Op-Ed: How is AI already changing the game in the hospitality sector?
Is AI all hype, or is it the key to boosting a venue's profitability and guest experience? Paul Hadida, GM, SevenRooms
Today, venues are facing, and attempting to answer, numerous questions. However, there are two that particularly stand out. “How can I overcome economic pressures and their impact on my business?”. “Is AI all hype, or are there tangible benefits my venue can enjoy?”
They sound like entirely separate questions, but they’re very much intertwined.
Few sectors, if any, are more vulnerable to economic pressures than hospitality. Consumers are being more cautious in their spending, and venues are leaving no stone unturned to improve revenue. The most strategic venues are taking a dual approach; improving their top line by increasing guest acquisition and retention, and enhancing their bottom line, through operational efficiencies and cost savings.
The Winter Issue of AccomNews is out now. Read it HERE
Today, one of the most impactful ways of doing both is through AI and automation. While hospitality is often seen as more traditional than most industries – you can’t automate the consumption of a meal, after all – our technology adoption is as widespread as any other industry.
In fact, according to SevenRooms research, 85 percent of Australian hospitality venues have already adopted AI to drive operational efficiencies, cut costs and boost revenue and retention.
Venues tapping AI
SevenRooms’ Restaurant Trends and Diner Expectations report sought to understand how restaurants, bars, cafes and hotel F&B venues are driving loyalty, enhancing guest experiences and overcoming challenges in the age of AI and automation. It found that the top two priorities for venues this year are increasing revenue and cutting operating costs. When it comes to how they’re using AI specifically, it’s across their entire operation.
The most prominent use case is data analytics, with 36 percent of venues already using AI to unlock their data and turn it into insights. It’s no secret that data is the lifeblood of so many industries and businesses today, but it’s not always easy to source.
Today, industry-leading venues are using platforms to automatically analyse data, turning it into actionable insights. For example, segmenting customers based on key preferences and characteristics, then targeting them with tailored, automated marketing campaigns.
This focus on personalisation boosts retention, and because it’s automated, saves time.
Similarly, venues are analysing their reservations data and using the insights to, for example, inform their purchasing decisions. For example, if a high quantity of guests at a hotel F&B venue are vegetarian, the operator can reduce the quantity of meat in the next order, thereby cutting costs. In fact, 36 percent of venues are using AI to manage their inventory in this way.
Some venues are not only using it to manage their menu items, but devise them too. In fact, over a quarter (29 percent) are using AI to create dishes, based on the produce they have on hand. This is particularly handy for venues looking to cut down on wastage.
And from menu items to menu costs. A further 25 percent are using AI to inform dynamic pricing, which enables them to automatically adjust their costs based on demand, for example dropping prices during off peak times to increase reservations.
It’s also growing in popularity for both scheduling (26 percent) and staff hiring and training (25 percent). If a venue’s schedule is optimised based on data – with, for example, more staff on a Saturday evening and a smaller team on a Tuesday afternoon – a venue will immediately see a difference in their bottom line. And in a transient industry, the time saved in hiring and training staff could be worth its weight in gold.
Evidently, venues aren’t just enjoying AI-generated benefits in an isolated process, but across their entire operation. As economic pressures persist and guest demands increase, it’s going to become an even more essential tool.
Bottom line foundations, top line growth
As a former hospitality business owner myself, I know there is no single silver bullet to improve profitability; but instead a commitment to the entire guest experience, both directly and indirectly. For all the aforementioned AI uses, it’s not just enabling operators to better manage their bottom line and improve profitability; it’s giving them the time, insights and platform to enhance their guest experience and turn it into a driver of retention and revenue.
Some things, like the preparation and consumption of a meal, should never be automated, or replaced by AI. But instead, venues are tapping into AI to enhance their ability to provide those special human moments.
According to SevenRooms research two in three Australians say they’re focusing more on the quality than the quantity of their visits to hospitality venues. Venues who recognise this, and sell ‘experiences’ – informed by AI and enabled by automation – rather than just meals are generating more than $34K in revenue per venue.
Despite all the hype surrounding AI, it is already providing tangible benefits. Whether it’s through personalised marketing, a well-staffed and expertly trained venue, or simply the provision of unforgettable experiences that guests will remember, recommend and return for – AI is reshaping hospitality.That’s what truly spectacular hospitality looks like. And it’s not just good for your guests, it’s good for your venue, from bottom line profitability to top line growth.
By Paul Hadida, General Manager, APAC at SevenRooms, a data-driven guest experience and retention platform for the hospitality industry