - Generate new ideas and solutions

Although artificial intelligence may seem like a difficult concept, it is actually a technology that we already use every day to simplify and improve our lives. We often do not realize it, but popular tools such as Google Maps, Alexa or Instagram filters are based on artificial intelligence.

Artificial intelligence is also becoming increasingly popular in the hospitality industry. In particular, hospitality businesses are leveraging it to improve guest experience and operational efficiency. The best example in the latter sense is artificial intelligence applied to revenue management.

How artificial intelligence impacts hotel revenue management

Revenue management is a discipline that aims to maximize revenue for your hospitality business, and if you want to learn more about how it works, we suggest reading our complete guide to revenue management.

If you are wondering how artificial intelligence impacts revenue management, here are the areas where it is capable of making a difference.

Data analysis and competitive pricing

Artificial intelligence is capable of collecting and analyzing huge volumes of data ranging from the hotel's internal data (such as booking history, ADR, occupancy, booking window, etc.) to market performance, recognizing recurring trends. Moreover, by performing this analysis constantly and around the clock, it is able to react more quickly to any changes, adjusting room rates accordingly and enabling it to seize every opportunity.

Work automation

In addition to relieving the host of such labor-intensive work as the data analysis just described, artificial intelligence can automate repetitive tasks such as adjusting prices, updating them on each booking channel, and creating reports to monitor strategies. By eliminating manual handling, not only are there huge savings in time that can be spent on other tasks, but the risk of errors is also reduced to zero.

Reduced complexity

Revenue management is a complex discipline, and practicing it requires having attended specific courses or having accumulated extensive practical experience, perhaps alongside experienced professionals. Thanks to the support of artificial intelligence, it is possible to bring the benefits of revenue management to your own hospitality establishment as well, regardless of your expertise in the field.

The four biggest fears about artificial intelligence and revenue management

Every technological innovation, especially in the first stages of diffusion, brings along doubts, questions and fears that often, with use, turn out to be unfounded.

Artificial intelligence applied to hotel revenue management is no exception and, based on our experience, we have identified the 4 most recurring fears of hoteliers. Let's see what they are and how to overcome them.

1. Lack of transparency in processed data and information

If you are used to managing prices by hand and in person, the first fear that may arise when faced with AI-based revenue management software is related to transparency. How much and what data is being used? Where does it come from? What weight is given to each variable? Why did a particular variation occur rather than another?

These are normal and fair questions to ask, and rather than driving one away from this technology, they should be used to select the best software.

The right software, in fact, is the one that offers maximum transparency and control (as we will see in a moment) over the calculated prices.

If you think about it, it's the same thing that happens when you go to a revenue management consultant: those who are good will be able to explain the precise reasoning they will follow to improve your revenues, others will just ask you to "sit back and watch”.

2. Revenue managers will be replaced by artificial intelligence

When a hospitality establishment already has a revenue manager, the fear is that the technology introduced seems to be intended to replace them.

Yet, think of accountants and bookkeepers: did they disappear with the advent of Excel? No, they were simply able to modify and speed up the activities they perform. Instead of spending hours and hours "doing the math”, they have been able to spend more time optimizing expenses and advising business owners on their activities.

Similarly, a revenue management software will become a valuable ally for a revenue manager, allowing him or her to have an advanced analytical tool to refine their pricing strategies and save valuable time by automating the publication on the various distribution channels.

Time that a revenue manager can spend on other key activities such as market segmentation and creating targeted offers to attract new customers, retain them and further maximize revenue.

3. Not having complete control over pricing decisions

Loss of control is a very common fear, especially among those who are used to taking care of everything in their accommodations.

Again, this fear is normal and can be used to make the best software choice.

A good revenue management software, in fact, will not completely replace the host, but will be a tool in their hands. This means that it will have to be easy to use and configure from the start and offer the highest degree of customization. No software, in fact, can equal the host’s insight and sensitivity to the characteristics of their facility and their guests.

An important portion of control therefore will remain in their hands, but that control will be carried out in a much easier and faster way. Once the software's task has been set up correctly, one will be able to supervise and correct the course whenever needed and according to one's specific goals.

4. I don't trust a revenue management software based on artificial intelligence

The most common fear is related to "trust," and this too is more than normal. We are talking about a software that literally revolutionizes the work of price management and requires you to completely change your approach, especially for those who have always used the classic fixed price list.

This means stepping out of one's comfort zone, questioning old beliefs and established habits, and sometimes realizing that one's decisions were perhaps not the best ones because they were based on instinct instead of analytical reasoning.

Then there is the technological component that is frightening, and the lack of confidence you might feel can be compared to when thinking about the most advanced assisted driving systems.

Again, however, you are not "blindly" relying on a machine: the presence of an attentive driver, keeping their hands on the wheel while driving and giving the machine the inputs to follow is always absolutely necessary.

What the car will do is lighten the driver's workload by adjusting speed according to traffic, helping the driver to steer, change lanes, or deal with more complex environments and parking lots. In other words, it will increase the effectiveness of your driving style, just as a Revenue management software will increase the effectiveness of your pricing strategies.

In either case, using this technology and hands-on practice will be critical to gaining confidence and total confidence.

If we know the common doubts and fears about artificial intelligence applied to revenue management so well, it is because we have accompanied more than 3,000 hoteliers to discover its potential through our revenue management software Smartpricing.

The result? On average, those who chose Smartpricing increased their revenue by +30% per year, significantly reducing their workload and increasing their efficiency in price management.

If you want to learn more about Smartpricing and find out how it could support you too, start with a free demonstration!