Role of Artificial Intelligence in Development of Hotel Industry PDF

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INTERNATIONAL JOURNAL FOR INNOVATIVE RESEARCH IN MULTIDISCIPLINARY FIELD ISSN: 2455-0620 Special Issue - 8, Feb – 2019 Monthly, Peer-Reviewed, Refereed, Indexed Journal with IC Value: 86.87 Impact Factor: 6.497 Publication Date: 28/02/2019 International Interdisciplinary Conference on ‘New Pathways ...

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Role of Artificial Intelligence in Development of Hotel Industry Vaidehi Daptardar, Dr. Sumedha Naik IJIRMF

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INTERNATIONAL JOURNAL FOR INNOVATIVE RESEARCH IN MULTIDISCIPLINARY FIELD Monthly, Peer-Reviewed, Refereed, Indexed Journal with IC Value: 86.87

ISSN: 2455-0620 Impact Factor: 6.497

Special Issue - 8, Feb – 2019 Publication Date: 28/02/2019

International Interdisciplinary Conference on ‘New Pathways to World Development: Opportunities and Challenges’ 26 - Feb, 2019 Adarsh College of Arts and Commerce, Kulgaon – Badlapur, Thane, MH, India

Role of Artificial Intelligence in Development of Hotel Industry Ms.Sumedha Naik Assistant Professor, S. K. Patil Sindhudurg Mahavidyalaya [email protected]

Dr. Vaidehi Daptardar Principal, Adarsh College of Arts and Commerce [email protected]

Abstract: Technology led marketing, has not remained a new concept for the hospitality businesses, mainly driven by customer data viz. demographic profile, social media presence and preferences. Artificial Intelligence has become the game changer for traditional hotel industry for enhancing hotel reputation and revenue by taking customer experience at a new level. This paper studies the role of Artificial Intelligence (AI) in enhancing the service quality of the Hotel Industry. It highlights various ways to use AI in achieving the service quality by managing service encounters and customer experiences through data integration and analysis and evolving AI systems. It also lays emphasis on role of Artificial Intelligence in developing the hotel sector by way of cost savings, revenue and reputation management.

Key Words: Hotel Industry, Service Quality, Artificial Intelligence, Customer Data.

1. INTRODUCTION: Booming travel and tourism is raising the demand for hotel industry. Major hotel players are widening their geographical base for grabbing the heightened demand, branding aggressively, establishing strategic partnerships. Globally hotel industry is witnessing a paradigm shift due to technological advancement. Service innovation by resorting new ideas and rigorous technology led marketing is need of hour for hotel operators. Social Platforms have provided more information and wider choices to the potential hotel customers. Managing customer experience with higher service quality is the key to customer satisfaction and visit repetitions. Artificial Intelligence (AI) is a branch of computer science that emphasizes the creation of intelligent machines those work and react like human beings. John McCarthy coined the term AI in 1956, who defines it as ‘the science and engineering of making intelligent machines.’ It took almost 60 years to actually intelligent machines come into existence, perceive their environment, learn and take action. AI systems learn from the errors or the activities happened and attempt to evolve themselves to perform in a better way. This paper attempts to review the use of AI in hotel industry and to find its impact on hotel service quality and development. 2. STUDY OBJECTIVES:  To review applications of AI in Hotel Industry.  To analyze role of AI in enhancement of Hotel Service Quality.  To identify impact of AI on development of Hotel Industry. 3. REVIEW OF LITERATURE: Many researchers have studied hotel service quality from different perspectives viz. dimensions of service quality, its impact on satisfaction and loyalty, quality gaps and affecting factors such as Gabbie and O’Neill (1997), Juwaheer T. D. (2004), Lau et al. (2005), Marković S. and Raspor S. (2010), Bostanji G.M.A (2013), Antoneta and Charles (2014).Whereas, AI being a recent development, very few studies are conducted on the application of AI in hotel industry. Olsen and Connolly (2000) underlined the significance of hotel customers’ data to meet their changing needs and desires. Jurca and Fallings (2004) studied AI based Reputation Mechanism for hotel bookings and found it effective to prevent financial frauds. Ivanov and Webster (2017) conducted a cost benefit analysis of adoption of robots, artificial intelligence and service automation. The perusal of literature revealed the absence of studies identifying the impact of AI applications on hotel service quality and overall development of the Hotel Industry. Available online on – WWW.IJIRMF.COM

