Four AI Strategies for Forward-Thinking Hospitality
At TalkTalk Business, we recently commissioned large-scale research into the UK hospitality industry. We asked hospitality workers – IT decision makers (ITDMs) and frontline workers – for their views on how technology is changing their ways of working. We wanted to know what they see as being the future of hospitality.
When we asked them about technologies such as automation, voice control and contactless customer experiences, our survey participants often had polarised opinions. Many were keenly enthusiastic about the new possibilities these technologies afforded; others were more cautious or doubtful.
However, there was one innovative hospitality technology that almost every ITDM we spoke to was eager to see adopted within their business: AI.
92% of ITDMs reported that operations and supply chains within their businesses would benefit from AI making the majority of day-to-day strategic decisions. The only ITDMs who didn’t agree were those who said that AI was already making the majority of those decisions.
As you’ll see below, there are a number of ways in which AI can improve operational efficiency and customer experience in hospitality businesses of all kinds – from hotels to gyms, restaurants to entertainment venues. But first, let’s define what we mean by AI.
AI – artificial intelligence – analyses data, identifies patterns, makes assumptions, and uses machine learning to offer predictions and make decisions, often with uncanny accuracy. An AI’s ability to cross-reference vast amounts of information at lightning speed allows it to outperform human strategists and analysts with ease.
It’s worth noting that AI is subtly different from data analytics, which looks solely at historical data in order to identify patterns and trends. While undoubtedly a useful tool, data analytics lacks the big-picture forecasting power of AI.
Build resilience in your supply chain
From catering ingredients to cleaning supplies, hospitality businesses rely on a steady and predictable flow of products to keep customers happy. But as the Covid-19 pandemic demonstrated, managing supply chains is an increasingly complex – and often stressful – task.
As product portfolios become more varied, supply chains are growing longer and more interlinked. Volatile markets and disruptive events can affect supply chains the world over.
Then there are environmental considerations. Many hospitality businesses seek to minimise their carbon footprint, or offer locally sourced goods wherever possible. Optimising supply chains while maintaining regionalisation requires constant watchfulness, flexibility and agility.
With sufficient data powering its ‘thinking’, an AI can keep your supply chain resilient by getting ahead of any potential issues and making automated adjustments within pre-set parameters. It can find alternative sources for stock, or move existing stock between locations to keep levels topped up. Most importantly, it can predict problems before they happen, so while you’ll still occasionally experience supply shortages, they won’t come as a nasty surprise.
Your dynamic planning – i.e. your strategy for adapting to an ever-changing marketplace – can be enacted and optimised in real time. Your integrated business planning – i.e. your interconnected strategy linking every department together – becomes clearer and more effective.
According to McKinsey, implementing AI-enabled supply-chain management “has enabled early adopters to improve logistics costs by 15%, inventory levels by 35%, and service levels by 65%, compared with slower-moving competitors.
Forecast demand using AI
Demand forecasting is key to the successful running of any hospitality business – large or small. Demand forecasting allows businesses to avoid being caught off-guard by a surge in customers, or overstaffed and overstocked during quiet periods. It minimises wastage and maximises profitability.
In hospitality, some demand forecasting is pretty self-evident. A pub with a large garden will become busier when the sun’s out. A hotel will fill up quicker when a big conference rolls into town. But to really make your day-to-day operations more efficient, you need the hyper-incisive demand forecasting that only AI can offer.
By analysing datasets drawn from a variety of sources – both internal and external – and making assumptions informed by machine learning, an AI can not only predict the numbers of customers coming through the door, it can also predict what they’ll want to do once inside.
At the enterprise level, AI-powered demand forecasting is not just about keeping operations running smoothly – it’s about remaining competitive in the ongoing technology arms race. In its Predictions 2023 report, Forrester forecasts that “one in four tech execs will report to their board on AI governance [in 2023]. AI is now an enterprise essential, and as such, AI governance will join cybersecurity and compliance as a board-level topic.” Over the course of 2023, “AI will become an indispensable, trusted enterprise coworker.”
Increasingly, having an AI on your team for demand prediction is a must-have, rather than a nice-to-have. If you own a gym chain, ignore AI, and fail to predict a threefold surge in demand for banana protein shakes during August 2023, you’re going to miss out. That AI-adopting gym chain down the road, however, is going to be laughing all the way to the bank.
Of course, no AI can perform demand forecasting with 100% accuracy. There will always be curveballs that create unexpected surges or lulls – a social post from a local influencer, for example, or a price-slashing promotion from a competitor. Nevertheless, AI-driven demand forecasting is your best bet for foreseeing what comes next.
Cleanse your data
Any AI is only as ‘clever’ as the data fed into it. It’s not merely about the breadth of data supplied, but the quality of that data. Hospitality enterprises generate huge datasets on a daily basis but, according to multiple estimates, around 80–90% of enterprise data is chaotic and unstructured, making it difficult to analyse.
For this reason, the vast majority of data generated by hospitality organisations goes unused. But these datasets – as flawed and incomplete as they are – represent untapped opportunities to improve operational efficiency.
AI can help here. Through machine learning, an AI can cleanse and tune even the most unstructured datasets by making assumptions and estimates to fill any gaps. And the more an AI cleanses a particular dataset, the more it learns about the accuracy of its own assumptions and estimates – and the better it gets at assuming and estimating.
Again, an AI isn’t infallible. There will always be data-quality issues that an AI can’t identify and correct – data incorrectly inputted by customers or employees, for example, or an incorrect code being assigned to an action. Still, nothing else can come close to forming a big picture from billions of disparate pieces of information.
Strengthen your network
An effective AI is a hungry beast. Fuelled by huge amounts of data, it demands to be supported by a powerful and resilient network. Just as the quality of your data matters, so does the speed at which it moves around your network. Traffic bottlenecks prevent an AI from operating at maximum efficiency.
Security, too, is a key consideration – particularly when dealing with data gleaned from your customers’ behaviour.
TalkTalk Business is helping hospitality businesses embrace the AI-driven, data-fuelled revolution. Our ultra-reliable, high-bandwidth network provides the critical connectivity needed to unleash the full potential of your data.
And with SD-WAN, you can create private networks that keep sensitive data away from prying eyes. SD-WAN also offers high levels of control and flexibility, allowing you to rapidly adapt your network to align with the predictions made by your AI.
AI is the future of hospitality – and TalkTalk Business is committed to making that future as bright as possible. To learn more about where the hospitality sector is likely headed next, read our whitepaper: The Future of Hospitality: AI, Data and People Power.
About the research
In September 2022, we commissioned a survey by Vanson Bourne of 300 senior IT decision-makers and frontline employees in business sizes ranging from 1,000-2,999 employees to those with 5,000 or more.