Artificial Intelligence in the Hospitality Industry


Term Paper, 2018
22 Pages, Grade: 1,3

Excerpt

Table of Content

1. Introduction

2. Theoretical Background
2.1 Characteristics of the Hotel Industry
2.2 Customer Experience in Hotels
2.3 Artificial Intelligence in Hotels

3. Best Practise Examples of Robotics
3.1 Robotic Concierge at Hilton Hotel
3.2 Henn-na Hotel in Japan

4. Improvements of Customer Experience by using Artificial Intelligence
4.1 Before the Trip
4.2 During the Trip
4.3 After the Trip

5. Conclusion and Implications for Future Research

Table of Figures

Figure 1: Fields of Artificial Intelligence

Figure 2: Customer Journey with Artificial Intelligence

1. Introduction

Tourism is one of the biggest sectors of today´s economy. It contributes 10 percent to the global GDP and one out of eleven jobs is in tourism1. The hotel industry is part of tourism and is predicted to grow in the future, as more people are going to travel2. The competition in the hotel sector is tough and many small and medium sized hotels fail3. To compete, it is crucial to have several regular guests, as acquiring new ones is more expensive4. To make guests more loyal, hotels should provide a high service quality5. During all encounters along the customer journey, customers must make memorable experiences6. This positive experience is mostly made by the employees themselves, because they offer personalised services and bond with the customer on an emotional level7. To make services personalized, a lot of knowledge about the customer is needed. Artificial Intelligence helps to collect, store and analyse this data to enhance customer experience by offering personalised services. Therefore, the aim of this paper is to find possible fields of introducing Artificial Intelligence in hotels to enhance customer experience.

So far, literature about Artificial Intelligence applied in tourism is limited. Some articles focus on the relevance in destinations, but almost no research is done concentrating on hotels. This seminar paper focuses on the correlation between customer experience and hotels working with Artificial Intelligence. To identify relevant fields of application general literature about Artificial Intelligence was used. Afterwards, literature about marketing and customer experience was analysed to relate both topics to the hotel industry. Best practice examples were included to show how first-movers are working with Artificial Intelligence. The first chapter focuses on the theoretical background about the hotel industry, customer experience and Artificial Intelligence. Connecting the theoretical background and the best practice examples, improvements are found in chapter 4 to answer the question: ”In what way does Artificial Intelligence improve the customer experience in hotels?”.

2. Theoretical Background

In the following, the main components of the hotel industry, customer experience and Artificial Intelligence are explained. To understand the importance of each topic, fundamental background information is provided.

2.1 Characteristics of the Hotel Industry

The hotel industry is part of the hospitality industry, as well as the global tourism sector. Through touristic infrastructure jobs are generated, the overall economy improves and it helps countries to develop.8 The hotel industry focuses on individuals and organizations offering accommodation to tourists concerning business9. Hotels, according to literature, serve their guests and offer them shelter. They are a major part of the service industry.10 Services have special characteristics as they are intangible, perishable, heterogeneous and inseparable. Consumption and production take place at the same time and production out-comes, the services themselves, are not storable.11 During the last few decades the market consolidated and big hotel chains are leading the industry, since competition is hard and small brands could not survive12. Since the tourism sector, as well as the hotel industry, is expected to grow in the future, accommodation providers must be innovative to handle 1,3 billion tourists which are expected to travel in 203013. For hotels it is crucial to stand up against their competitors by improving their business´ processes, as well as retaining their customers14. This also includes improving the employment situation. In the hotel industry, especially in industrial countries, a labor shortage of millions of people is a big problem. It is difficult to find qualified employees and bonding them to the company. This is due to the bad image of working in a hotel, as working hours are high and wages in comparison low. Less trained staff affects the customer service negatively and leads to customer dissatisfaction. It will not be the only challenge that the industry will face in the future. Despite labor shortage, a new culture moving from “service” to “entertainment” could cause problems. Customers are nowadays well-travelled and experienced, therefore, expecting a higher level of service and even entertainment to keep memorable experiences. Managers are forced to reinvent their strategies, by using new technologies to keep up with trends in tourism.15 Integrating new technologies into business, requires more than assets and trainings, it also requires customers who are willing to find new products. With new technologies, such as Artificial Intelligence, and motivated staff, hotels can enhance their service quality and gain more customer satisfaction. Thus, they will beat their competitors and boost turnovers.16

