Generative AI: Driving operational efficiency and profitability in hospitality

Article By- Aditya Sanghi, CEO and Co-Founder, Hotelogix

If you run a hotel today, you’re competing on two fronts at once. The first one is guest expectations that need to be friction-free, hyper-personal, and 24/7. The second one is your operating model, which is constantly under pressure due to labour shortages, distribution costs, thin margins, and other factors. In this scenario, properties that are leveraging GenAI are already far ahead of others in terms of driving operational efficiency and enhancing the guest experience, ultimately leading to increased profitability.

The rising importance of GenAI in hospitality

According to recent data, the generative AI market in hospitality was valued at $16.3 billion in 2023 and is expected to surge to $439 billion by 2033, growing at a CAGR of 40.2%. This growth is driven by the sector’s focus on enhancing operational efficiency, delivering exceptional guest services, and driving profitability. Additionally, according to 61% of hotels, AI is already influencing daily hotel operations.

Transforming hotel operations across departments

#1. Front desk and concierge

GenAI-assisted, mobile-first check-in eliminates queues, reduces errors, and opens new opportunities to monetise early check-ins. Studies indicate that automated upselling during digital check-in can boost per-guest spend by 20% or even more. Separate surveys show 71% of guests are more likely to book when contactless check-in is available.

#2. Booking and reservation management

Approximately 58% of guests report that AI enhances their hotel booking experience. GenAI booking assistants transform guest engagement by answering routine questions and capturing leads outside business hours. For hotels, it leads to increased conversion, occupancy and revenue. Most importantly, they save significantly on labour costs as these intelligent tools do the job on their own.

#3. Guest communication, personalisation and marketing

Sitting on the top of a robust CRM/CDP solution, GenAI tools can compose on-brand messages, translate instantly, and recommend precisely the next best action for each guest. It also automates direct guest engagement across chat, email, and social platforms and delivers tailored recommendations and responses within seconds. Almost all types of guest conversations can now be handled by GenAI, enhancing efficiency and freeing staff to focus on other essential tasks.

#4. Service automation and predictive maintenance

Hotels can save a significant amount of administrative and labour costs with AI-powered service automation and predictive maintenance through intelligent task scheduling. For example, AI-driven task scheduling and orchestration narrow the gap between rooms requiring service and teams available to deliver it. Industry analyses and reports suggest that the adoption of AI-powered automation can lead to a 23% boost in operational efficiency, a 15%-20% reduction in labour costs through improved task scheduling, and around 30% reduction in maintenance costs.

#5. Revenue management

GenAI-powered hotel revenue management system (Hotel RMS) analyses historical data, market trends, and competitor pricing to adjust room rates dynamically. Hotel brands that blend human intelligence and GenAI have seen a 22% increase in RevPAR and a 15% boost in ADR.

#6. Reputation management

GenAI now automates review monitoring, enabling hotels to respond to guest reviews instantly. It also helps hotels with analysing guest sentiment to shape brand messaging. These capabilities strengthen direct booking channels and reputation, driving profitability.

Today, for hotels of all types, investing in GenAI is the most essential step to see the real value of digitisation. Those who adopt and leverage it with well-strategised plans, will lead the race with improved operational efficiency, happier guests, and increased profitability.

Sources Generative AI in hospitality: Integration, use cases, challenges, and future outlook

https://www.alliants.com/news/ai-in-hospitality-practical-adoption-strategies-in-2025

https://oysterlink.com/spotlight/contactless-check-in-hotels/?utm_source=chatgpt.com