If hotel booking during the past decade has been about mobile-first, the next is set to be about AI-first and not as a gimmick, but as a way for hotels to significantly grow revenue.
That’s not to say that the industry should stop making efforts to optimise the mobile booking experience, but to be aware that it is AI that will be the future gamechanger in a sector where selling rooms might meet occupancy targets, but the ability to make profit on them has flatlined.
Auxiliary spend is now where the real growth is and those hotels with AI-powered experiences built directly into the booking journey, based on guests’ needs and preferences, will be the ones that increase conversions and grow revenue through personalised upselling.
We’ve reached the point where four walls and a bed is not enough anymore. These days, travellers don’t book hotels, they book experiences. Yes, a room will get you considered, but an experience will get you booked.
Yet most hotel booking journeys continue to be built around availability, not inspiration and the potential is still there waiting to be unlocked.
Currently, many booking journeys feel like hard work for guests. There is still far too much choice, which can reduce conversion by up to 25%. At the same time, guests are being asked to interpret, compare and decide instead of being guided and inspired.
When hotels start to embed AI into the booking flow, they can transform a static booking journey to one that is visual, curated and personalised. A booking journey that feels just like scrolling.
AI has the ability to change a generic booking experience into a hyper personalised one that enables hotels to upsell in areas like food and drink, wellness, culture and so on. Like a discovery engine, it will let guests scroll, explore and select experiences. It makes them feel like they’re curating a trip, rather than just booking a room.
In most cases, before they even choose their accommodation, travellers will have already researched destinations and activities and pictured what their trip might look like. A hotel can come into its own by helping to make their vision come to life.
If hotels just give guests an opportunity to book a hotel room and nothing more, it will limit both conversion rates and potential revenue. Yet offer them an AI-personalised experience during the booking experience, when guest intent is high, and a hotel can open itself up to a variety of revenue streams that boost their bottom line.
What’s more, upselling isn’t just for luxury hotels with spa and golf facilities. Any hotel with a wider experience ecosystem such as dining, activities and access to local experiences, can leverage AI and get in on the action.
Generating personalised recommendations within the booking flow can help increase spend even after the ‘book now’ button has been pressed. Our research shows around 17% more revenue can be generated after confirmation and pre-check in, resulting in a growth of 106% in auxiliary spend.
An AI-first approach to booking that lets hotels respond to guest’s needs and motivations in real time, when they are excited and ready to spend, provides huge opportunities.
This next generation of booking will of course require investment but those leveraging AI will be able to deliver more than just a room. Without it, they risk competing on price alone but with it they will increase experience-led revenue per stay, encourage guests to book directly and so reduce commission to third party agents, and grow brand loyalty with memorable stays facilitated by the hotel.
Patryk Luszcz - UK Regional Director