2.2 Customer Experience in Hotels

There are many definitions of customer experience found in literature. According to Oh et al. experiences are: “enjoyable, engaging, memorable encounters for those consuming these events.”17. Other authors state that experiences are the total of touch points along the customer journey with the company18. Halvorsrud et al. state that customer journeys are a sequence of successive touch points during a service delivery. They must be designed on an individual framework to ensure personalised experiences.19

Staged customer experience was first introduced by Pine and Gilmore in 1998. They stressed that it is important to design a memorable experience to gain full benefits for a company. Also, they mentioned that each experience influences customers differently, as they are all individual and differently engaged. To design a successful experience, companies must set up a theme which is supported by different cues, sending impressions to the customers.20 Cues are working as a transmitter to transfer emotions21. If these cues reach the customers´ mind in a positive way, a memorable experience will be created22. Hotels must develop or map the customer journey from the customers´ point of view including emotional signs and cues. Experiences are very personal and vary between customers, depending on the specific situation and its context.23 They are always co-created by the customer and therefore not fully plannable24. On each encounter with employees or other touch points with the hotel brand, an experience should catch the customers´ attention. Confirming to the research of Alcoba et al., experiences in hotels, are mostly linked to the quality of rooms, board and especially to employees and encounters with them. It depends on the employees how memorable and great these experiences will be, because customers highly appreciate friendly and helpful staff.25 The hotel management must provide special trainings for staff to ensure high service quality. A motivating system must be introduced to reward employees´ accomplishments and making them feel important. Employees will be motivated to provide the best service quality possible, to enhance customer experience.26 A positive customer experience leads to customer satisfaction and loyalty27.

Nowadays, satisfying customers is not enough anymore to keep up in competitive markets. In the hotel industry it is getting more important to delight customers to retain them as regulars. Surveys showed a strong correlation between surprises within the service and customer delight. Therefore, hotels must research what their customers´ expectations are, to exceed them.28 By enhancing customer delight, customers stronger engage with the company and become more loyal over time. Especially in the hotel industry it is important to create experiences and offer something special to the customers to be remembered.29 This requires personalised services which can be provided easier with Artificial Intelligence30.

2.3 Artificial Intelligence in Hotels

Artificial Intelligence is nothing new in science. The expression was first announced in 1956 by McCarthy, an U.S. American computer scientist31. The aim was and still is to develop a Neuronal Network, which works just like the human brain, based on algorithms. It shall be able to learn from the environment and react to it. Artificial Intelligence is part of computer science and compromises different areas, such as Robotics, Natural Language Processing and Machine Learning.32

There are many scientific definitions of Artificial Intelligence. Searching for a more non-mathematical definition, the Oxford English Dictionary gives a brief explanation of it. Artificial Intelligence is defined as: “The theory and development of computer systems able to perform tasks normally requiring human intelligence, such as visual perception, speech recognition, decision-making, and translation between languages.”33. At the moment, we are in a stage of high development and usage of Artificial Intelligence. There are a couple of drivers which urge on further development. Firstly, a lot of data is created every minute, supposedly the number of data doubles every two years. Big data is essential for Artificial Intelligence to work well, especially in the field of Machine Learning, because it can be processed, to generate value. Secondly, cloud storage becomes more available and cheaper. It is strongly connected with improved processing power and the connection to the internet with many devices.34

Abbildung in dieser Leseprobe nicht enthalten

Figure 1: Fields of Artificial Intelligence (Source: www.eyerys.com35 )

