Hotel owners, developers gaining competitive edge with AI tools
By Rachna Bafna
It’s become evident that the promise of artificial intelligence optimization is no longer a “nice to have” but increasingly a competitive advantage that certain operators are using to automate client relations, optimize their operations, and save money on maintenance, CapEx, and construction.
Over 70 percent of hotel executives report AI as a top investment priority to optimize service and profits, according to PWC, and the results speak for themselves. AI is already delivering measurable returns across the industry. But here’s what many hoteliers miss: The most impactful AI applications aren’t always the most visible ones.
Optimizing the Guest Experience
On the customer service side, AI offers opportunities to heighten guest experiences through more personal, rapid service. However, it must be seen as a complement to a hotel’s brand promise and customer experience. A mid-tier hotel may utilize AI in customer service quite differently than a f ive-star or ultra-luxury property.
Text and voice chatbots powered by machine learning can answer routine guest questions 24/7 – covering amenities, checkin and checkout procedures, and local recommendations – while handling bookings and requests instantly.
The benefits are substantial. Chatbots provide instant, consistent service with multilingual support and upselling capabilities. They free staff from routine tasks and can handle 60 percent to 80 percent of common queries, improving guest satisfaction while cutting labor costs.
The return on investment is clear: 24/7 availability boosts direct bookings and loyalty. Chatbots can suggest upgrades for spa treatments or dining based on guest profiles, increasing ancillary revenue. Studies indicate AI chat assistants raise engagement and allow staff to focus on VIP guests, saving your workforce time and energy.
A Las Vegas hotel told the BBC how it is “the first AI-powered hotel,” gathering more information than ever on guests in order to anticipate and accommodate their needs in significant detail. Guests can have doors electronically open for them, food and drink options in ready-to-order format, and other customization. However, some guests may balk at giving over personal preferences, social media data and the like, and can opt out or decline.
While AI interacting with customers on your behalf can seem risky or daunting, integrating them into your building systems will become key, if not industry standard within the coming years.
Driving Revenue and Savings
While guest-facing AI gets attention, some of the most dramatic cost savings occur back-of-house.
Maximizing RevPar is a key performance indicator for all hotels, and AI tools can use real-time information to adjust room rates that reflect daily and seasonal demand, market-competition, and other factors. Connecting existing hotel data against external information can provide detailed recommendations for optimal room rate setting. Consumers already anticipate dynamic pricing, and implementing these tools can significantly improve profitability.
AI-driven dynamic pricing enables hoteliers to instantly respond to changing demand, such as a just-announced convention or concert. It also helps hotels remain competitive in rapidly shifting conditions, adjust to guest trends like mobile booking, maintain margins during peak periods, and free up revenue teams by reducing manual work.
Meanwhile, sensors installed in hotel equipment can use Internet-of-Things (IoT) advancements to monitor performance and even anticipate failures, reducing downtime and maintenance costs. For example, sensors in HVAC systems or elevators spot issues early and trigger maintenance, helping prevent service interruptions for guests.
Luxury chains are piloting IoT maintenance with impressive results. For instance, hotels using IoT asset-management platforms like Dalos have reported 30 percent reductions in maintenance costs and 20 percent higher equipment uptime by using AI to predict HVAC and elevator issues. Fewer breakdowns also yielded higher guest satisfaction.
This approach reduces emergency repairs and downtime, extending the life of key systems. Staff can schedule maintenance during vacancies, avoiding guest disruption. Predictive insights save money by eliminating rush repairs and improve energy efficiency by catching issues early. In short, AI maintenance leads to lower costs, smoother operations, and better guest experiences.
AI-Powered Procurement
AI-driven procurement platforms are fundamentally changing the status-quo of procuring finish materials, typically among the highest costs of hotel interior expenditures.
Today’s technology innovation can access manufacturers and suppliers direct, for everything from flooring, tile, lighting fixtures, plumbing fixtures, window systems, doors, furniture, and other equipment. Using machine learning, modern tech can identify optimal suppliers that meet quality, regulatory, and budget requirements and ship direct to a hotel construction or rehab site. Experienced staff manage ordering, sample review and approval, and delivery, end-to-end.
The potential savings are substantial. A hotel developer in Monterey, CA, saved over $100,000 on bathroom tile, flooring, and other products that the traditional supply-chain had quoted at almost double their original cost. Leveraging AI-powered tech, offshore manufacturers were identified who delivered same or better quality, in plenty of time – and side-stepped tariff regulations going into effect.
The AI Competitive Reality
AI adoption in hospitality is no longer optional – it’s a competitive necessity. Hotels investing in AI are seeing measurable advantages in guest satisfaction, equipment efficiency, and project budgeting. Early adopters are establishing leads that will be difficult for competitors to close.
The tools are becoming more sophisticated, more affordable, and easier to implement. The question isn’t whether to adopt AI, but how quickly to understand and integrate these capabilities for services, operations, management, and construction improvements. Hotels that will lead the industry in the coming years are the ones making smart AI moves today.
Rachna Bafna is co-founder and COO of San Francisco-based Flume AI, an AI-powered procurement platform for hospitality and multi-family construction. Prior to Flume, an Allied Member, she held leadership roles at Chime, StubHub, and Ancestry, bringing over a decade of technology and operations experience to the hospitality industry.
Image: Ramcreative/stock.adobe.com
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