Some hospitality businesses are already using Artificial Intelligence or AI. Not all are using it effectively or to its full potential.
AI has exploded into our lives and is here to stay, thanks to services such as ChatGPT. All businesses, including hospitality, will be embracing AI to stay ahead of their competitors and retain and grow customers or members.
Is your hospitality business ready for AI?
In a previous article we wrote about how many hotels, pubs and clubs are embracing new trends in hospitality beyond enhancing customers’ experience and administration. Hospitality technology and hotel technology are transforming accounting processes for hotels, pubs and clubs.
In this article we look at the many benefits of using AI, specifically Generative AI (Gen AI), in the hospitality industry. We also share some of the risks and how to safeguard against them. All businesses are on the cusp of discovering how AI can help them. Pitcher Partners’ Business Radar Report looks at the steps hotels, pubs and clubs are using when considering AI in their business.
What is AI and how are Australian businesses using it?
Generative AI (GenAI) uses algorithms to create new content including audio, text, video, images, code and more. It has been in software for some time, but ChatGPT has brought the power of AI to every business. Currently free to use, it is being taken up at a rapid rate. Two months after its launch, ChatGPT had more than 100 million users.
GenAI uses learned patterns of understanding and existing data and information which it reassembles depending on what humans ask of it. So, its responses are often only as good as the person prompting it and the information it has been given. But it has taken a huge leap forward in usability and possible uses.
ChatGPT is the most famous of several GenAI platforms. Other platforms include:
- Microsoft Copilot.
Pitcher Partners’ July 2023 Business Radar Report dives into GenAI in Australian mid market businesses in detail. The report shows:
- almost every business leader has heard of GenAI but very few have a lot of knowledge
- overall businesses see largely positive impacts from GenAI
- Gen AI is being used by a third of mid-market businesses, but few have effectively operationalised it
- businesses are using GenAI for a diverse range of functions, predominantly customer oriented and back office and administration processes.
- businesses agree that GenAI will impact a range of business operations, requiring many to upskill people and pivot resources
- the top concerns businesses have in using GenAI are security and data privacy, accuracy and quality, and staff concerns about losing hours or their jobs.
The hospitality sector must embrace but ring fence AI
Gen AI will impact all industries. Like it or not, AI will set new standards for the customisation of the delivery of services delivery and managing costs. Your competitors will be using AI so embracing it may be vital to business survival.
Experts say it is time to be proactive and ask how your hotel, pub or club can use some of the huge benefits AI tools bring while safeguarding your business, data and clients against AI risks.
How can hotels, pubs and clubs use AI to benefit their business
There are lots of ways hotels, pubs and clubs can use AI to increase operational efficiency and improve customer experience. Generally, businesses have limited their thinking on AI to back-office support – non-specific administration, reports and marketing material content – but there is much more potential.
Business advice and guidance, training, knowledge management, innovation, and bookkeeping and accounting are other possible uses identified by businesses.
Here are nine of the many examples of how AI can assist hotels, pubs and clubs to make better data-driven decisions, improve customer satisfaction and drive business growth.
- Enhance customer service. AI-powered chatbots or virtual assistants can handle initial customer inquiries, give information about specials or events, and take orders.
- Develop personalised customer promotions. AI algorithms can analyse customer data, such as past orders, preferences, and feedback, to offer personalised food and beverage recommendations or broader promotions.
- Inventory management. By analysing historical sales data, current trends, and external factors AI can help to predict demand more accurately. This helps to have the right quantity of ingredients and beverages at the right time and reduces waste.
- AI algorithms can analyse data on customer behaviour, competitor pricing, and market trends to adjust food and drink prices dynamically to maximise revenue and profitability.
- Optimise staff scheduling and performance. Using historical sales and customer traffic data, AI can help better align staffing levels with customer demand. AI algorithms can also analyse staff performance data to identify improvements and training recommendations.
- Entertainment and music selection. AI can help to curate playlists or suggest entertainment options to create the atmosphere you and your customers are looking for.
- Fraud detection. AI can help to detect fraudulent activity, such as credit card scams or counterfeit money.
- Energy efficiency. AI-powered systems can monitor energy consumption and optimise lighting, heating, and cooling systems.
- Marketing. By analysing online reviews, social media discussions and mentions, and customer feedback, AI can help identify emerging trends as well as customers’ preferences and expectations. Use this information to develop offers and new products to stay ahead of your competition. Manually monitoring social media is time consuming and AI can help manage your brand online and respond promptly to customer feedback or concerns.
Four steps to using GenAI effectively in the hospitality industry
Here are four steps that hotels, pubs and clubs could take as they consider using GenAI in their business.
Step 1. Build Knowledge. Get to know the range of GenAI tools available and which ones best suit your business goals. Identify the best uses of GenAI and its limitations.
Step 2: Governance. Create a policy around which AI systems you and your team members can use and have a system for reviewing and vetting the outputs from GenAI to ensure accuracy.
Step 3: Manage change. Prepare the business for the impact on organisation and culture. Communicate the benefits of GenAI to staff and allay their fears.
Step 4: Train your people. Ensure staff using GenAI and its outputs are aware of the risks, strengths and limitations of GenAI. Outline your AI policy, and processes about output reviews and data security and privacy.
Specialist accounting and business advice for your hotel, pub or club?
Pitcher Partners Newcastle and Hunter has a diverse team of business advisors, accountants and tax professionals, and auditors specialising in the hospitality industry. This article is part of our commitment to providing the latest insights into the issues that matter to the hospitality industry.
If you want expert support to improve operational efficiency and profitability, please contact us today for a free, no obligation consultation.