The most relevant topics of Artificial Intelligence are seen in figure 1. For this paper, Machine Learning, Natural Language Processing, Speech and Robotics are of high relevance. All other fields are also important within the service sector36. Integrating Artificial Intelligence will help people doing their jobs better and making more sustainable decisions37. It is already used in many industries as it improves productivity and quality. Because it will grow in the future, the hotel industry must adapt to this development to gain those advantages.38 Often, it seems like robots or other technological improvements will take away jobs, but this is mostly not the case. Especially in tourism Artificial Intelligence is unable to fully replace hotel´s employees, as it is not able to understand the customer on an emotional level.39 The emotional interaction with employees is regarded as the most significant touch point to ensure customer satisfaction40. The hotel industry is a sector which highly depends on information to create personalised services. Technology is needed to store and analyse all this information. Hotels are often not open to introduce new technologies to their business.41 Artificial Intelligence can use, for example customer´s data to provide personalised services to improve customer experience42.

3. Best Practise Examples of Robotics

Currently, Artificial Intelligence is rarely integrated in the hotel industry. There are only a few businesses taking a first step to use these new technologies in their hotel. In the following chapter the introduction of the new concierge “Connie” at Hilton International will be explained, as well as the strategy of the Henn-na Hotel in Japan. Both companies are working with robots to enhance customer experiences. It is important to differentiate between robots and artificially intelligent robots. Robots are based on the control of humans and are only responding by using sensation. Artificially intelligent robots are based on algorithms which make it possible to learn from the environment, which is called Machine Learning.43 They will become more effective over time. They are also seen as the physical part of Artificial Intelligence. If they are like “Connie”, their knowledge comes from databases and through Natural Language Processing, Speech and Image Recognition and Optimisation they can communicate with others and take actions.44

3.1 Robotic Concierge at Hilton Hotel

In 2007, IBM was trying to develop a cognitive computing technology platform, called Watson, which could answer questions within a couple of seconds. The aim was to take part in a famous U.S. American quiz show. After three years of development Watson was finally taking part in the show and won it.45 Nowadays, Watson is based on algorithms which make it possible for the system to enhance many fields of business. So far, its Artificial Intelligence components are often used in medicine, for example to predict the right cancer treatment by analysing statistics and relating it to the client.46 But not only in medical terms Watson is useful. Its ability to soak up information through databases and learning by questioning him makes it possible to use him in many other business lines. Hilton International and IBM worked together to introduce the first robotic concierge. “Connie” gets her information about attractions nearby from an intelligent recommendation engine, called “WayBlazer”. She can access all information about the customer collected by the hotel and data the algorithm can find on the internet, such as social media profiles, to filter recommendations for specific preferences. Thereby, a more personalised concierge service is provided and customer experience improves. Included intelligent abilities are Natural Language Processing to understand customer´s request as well as Speech to answer in many different languages. Over time, “Connie” will learn more through questioning. All given answers are saved and the management can summarise them to learn more about the customers themselves. Through new innovations Hilton´s guest will be surprised, delighted and become more loyal. Additionally, employees have more time available to serve other guests47.

[...]


1 Cf. UNWTO, 2017. UNWTO Annual Report 2016. http://cf.cdn.unwto.org/sites/all/files/pdf/annual_report_2016_web_0.pdf. Accessed 6 May 2018, p. 12.

2 Cf. WORLD TRAVEL & TOURISM COUNCIL, 2017. The Global Summit 2017. https://www.wttc.org/-/media/files/summits/bangkok-2017/gs2017-summit-highlights-document.pdf). Accessed 9 May 2018, p. 2.

3 Cf. Vogel, 2016, Travel Industry Economics, p. 146.

4 Cf. Torres and Kline, 2013, From customer satisfaction to customer delight in: International Journal of Contemporary Hospitality Management Volume 5, p. 645.

5 Cf. Miguéis and Nóvoa, 2016, Using User-Generated Content to Explore Hotel Service Quality Dimensions. In: Borangiu, et al. (eds.). 2016 Exploring Services Science, p. 155.

6 Cf. Alcoba, et al., 2016, Framing Meaningful Experiences Toward a Service Science-Based Tourism Experience Design. In: Borangiu, et al. (eds.). 2016 Exploring Services Science, p. 130.