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INTERNATIONAL JOURNAL FOR INNOVATIVE RESEARCH IN MULTIDISCIPLINARY FIELD Monthly, Peer-Reviewed, Refereed, Indexed Journal with IC Value: 86.87

ISSN: 2455-0620 Impact Factor: 6.497

Special Issue - 8, Feb – 2019 Publication Date: 28/02/2019

4. METHODOLOGY: This study is based on secondary data collected from journals, hotel websites and, hospitality and AI experts’ web articles. 5. DISCUSSION: AI is changing our life in multitude ways by change in education, finance, business, manufacturing for the time being. The most known AI applications are speech recognition services (Alexa, Siri), Online Ads Network, Social Media Feeds, Media streaming devices, Navigation Apps. Self-driving cars by Tesla, Drone Delivery Programs by Amazon, Personalized Dynamic Video Games and Smart Homes are some of the examples showing how AI is prevailing in every facet of our life and business. 5.1 Applications of AI in Hotel Industry Three types of applications of AI technology viz. Conversational AI, Mass-Individualization and AI-Enabled Convergence can be used in hotel industry.  Conversational AI Conversational chat-bots allow value added interface at various interaction levels. Customer to bot and further bot to bot communications can be applied for hotel room bookings, enquiries, concierge and feedbacks.  Mass-Individualization It assists in providing customized and personalized services. The data of customers’ attitude, needs, behaviour, buying and browsing history collected by Conversational AI applications and algorithms will be used to shape and offer personalized hotel services.  AI-Enabled Convergence Technological convergence is related to evolving the intelligent machines for performing similar tasks. AI systems will perform the same task but in a more advanced manner, which would be helpful in enhancing service, encounters. 5.2 Role of AI in enhancing Hotel Service Quality Hotel Service quality is crucial in competitive advantage for satisfying customers and spreading positive word of mouth- offline and online. The Gap model of service quality compares the customer perception with his expectation and the excess of perception score is treated as Positive Gap of Service Quality (Parasuraman et. al.1985, 1988, 1991). AI enabled applications in hotels will positively influence the customer perceptions for five Service Quality dimensions in following manner:  Tangible: Tangibility deals with the physical facilities, sophisticated equipment and staff appearance. An AI valet on smart phones can replace the formal check-in and checkout and eliminate the waiting time at reception. Using facial recognition to know guest arrival valet assigns a room based on guest preferences and downloads room keys to his mobile. Tokyo’s Henn Na Hotel is using multi-lingual robots to help guests check-in and out and employs face recognition to replace room-keys. Meliá Hotels have introduced electronic wristbands, which allow guests to open the rooms, to pay for hotel services and to make payments at nearby stores facilitating cashless payments for guests and tracking their purchase preferences. In-Room media streaming devices can play media of customer’s choice using his self- reported and online data from multiple sources for maximizing the in-room experience.  Reliability: Reliability addresses punctuality, willingness to solve problems, dependability of services and accuracy of records. Guests can entrust the AI enabled robots to place room-service requests for assured prompt delivery. Konica Minolta recently deployed hospitality robot fleet. The navigation of the delivery robots or autonomous wheels platform throughout hotel floors and elevators is aimed at delivering items such as snacks and amenities to hotel guests, thus enabling hotel staff to focus on other need of the guests. Traditional wireless networks struggle to provide reliable service in large resorts. New AI-powered wireless platforms assess the data usage patterns of the guest and troubleshoot problems to equip with more consistent and dependable Wi-Fi. AI systems can also predict the problem areas and potential maintenance issues through pattern recognition and assure smooth workflow that increases the dependability of services. AI algorithm can scan for hotel rates across all distribution channels, alert the hotel for any disparity found and ensure the parity of hotel rates across all distribution channels.  Responsiveness: Responsiveness relates to quick service delivery and reducing waiting time. Chat bots based on Natural Language Processing (NLP) technology can understand the demands of the hotel guests from different countries, which enables prompt service delivery. AI algorithms can predict the expected time of service delivery. AI enabled hotels can provide Proximity-based assistance to its guests. Customer can get easy, quick and accurate solutions for his queries like the distance between hotel and conference venue, name

Available online on – WWW.IJIRMF.COM

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INTERNATIONAL JOURNAL FOR INNOVATIVE RESEARCH IN MULTIDISCIPLINARY FIELD Monthly, Peer-Reviewed, Refereed, Indexed Journal with IC Value: 86.87

