The use of cutting-edge client-facing technologies in hotels can have multiple benefits. Not only can these technologies help hotels increase their revenue, but they can also enable them to adapt to the ever-changing preferences of their customers. In the post-Covid-19 era, the hotel industry is realizing the importance of implementing new digital tools, as the pandemic has significantly transformed customer behavior and technology usage patterns.
One of the notable shifts in customer demand is the increased preference for contactless, self-service, and mobile-based solutions. This has prompted hotel operators to swiftly update their services to meet these new expectations. According to the 2023 Lodging Technology Study conducted by Hospitality Technology, a large percentage of hotels worldwide either already offer or are planning to introduce mobile booking, mobile check-in, mobile room keys, two-way messaging with guests, contactless payments, check-in and check-out kiosks, and voice-controlled devices.
However, the adoption of more sophisticated technologies, such as virtual reality spaces and hotel robots providing contactless services, has been relatively slower. The study mentioned that only a small percentage of travelers rated these technologies as important in the 2022 Customer Engagement Study. The limited uptake of cutting-edge technologies could be attributed to challenges faced by the hotel sector, including limited IT budgets and difficulties in measuring return on investment (ROI) in technology.
Nevertheless, there are positive developments in terms of IT budgets and investment attitudes. The average IT budget for hotels globally has increased, with more hotels allocating over 4% of their total revenue to IT in 2022 compared to less than 3% in 2021. Moreover, a significant percentage of hoteliers are now open to considering alternative investment metrics for technology projects. This indicates a growing willingness to invest in technology-driven initiatives within the hotel industry.
Interestingly, customers themselves are receptive to the use of advanced technologies if they enhance their hotel experience. A study conducted by Oracle and Skift in 2022 revealed that a considerable majority of travelers (73.4%) expressed interest in hotels utilizing artificial intelligence (AI) to analyze their travel data for personalized advertisements and offers. Hoteliers have taken note of this, with 51.5% of them planning to leverage AI and analytics to gain insights into guest behaviors and provide more tailored offerings.
AI-driven chatbots and voice assistants are proving to be valuable tools for hotels to integrate AI into their customer-facing solutions. These technologies can serve as booking assistants, continuously learning and improving their ability to generate bookings while reducing the number of abandoned transactions. Implementing AI chatbots has the potential to reduce customer service costs by up to 30% and increase direct bookings by 30%.
Real-world examples demonstrate the effectiveness of AI chatbots and voice assistants in the hotel industry. Zafiro Hotels in Spain utilized an AI chatbot called Velma, which successfully reduced the influx of customer calls and emails with repetitive questions, leading to an 11% increase in direct sales. Similarly, Lake District Hotels in the UK saw a significant decrease in phone calls and a boost in direct bookings by implementing a chatbot, resulting in more than £50,000 of additional revenue.
Voice assistants powered by AI also offer hotels new revenue streams. In addition to providing personalized recommendations and upselling room services, voice assistants can generate revenue from third parties by offering advertising space or establishing partnerships with local service providers and tourist attractions.
Virtual reality (VR) and augmented reality (AR) are other technologies that can enhance the pre-booking experiences of potential hotel guests. While VR is still considered an emerging technology in the industry, there is a growing interest among travelers in virtually exploring hotels before making a booking. Many hotels already offer 360-degree VR tours on their websites, allowing customers to have an immersive experience and gain a better understanding of the property.