7 Cf. Alcoba, et al., 2015, Tourism as a Life Experience: A Service Science Approach. In: Nóvoa, Drăgoicea (eds.). 2015 Exploring Services Science, p. 198.

8 Cf. UNWTO, 2017, p.12.

9 Cf. Jafari and Xiao, 2016, Encyclopedia of tourism, p. 434.

10 Cf. Camilleri, 2018, Travel Marketing, Tourism Economics and the Airline Product, p. 12.

11 Cf. Lovelock and Wirtz, op. 2016, Services marketing, p. 6.

12 Cf. Vogel, 2016, Travel Industry Economics, p. 146.

13 Cf. WORLD TRAVEL & TOURISM COUNCIL, 2017. The Global Summit 2017. https://www.wttc.org/-/media/files/summits/bangkok-2017/gs2017-summit-highlights-document.pdf). Accessed 9 May 2018, p. 2.

14 Cf. Weiermair, 2006, Product Improvement or Innovation. In: Organisation for Economic Cooperation and Development (OECD) (ed.). 2006 Innovation and Growth in Tourism, p. 57; cf. Miguéis and Nóvoa, 2016, Using User-Generated Content to Explore Hotel Service Quality Dimensions. In: Borangiu, et al. (eds.). 2016 Exploring Services Science, p. 155.

15 Cf. Jayawardena, et al., 2013, Trends in the international hotel industry in: Worldwide Hospitality and Tourism Themes Volume 2, p. 153–161.

16 Cf. Miguéis and Nóvoa, 2016, Using User-Generated Content to Explore Hotel Service Quality Dimensions. In: Borangiu, et al. (eds.). 2016 Exploring Services Science, p. 156.

17 Cf. Oh, et al., 2007, Measuring Experience Economy Concepts: Tourism Applications in: Journal of Travel Research Volume 2, p. 120.

18 Cf. Alcoba, et al., 2016, Framing Meaningful Experiences Toward a Service Science-Based Tourism Experience Design. In: Borangiu, et al. (eds.). 2016 Exploring Services Science, p. 130.

19 Cf. Halvorsrud, et al., 2016, Improving service quality through customer journey analysis in: Journal of Service Theory and Practice Volume 6, p. 843–847.

20 Cf. Pine II and Gilmore, 1998, Welcome to the Experience Economy Volume 4, p. 97–105.

21 Cf. Johnston, et al., 2012, Service operations management, p. 167f.

22 Cf. Pine II and Gilmore, 1998, Welcome to the Experience Economy Volume 4, p. 97–105.

23 Cf. Halvorsrud, et al., 2016, Improving service quality through customer journey analysis in: Journal of Service Theory and Practice Volume 6, p. 842f.

24 Cf. Lemon and Verhoef, 2016, Understanding Customer Experience Throughout the Customer Journey in: Journal of Marketing Volume 6, p. 74.

25 Cf. Alcoba, et al., 2015, Tourism as a Life Experience: A Service Science Approach. In: Nóvoa, Drăgoicea (eds.). 2015 Exploring Services Science, p. 198.

26 Cf. Huang, 2013, Research on the Influential Factors of Customer Satisfaction for Hotels: The Artificial Neural Network Approach and Logistic Regression Analysis. In: Du (ed.). 2013 Proceedings of the 2012 International Conference of Modern Computer Science and Applications, p. 447.

27 Cf. Alcoba, et al., 2016, Framing Meaningful Experiences Toward a Service Science-Based Tourism Experience Design. In: Borangiu, et al. (eds.). 2016 Exploring Services Science, p. 130.

28 Cf. Ariffin and Omar, 2016, Surprise, Hospitality, and Customer Delight in the Context of Hotel Services. In: Kozak, Kozak (eds.). 2016 Tourism and Hospitality Management, p. 134–139.

29 Cf. Torres and Kline, 2013, From customer satisfaction to customer delight in: International Journal of Contemporary Hospitality Management Volume 5, p. 645–648.

