Global tourism has begun surpassing its pre-COVID peak. South Africa remains a popular tourist destination with the hospitality sector contributing significantly to its gross domestic product (GDP). Competition in the hospitality industry is intensifying, making the marginal and not-so-marginal gains offered by artificial intelligence (AI) a vital consideration for any hospitality operator. The sector is in a prime position to capitalise because it sits on one of AI’s most important resources: data.

Hotels can gather large amounts of data because their guests are always generating information: when they typically order room service, how often they leave their room, favoured departure times, their spending profile, how clean their rooms are, and so on. Artificial intelligence is opening new worlds of efficiency for hospitality providers enriched by the pictures their guests paint through their day-to-day habits. 

Opportunities for hospitality operators in the age of AI

There are numerous ways AI can support hospitality operators in improving the quality of their service. Given AI’s wide breadth of influence, it is useful to consider its potential in the hospitality industry in two broad categories: customer experience and automation as well as ESG.

Customer Experience and Automation

Customer experience entails the full guest experience, such as safety and security, communications, service quality, cleanliness, reservations, dining, and amenities. AI can offer operators and guests increased security by using technologies such as facial recognition, biometric locks, and airport transfers driven by real-time flight times versus airline schedules. The check-in process can also be improved through adaptive, proactive systems that recognise repeat guests with a long track record of facility use.

Reservation systems supported by AI can offer guests dynamic pricing based on demand. Chatbots can service customer queries any time of the day or week, logging critical information for use the next time a guest checks in. The increased use of robots and automated tools can lead to fewer staff being needed to clean a floor or room, thus improving security and reducing overheads. Favoured meals will always be in stock through smart food storage and procurement.

ESG

Hospitality providers can consume a significant amount of power. They often operate 24 hours a day, and guests are less careful regarding energy consumption than at home. They tend to leave the water running for longer and the air conditioning and lights on. Energy is wasted with negative consequences for the environment, driving operating costs up. 

AI is already playing a major role in reducing energy wastage. When a guest leaves a room, smart energy management systems that leverage guest and hotel data can automatically switch off lights and systems, such as air conditioning.

Challenges of using AI in the hospitality sector

AI poses serious challenges and risks that need to be carefully considered and managed for hospitality operators to benefit from the opportunities and gains. 

Data Privacy

The greatest challenge any organisation grapples with when using AI is data privacy. In South Africa, the Protection Of Personal Information (POPI) Act plays a central role in regulating how private data is interacted with by private and public actors. 

If hospitality providers intend to use private data for commercial purposes, it is imperative that the agreements and waivers signed by guests giving providers permission to do so are legally sound and all-encompassing. Furthermore, each legal jurisdiction applies different regulations to how private and public entities can treat and interact with private data. A hospitality operator may be compliant in one jurisdiction but non-compliant in another.

Liability

Where AI is concerned, South African law currently has no provisions within its legal framework that specifically address AI or contexts where AI is used. In a practical sense, for example, that lack of a safety net means that when new employees are onboarded into the organisation, significant thought and care must be given to how employment contracts address the subject of AI and the use of AI tools. For example, suppose an employee uses an AI tool to manage a hotel’s kitchen inventory. Where does liability lie if an allergen sneaks in and a guest consumes it? Is the employee, hotel, or AI program supplier responsible?

Intellectual Property

For hospitality operators, intellectual property (IP) may not be among their chief concerns when using AI tools, but it is critical to keep abreast of IP implications. For example, if an employee uses an AI tool to craft a marketing campaign, immediate questions can be raised about the original source of the idea, the framework used to execute it, and whether in fact a third party owns it and its use results in an IP infringement and damages. Updating IP policies to deal with the adoption of AI is imperative. 

AI has opened new ways to do business in the hospitality sector. Customer experiences can be enhanced, operating costs lowered, and carbon emissions significantly reduced. The opportunities presented by AI are self-evident, but care is advised when leveraging its talents. 

Written by Bernadette Versfeld, Partner at Webber Wentzel