AI is not about man versus machine, but rather man with machine. Together, they can do extraordinary things.”
— Satya Nadella
AI is now the talk of the town. It has evolved in many ways from its original inception and has now transformed economies and industries worldwide. From start-ups to well-established giants, all are using AI. It can be for innovation or offering a hyper-personalised experience to satisfy their customers. Beyond these, automation needs a special mention.
What is AI? How does it impact the Indian industries?
AI, or Artificial Intelligence, is the ability of machines to perform functions like humans with respect to thinking, decision-making, and problem-solving.
According to a Boston Consulting Group [BCG] report titled ‘India AI Leap’, AI is significantly expanding the Total Addressable Market [TAM] by 1.2 to 1.5 times across the key Indian sectors. Further, India’s AI market is expected to reach $17 billion by 2027, which makes it one of the fastest-growing AI economies worldwide.
The World Economic Forum, in its annual meeting, has stated that AI has the potential to revolutionise sectors like agriculture, healthcare, and urban planning. That’s great!
But now, for a while, let’s take a look at the outlook of India’s tourism and hospitality industry, and study the impact of AI on it.
Tourism and hospitality industry of India
Among various initiatives undertaken by the Indian government, the measures taken to promote the tourism and hospitality sector are worth special mention. A press release by the Ministry of Tourism, posted on 25th Nov, 2024, states that the tourism industry constitutes 5% of India’s GDP [for 2022-23].
While tourism is a broad concept, hospitality specifically refers to businesses such as hotels, resorts, and food and beverage services. A news article by the Travel World from the ‘Economic Times’ states that India’s tourism and hospitality industry has the potential to contribute ₹43.25 lakh crore to the country’s GDP by the year 2034.
Such a massive industry! Isn’t it curious to know how AI has an impact on this sector, from an Indian perspective?
In this blog, let us explore how AI has influenced the hospitality industry in India.
Impact of AI in the hospitality industry
AI has benefited both hotels and customers. Let’s do a short comparative analysis.
1. Hyper-personalisation
Benefit for customers: Customers now get more precise hotel recommendations based on their past booking preferences. These AI-enabled, tailored suggestions make search faster, unlike traditional searching, filtering and so on.
Benefits for Businesses: As per a study by McKinsey, these personalised hotel suggestions have enabled hotels to increase their revenue by 10% and boost occupancy rates by 5%.
2. Pricing and revenue management
Benefit for customers: Customers benefit from tailored offers and much fairer pricing based on real-time demand. So they can now book hotels at much more reasonable prices.
Benefits for businesses: However, this capability of AI is much more beneficial for hotels. Marriott International has seen a 10% increase in its ‘revenue per available room’ [RevPAR] after implementing an AI-enabled revenue management system.
The AI algorithms help hotels in analysing the market demand, making forecasts, and pricing. These algorithms will adjust the room prices based on real-time market data like competitor prices, demand, and booking patterns.
3. Enhanced guest experience
AI-powered chatbots offer 24/7 support to all common queries from customers. It includes booking-related queries like booking modifications, amenities offered by the respective hotels, cancellation and refund policies, etc.
Popular hotel chains like Marriott International have implemented these and have enjoyed positive feedback from their guests.
4. Intelligent search
This is just a reiteration of hyper-personalisation. Earlier, the hotel booking platforms provided too many suggestions, without understanding the exact user preferences.
Now, with AI-powered search, it is easy to find the right hotel that exactly matches your preferences. These preferences could be luxury/budget hotels, couple-friendly stays, family-friendly hotels, hotels near some famous landmarks, etc.
Where do Indian hotel booking apps stand from an AI perspective?
Various hotel booking apps like Bag2Bag, are using AI to enhance their customer experience.
The key highlight is that, according to a Business Standard article, Bag2Bag has launched India’s first generative AI for its online hotel booking platform, named ‘Bano’. The report emphasises that Bano quickly processes user preferences such as budget, preferred city or locality, proximity to local attractions, and more. You can experience it for yourself.
Agentic AI – the game changer
Agentic AI refers to autonomous AI systems that are capable of performing various tasks and making decisions with minimal human intervention. In hotel bookings, it automates and manages the entire booking and the related processes. They offer even more precise recommendations for users.
Google is implementing agentic AI to enhance the hotel booking experience. ‘Agentic Hospitality Cloud’ is an infrastructure-level, AI-powered platform that is built on Google’s Cloud Vertex AI platform. It creates a personalized AI-driven experience for guests and streamlines booking.
It would be a conversational type where you can ask for hotels with your preferences. Then the AI agent performs a search with multiple booking platforms and will present you with the right hotels matching your preferences. For booking, you’ll be directed to the booking page directly.
The takeaway is…
AI is undoubtedly transforming the hospitality industry, elevating the user experience to unprecedented levels. While challenges like the absence of a human touch, technical glitches, and concerns about job displacement exist, these are natural initial hurdles. Every groundbreaking advancement begins with such challenges before ultimately becoming a true game-changer. Embracing AI’s potential today will shape the future of hospitality tomorrow.
How do you think AI will continue to reshape your experience in hospitality? Your opinions are welcome!