ISSN: 2455-0620 Impact Factor: 6.497

Special Issue - 8, Feb – 2019 Publication Date: 28/02/2019

and menu of closest restaurant suitable for his food-preferences, nearby tourist spots, local deals of his interests and leisure habits, especially very helpful for leisure travellers.  Assurance: Assurance shows the trustworthiness, politeness of hotel staff, customer safety and support to staff from hotel patrons for excelling service performance. AI can analyse the foot traffic patterns of the hotel and other information to decide the staff demand. It will result in quick service delivery and optimum use of human resource. Better-informed and well-prepared staff will be available and free from stress during peak seasons and peak hours, too. AI fuelled surveillance system can be strengthened with evolving object and face recognition. Security camera feeds monitored by AI would detect the potential threats and inform the authorities for early action.  Empathy: Empathy dimension deals with the personalization of services, individual attention and convenience of customer. For personalized marketing and offers, AI enabled online ads network and social media feeds based on user statistics are already in use, for instance video recommendations on you-tube, online hotel ads with respect to customer’s travel bookings or nearby things ads with respect to his hotel booking. Additionally, AI enables hotels to personalize the reward program. Service encounter at hotel bookings is a major friction point. Customers checking room availability many times leave without booking. Filling up required information on each hotel page becomes time-consuming and complex and interacting with booking staff of each hotel is almost impossible. Chat bots on hotel website and on social-media platforms can resolve this issue and provide a personalized booking experience at customer’s convenient time. Network Intelligence, using the power of many connected computers to learn, can achieve the web optimization. For example, if a system in Indian Hotel notices that there is an increase in Russian visitors on several hotel websites, it can optimize the websites for Russian visitors during that specific period. Recommender engines analyse the information received from multiple AI programs and give suggestions for improving online performances. For instance, a system analyses that visitors coming from USA often search for water sports information, it would recommend change in web display by placing water sports information in the menu earlier on the site. The AI voice assistants are useful for senior citizens, persons with disabilities to make booking enquiries, to discuss suitability of amenities, prices and offers, to order room-service and even for persons on the go. For example, there are virtual butlers like ‘Edward’ of Edwardian Hotels and ‘Rose’ of Cosmopolitan Hotel in Las Vegas. 5.3 Role of AI in Development of Hotel Industry  Cost Savings with higher efficiency- Energy equipment consume almost 10% of hotel revenue, according to the National Grid. AI can monitor guest presence and preferences and intelligently turn on and off the equipment saving energy and optimizing guest comfort. AI based cleaning machines, robotic mini vacuum discs and robot mops will keep the hotel clean reducing workload of housekeeping staff. AI, by analysing the demand and material requisition patterns, will avoid piling up stocks and wastage. AI enabled supply chain management systems can ensure procurement of material of right quantity and quality, at right time for reasonable prices ensuring efficient service performance.  Revenue Enhancement- Personalized offerings with thoughtful touches such as a guest’s preferred newspaper, toiletries, pillows, television, bathroom settings and room-views keeps the guest coming back. Special things provided by tracking desires and preferences and designing individualized service experience like lavish linen, exquisite menu of beverages, luxury vehicles for high-end customers will draw extra income. Parsing multiple data sources, AI ascertains the occupancy patterns for hotel locality and assesses the impact of particular events and suggests dynamic pricing. Airbnb uses AI to recommend the pricing strategies to its hosts. Moreover, it enables to design marketing strategies for maximizing occupancy level during such events. AI added to the hotel websites and booking engines can increase the conversion rate by changing display options. A potential guest checks rates and availability on booking engine and AI observes that the abandonment rate is higher when the rooms are presented in descending price order, whereas, by inverting the order, the abandonment rate drops significantly. Thus, the system learns which the optimum method of displaying rates is and alerts the hotel patrons or displays the rates accordingly by itself.  High Return on Investment- For providing high service quality, the hotels need to channelize its resources for best return. AI systems inform and remind the hotel patrons about the repairs, upgrades and replacement of equipment and property. It uses occupancy data, feedback and online reviews, self-reported guest data to prioritize the strategic decisions with the maximum return.  Reputation Management- AI can scan all the review sites, videos, images, social networks, blogs and other websites about the hotel and portrays the real-time public image of hotel, so that hoteliers can instantly

