Where to Apply AI within a Hotel?
As anyone reading this article will surely know I am an AI and Tech Optimist. I have spent the past 15 years championing AI driven personalization, experiential search, predictive design, and the like. Over the past 18 months, I have given over 30 Keynote speeches to groups thinking about this new technology epoch, have met well over 150 startups applying AI in new ways, and have advised executives from most of the largest travel and lifestyle companies in the west.
I list all of this to highlight the fact that I have seen and heard A LOT of ideas of where, how, and when to apply AI. And as an AI optimist, I love most of these ideas. But in recent conversations with brilliant friends including Kenny Blatt and John C. Tolbert it dawned on me that a vast majority of these innovators are ignoring a giant glaring opportunity. What I call (inspired by the one and only Scott Galloway ) Back-of-House Ozempic.
Opportunity Calls
Between labor shortages, wage inflation, enormous traveler demand, and the rise of AI hotels (and all travel businesses) are more open to technology, automation, and innovation today than at any point over the past 15 years. So while most founders are focused on consumer offerings, storytelling, recommendations, and funnel optimization (all areas I am passionate about and invest in), almost none are focused on the enormous opportunity that is Back-of-House Ozempic. The opportunity to shrink down expenses, increase productivity, and help supercharge a hotels operational and hospitality teams.
One of the key lessons learned from being a member of a YPO chapter is that often it is the unsexy behind-the-scenes businesses have less competition and thus higher margins, less churn, and an easier road to success. So to all of you founders chasing your AI startup dreams, consider the back of house, and Ozemipc it.
Secret Sauce
Nobody I know is on Ozempic. Yet, nearly everyone I know is on Ozempic. Either that, or gluten-free diets are suddenly delivering exponential results previously unheard of. People are hesitant to acknowledge they need a drug to lose those last 15 pounds — which doesn’t fit with our narrative that success is correlated to self-control. One of the most interesting, and discouraging, features of GLP-1 use is that the region with the greatest per-capita prescriptions is also (wait for it) the thinnest. This makes no sense … but it does. The Upper East Side of Manhattan is replete with people who can spend $1,000 a month to go from slim to skinny. In sum, GLP-1 drugs are not (yet) getting to the communities who really need them. I believe this will eventually happen, however, because the public health and economic benefits are just that staggering.
Corporate Ozempic
Similarly, my thesis is that firms (notably tech companies) have also discovered a weight loss drug and are also being coy about it. Recent financial news features two stories: layoffs and record profits. These are related. There’s no mystery to the surface narrative. A company lays off 5%, 10%, or even 25% of its workforce and, 6 to 12 months later, after severance pay and expenses are flushed through the P/L, its operating margin hits new heights. The ultimate peanut-butter-and-chocolate shareholder confection is Meta, which produced a singular Hall of Fame quarter in Q4.
I think this is more than JUST a simple dose of AI. I don't believe the hospitality industry has become bloated either. In each downturn since 2001, hotels have lost critical skills and the number of people required to adequately train and develop new staff. Too much OJT without any mentors. So we end up with fewer people who also don't know how to do their jobs. When they learn the required skills they are easily lured away. At the same time, tech and complexity in hotels have risen. Hotels have multiple technical systems from different suppliers that all lack unity in terms of configuration management (more critical than you might first think), operational management, and remedial action. Many times those systems depend on each other and many (not all) suppliers, being pinched as well, tend to blame the other guys if they can. So someone at the hotel has to sort this stuff out either technically or through anger. BTW these systems cross over between finance, operations, building systems guest-facing technology, etc. Well-applied AI can help by unifying this maze of confusion to provide staff with answers instead of just confusion and of course anger... I think in today's hospitality world less turnover = real savings.
Co-Founder and General Partner at Moment Ventures
3moI love this write up, Gilad Berenstein! The hotel and travel industry infrastructure at large has gotten so bloated over the years, and AI can come off looking like a magic pill IF it can solve a real and tangible problem for entities that have gotten sluggish in their ways. This is the Future of Industries opportunity in travel! #futureofindustries #travel #AI #startup #vc #infrastructure
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3moWhen this first wave of builders chasing consumer dreams get flushed through, they’ll have learned a lot and be much better builders. Some will find grizzled veterans who know where the real corporate pain points are and if they find and listen to each other - they’ll create the magic you’re talking about here. The builders are just too unlikely to find it on their own. Maybe we need a “society of grizzled veterans” as the new first half of a new YPO type org
Global Head of Hotels Research at JLL
3moGreat points all around Gilad Berenstein! It seems like the industry has been dabbling with back-of-house AI for quite some time but clearly there are significantly more opportunities!