30 Cf. Zsarnoczky, 2017, How does Artificial Intelligence affect the tourism industry? in: Journal of Management Volume 2, p. 87.

31 Cf. J. McCarthy, 1956. A Proposal for the Dartmouth Summer Research Project on Artificial Intelligence. http://www-formal.stanford.edu/jmc/history/dartmouth/dartmouth.html. Accessed 30 March 2018, p. 1.

32 Cf. Zsarnoczky, 2017, How does Artificial Intelligence affect the tourism industry? in: Journal of Management Volume 2, p. 85f.

33 Cf. N.U., Y.U. Definition of artificial intelligence in English by Oxford Dictionaries. https://en.oxforddictionaries.com/definition/artificial_intelligence. Accessed 17 May 2018.

34 Cf. Burgess, 2018, The Executive Guide to Artificial Intelligence, p. 13–16.

35 Cf. N.U., 2017. Paving The Roads To Artificial Intelligence: It's Either Us, Or Them. https://www.eyerys.com/articles/paving-roads-artificial-intelligence-its-either-us-or-them?_lrsc=7bddc433-7638-4dc9-a93f-066c0932e7ff. Accessed 27 May 2018.

36 Cf. Skilton and Hovsepian, 2018, The 4th Industrial Revolution, p. 33f.

37 Cf. Burgess, 2018, The Executive Guide to Artificial Intelligence, p. 1.

38 Cf. Zsarnoczky, 2017, How does Artificial Intelligence affect the tourism industry? in: Journal of Management Volume 2, p. 85.

39 Cf. Walden, 2017, Customer Experience Management Rebooted, p. 22.

40 Cf. Huang, 2013, Research on the Influential Factors of Customer Satisfaction for Hotels: The Artificial Neural Network Approach and Logistic Regression Analysis. In: Du (ed.). 2013 Proceedings of the 2012 International Conference of Modern Computer Science and Applications, p. 445.

41 Cf. Walden, 2017, Customer Experience Management Rebooted, p. 65; cf. Law and Jogaratnam, 2005, A study of hotel information technology applications in: International Journal of Contemporary Hospitality Management Volume 2, p. 171–178.

42 Cf. Zsarnoczky, 2017, How does Artificial Intelligence affect the tourism industry? in: Journal of Management Volume 2, p. 87.

43 Cf. Owen-Hill, 2017. What's the Difference Between Robotics and Artificial Intelligence? https://blog.robotiq.com/whats-the-difference-between-robotics-and-artificial-intelligence. Accessed 31 May 2018.

44 Cf. Burgess, 2018, The Executive Guide to Artificial Intelligence, p. 65.

45 Cf. Ferrucci, et al., 2010, Building Watson: An Overview of the DeepQA Project in: AI Magazine Volume 3, p. 59f.

46 Cf. Gorski, 2017. IBM’s Watson versus cancer: Hype meets reality. https://sciencebasedmedicine.org/ibm-watson-versus-cancer-hype-meets-reality/. Accessed 23 May 2018.

47 Cf. McLean, 2016. Hilton And IBM Pilot “Connie,” The World’s First Watson-Enabled Hotel Concierge| Hilton Global Media Center. http://newsroom.hilton.com/index.cfm/newsroom/detail/30279. Accessed 18 May 2018.

Excerpt out of 22 pages

Details

Title
Artificial Intelligence in the Hospitality Industry
College
University of Applied Sciences Kempten
Grade
1,3
Author
Year
2018
Pages
22
Catalog Number
V498676
ISBN (eBook)
9783346033451
Language
English
Tags
Tourismus, Hotellerie, Künstliche Intelligenz, Hospitality, tourism, travel, robotik, service, customer experience, artificial intelligence, kundenzufriedenheit, dienstleistung, hotel, japan, customer journey
Quote paper
Jasmin Armbruster (Author), 2018, Artificial Intelligence in the Hospitality Industry, Munich, GRIN Verlag, https://www.grin.com/document/498676

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