Available online on – WWW.IJIRMF.COM

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INTERNATIONAL JOURNAL FOR INNOVATIVE RESEARCH IN MULTIDISCIPLINARY FIELD Monthly, Peer-Reviewed, Refereed, Indexed Journal with IC Value: 86.87

ISSN: 2455-0620 Impact Factor: 6.497

Special Issue - 8, Feb – 2019 Publication Date: 28/02/2019

respond negative reviews and avoid probable public relation disaster. Furthermore, they can strategize and engage in effective marketing, branding and reputation enhancement efforts.  Competitive Intelligence- Multi-variance testing used by OTAs enables experimenting with different colours, button placements or messages to evaluate and choose most efficient and attractive specific variant for competitive advantage. AI systems can test thousands of patterns, learn and improve results for multiple times, which is beyond human capacity. Parsing multiple databases, AI can provide valuable context to drive the future expansion. Population mapping, identifying hotel demand and scant supply in particular areas provides firm base for expansion of hotel business. Review data, Demographics and hotel pipeline Data set the requisition and standards of upcoming hotel property and services to resonate best with target customer segments. Deep learning systems can be used by major players in the industry to find service patterns for creating innovative services and new brands for specific customer segments. It can be utilized by the Hotel Associations and Government for taking policy, infrastructure and investment decisions which will result in employment and revenue generation and overall growth of hotel industry. 5. LIMITATIONS: This study presents an overview of use of AI in Hotel Industry; however, it needs the empirical assessment of impact of AI applications on Hotel Service Quality. 6. CONCLUSIONS: Artificial intelligence is changing traditional outlook to hotel services with its ability to streamline processes, provide valuable insights and optimize guest experiences. It is driving the new wave of innovative, responsive and guest-centric hospitality to attain better service quality and overall development of hotel industry. Hotel patrons, yet unaware of AI or having no immediate plans of AI, have to collect and save data that can be transformed into competitive advantage; in near future, the saved data will turn into a very rich source of valuable revenue. There is no doubt, machines learning and working with human, will ensure quality hospitality, making AI more valuable and not just a buzzword. REFERENCES: 1. Avery Philips, 2018, How Artificial Intelligence Is Changing Modern Life? www.becominghuman.ai. 2. Christoph Auer-Welsbach, 2017, The Rise of AI in the Modern World. medium.com. 3. Frank Reeves, 2018,. How Artificial Intelligence Will Bring the Human Touch Back to Hotels. www.avvio.com. 4. Hospitality Technology, 2018, 5 Ways to Harness AI for the Hospitality Experience of the Future. www.hospitalitytech.com. 5. Hotel Industry Analysis and Market Statistics for 2018. www.soegjobs.com. 6. Ivanov S. and Webster C. 2017, Adoption of robots, artificial intelligence and service automation by travel, tourism and hospitality companies – a cost-benefit analysis. International Scientific Conference on Contemporary tourism – traditions and innovations, Sofia University. 7. Jurca R. and Fallings B., 2004. "CONFESS" an incentive compatible reputation mechanism for the hotel booking industry. Proceedings. IEEE International Conference on e-Commerce Technology, 2004. DOI: 10.1109/ICECT.2004.1319735. ISBN: 0-7695-2098-7, pp. 214-220. 8. Mei AWO, Dean AM and White CJ, 1999,. Analyzing service quality in the hospitality industry. Managing Service Quality. 9 (2), 136-143. 9. Olsen Michael D. and Connolly Daniel J. ,2000, Experience-based Travel: How Technology Is Changing the Hospitality Industry. Cornell Hospitality Quarterly, Vol. 41(1): 30-40. 10. Parasuraman A., L. L. Berry and V. A. Zeithaml, 1991, Refinement and Re-assessment of the SERVQUAL Scale. Journal of Retailing 67 (4): 420–50. 11. Parasuraman A., Zeithaml V. A. and Berry L.L. ,1985, A Conceptual Model of Service Quality and its Implication for Future Research. Journal of Marketing, 49 (Fall): 41-50. 12. Parasuraman A., Zeithaml V. A. and Berry L.L., 1988,. SERVQUAL: A Multiple-item Scale for Measuring Customer Perceptions of Service Quality. Journal of Retailing, 64 (1 spring): 12-37. 13. Rachit Agarwal, 2018, 10 Examples of Artificial Intelligence You’re Using in Daily Life. www.beebom.com. 14. Rob Miller 2018. Artificial Intelligence: ...