Struggling with Service Gaps, Hotels Look to AI

As labor challenges persist, hotel companies are struggling to fill vacancies despite offering record-high hourly wages, greater flexibility and benefits, according to a recent American Hotel & Lodging Association survey. The number of U.S. hotels experiencing staffing shortages has actually increased from 79 percent in January to 82 percent in June, according to AHLA. 

To mitigate these challenges, 75 percent of hotelier respondents are increasing wages, 64 percent are offering greater flexibility and 36 percent are expanding benefits, according to the survey. Yet 87 percent of survey respondents say they still are unable to fill positions. The AHLA 2023 June data was collected May 3 to May 9 from 474 U.S. hoteliers.

Hospitality leaders this week at the 2023 NYU International Hospitality Industry Investment Conference in New York said it's time for a new strategy that doesn't lean on wage increases and utilizes artificial intelligence to fill in service gaps. Industry execs in various panel discussions Monday and Tuesday pointed to alternative solutions for attracting and retaining talent, including rebranding their messaging while accepting the fact that some restaffing may look different post-pandemic. 

Changing the Narrative

Looking at overall hospitality industry labor, leaders hear the market is improving, but know from experience there's still a gap. "That gap can't be fought on just a wage basis," RLJ Lodging Trust president and CEO Leslie Hale said during a CEO panel discussion.

"It really has to be about changing the narrative around the job opportunities that are in the hospitality industry—really helping to see that this is a career, not a job," Hale said.

Painting a better picture of the industry's career opportunities is a solid starting point for generating awareness of its employment offerings—and one that AHLA CEO Chip Rogers also articulated in March. And while reinventing the narrative can bring talent in, other industry leaders are looking outside the box and seeking talent out.

"We went to a different set of people," Accor Group CEO Sébastien Bazin said, adding that in doing so the company added "123,000 people" in the past three months. Of those 123,000, 60 percent have high school diplomas but stopped short of a university degree, according to Bazin. "We train them. We cater to them. We basically bring them home," he said.

New Shape of Restaffing

Nearly every industry leader during the conference cited visa delays and a need for immigration and policy reform as top action items for solving labor issues, while executives took creative approaches in accommodating the staff they were able attract and retain. 

"The F&B side is where we struggle in trying to find food veteran employees," Outrigger Hospitality Group CEO Jeff Wagoner said. "We literally had to develop three different menus depending upon who showed up on any given day, and we would put that particular menu in place based on the cooking skills that were there."

Affordable employee housing also is a top concern for some hotel executives, especially in resort-heavy regions with inflated real estate pricing. 

"We're buying older motels, turning into dormitories, [buying] older apartment buildings [for] housing. We've really gone from just building and renovating hotels to building and renovating housing," Omni Hotels & Resorts chairman Peter Strebel said.

That adaptability extends to the core of the labor shortage for hotel companies, and will be an invaluable asset going forward, whether or not today's staffing model is the post-pandemic new normal. 

"You have to really think differently about what restaff looks like, because so many functions in our hotels have changed," Hyatt Hotels Corp. CEO Mark Hoplamazian said. "We've clustered a lot more, repurposed food and beverage outlets and grabbed those for meeting spaces. There are fundamental changes in operations that were necessitated by Covid, but actually are serving durable and enduring purposes." 

AI in Hospitality

Hotel companies and hotels themselves are operating with less in a time when corporate and group demand is on a steady climb and leisure demand shows no tangible signs of slowing, according to panelists. Where hotels can fill those service gaps with technology, they will.

"We're all … operating [at] 10 to 15 percent less. And it's using technology to be able to make departments more efficient and cross functional," Remington Hotels CEO Sloan Dean said. 

Across the board, industry leaders all agreed that AI—when paired with human interaction—is a valuable solution for a myriad of pain points in the industry but requires caution and expert execution. 

"AI can enable our colleagues to have more time to provide better services to customers," IHG Hotels & Resorts CEO Keith Barr said. "At the end of the day, this industry is about having people look after people and giving great service experiences to them. It will have [an] impact on call centers, but that can free up our people and do it even better too. It's going to help optimize our industry." 

Industry executives across multiple panel discussions stressed the importance of cautious AI deployment, keeping humanity in hospitality and protecting privacy.

"AI certainly has, if deployed correctly, the ability to further remove friction, particularly from the search process," during the booking process and how companies serve their content to customers, Marriott International president and CEO Anthony Capuano said. To which Bazin added: "Let's make sure they get a human touch. I don't want any robot to welcome a guest."

Beyond the search process and call center, AI also has the ability to streamline revenue processes, inventory, marketing and countless other capabilities, according to Hilton Worldwide CEO Christopher Nassetta.

Among the many implications of AI, "one is on the revenue side," Nassetta said, adding that "AI and big data are going to allow us to figure out where people want to be and what they want." 

With revenue in one bucket, Nassetta puts customer experience in another. 

"We are a business of people serving people. We always will be, and that's where we really deliver," Nassetta said. "There are a whole lot of ways that big data and AI can enable our team members to do a heck of a lot better job serving very specific needs on a fully integrated basis in the moment," he said, adding that "we all have to be really careful."

And while the industry never will be fully automated, according to conference panelists, AI could be "the death of the hotel concierge," in terms of offering guests local insight and itineraries, Dean said. Specifically for business travel, executives have their eyes set on improving manual request-for-proposals processes.

"Just like other technologies, [AI] makes us more efficient," Dean said. "We're testing. We're responding to sales RFPs. But there [are] a lot of RFPs [that] don't make sense," he said. If the system is automated and can refine what would "traditionally be RFP spam or big citywides—and they can do it very quickly—it's more cost-effective than active sales measures," Dean said. 

"We'll see sales, marketing, concierge services, planning all be more efficient. We have to work in a physical industry and it's not going to be automated," Dean said.

According to panelists, hotels and hospitality companies are employing and testing AI in their own operations first to better navigate ways to safely and flawlessly apply the technology going forward. In the interim, Sonesta CEO John Murray said, many organizations will experiment with ways to use AI to ease mounting staffing pressure and to "do more with less. Hopefully we don't burn everybody out."