AI, new technologies and age-old fundamentals
Hotel management professionals are always looking for an edge. And so maybe we shouldn’t be surprised that the hotel business has been an industry on the forefront of integrating promising new tools and technologies. Among of the most exciting of those technologies have to do with the use of big data and artificial intelligence (AI).
I’m guessing there are lots of folks out there who would be surprised at just how widespread AI tools have become. AI isn’t science fiction — it’s being used every day by hotel management companies to make smarter and more strategic decisions about rates and revenue management and to gather and leverage guest information to improve service and make marketing more effective.
Check this out: travel and hospitality trends
AI is here. It’s important. And it’s having a significant impact on the industry. AI algorithms have already replaced some rate and revenue management experts. In at least one hotel company, revenue managers whose decision-making doesn’t align with the course of action prescribed by AI systems will find their annual bonuses docked.
But the story isn’t a simple one of progress and prosperity. Because new technologies come with new complexities and shades of gray, new challenges as well as new opportunities, and potential blind spots that can cause us to lose sight of some critical fundamentals when we have some shiny new tools to play with. The reality is that hotel management professionals are still learning how to use these new tools effectively: how to get the most out of them, and also how to use them in ways that don’t compromise core principles of personalized service and employee satisfaction.
First, we simply have to do a better job of utilizing the vast amounts of data we’re already gathering. It seems as if hotel management companies are all competing to get their hands on the latest group data aggregator, or whatever new tool can allegedly crunch the numbers with increasing precision.
And while it’s remarkable if your sophisticated state-of-the-art system can tell you that your average customer is 65 years old, books within a 9-day window, and comes from the Midwest — it’s what you do with that information that matters. While automation has long promised to trim labor expenses, many hotel management companies are actually adding new positions wholly dedicated to data management.
Which brings us to the heart of what strikes me as a pretty fascinating paradox. In our justifiable excitement about powerful new tools and technologies, we can’t overlook the importance of keeping our employees happy and motivated. A full 70% of the costs in the hotel business are people-related, and yet we spend far more time talking about the potential of new tech than we do about the proven savings power of employee satisfaction measures.
Prism’s most recent employee satisfaction survey came back at 94% satisfied compared to industry average of 73%. From health insurance savings to lower turnover and training costs, high employee satisfaction scores can have a dramatic impact on your bottom line. We have a turnover rate of only 5.8% compared to the industry average of 20.7%. Our health insurance premiums decreased on average 2.2% annually over the past five years. Compared to the market — over the past 5 years the average increase was 10% per year — that’s $2.5 million in savings.
Check this out: travel and hospitality trends
In other words, treating employees well is not just the right thing to do, but the smart thing to do. At a time when so many hotel management professionals are using cutting-edge tech to optimize rates and maximize revenue potential, it’s a sobering reminder that tech solutions are still just part of the equation. Treating your people well is still one of the most effective ways to cut costs and grow margins, and promising technologies will only ever be as transformative as hotel management companies’ ability to leverage them as part of a consistent and holistic commitment to maximizing operational efficiencies.
