Hospitality Businesses Will Fail to Scale AI Without a Solid Customer Data Foundation

By Matthew Biboud-Lubeck, General Manager EMEA, Amperity (https://amperity.com/)

The hospitality sector has high aspirations for AI. Companies are keen to explore its potential to transform pricing, create customer offers, generate content, enhance guest support and more. But, in reality, most businesses are still at the early stage of adoption, with applications currently small-scale or experimental.

Recent Amperity research has revealed that while 96 percent of businesses in hospitality are planning to maintain or increase AI spending over the next 12 months, less than a quarter of leaders feel ‘very confident’ in their ability to deploy AI at scale across operations.

A lack of technical expertise and high costs are cited as reasons for this. Critically though, it’s a lack of quality data and the inability to act on customer insights that are undermining the effectiveness of AI investments.

An opportunity with risks and limitations
Businesses recognise the contribution AI can make to keeping pace with competition and meeting rising consumer expectations. It has the potential to enhance personalised interactions, tailored experiences and the ability to present real time offers based on customer preferences.

Yet, only a third are currently using AI for customer-facing applications. Cost is undoubtedly holding some businesses back. Four in ten respondents said the expense of AI tools is impeding their ability to scale initiatives across their organisation. AI investments can quickly snowball, so businesses need to set clear and specific goals that will not only increase the chances of success but also help keep expenditure under control.

A lack of technical skills is also inhibiting progress. Customer support, marketing and sales are the business functions most likely to use AI in hospitality. But less than a third of professionals in these teams are able to manage customer data independently of the IT department.

This is an issue that needs attention. Intuitive tools like AI agents can help reduce the dependence of non technical teams on IT colleagues but businesses must also consider formal AI training. Only a third of hospitality businesses are currently providing this. As companies seek to ramp up productivity using AI, it’s going to be critical that users understand how it adds value, where its limitations lie and what safeguards should be put in place to ensure responsible use.

Make or break quality of data
Any AI deployment depends on quality data, but this is also an area that needs attention in hospitality. Data siloed across different systems and channels often leads to inaccurate reporting, increased risk of human error and higher IT costs. More than half of respondents in the Amperity study said their customer data is fragmented or incomplete, and less than a quarter said they were very confident in their ability to understand and act on customer behaviour.

The creation of duplicate customer profiles is a common problem.

Customers tend to engage with hospitality brands across several touch points including email, mobile, apps and in-store. They also use various identifiers such as abbreviated names, alternative email addresses, etc. This can lead to a customer being treated as if they are different people on different channels.

AI tools drawing from un-unified data will be making decisions based on partial or incorrect insights. This will reduce the effectiveness of cross-channel engagement, impede personalisation and potentially result in customers receiving conflicting communications.

A 360 view for effective engagement
Conversely, when businesses consolidate data from their multiple consumer touch-points, customer-facing AI solutions can make informed decisions based on all previous customer engagements – and take action fast, in a meaningful way.

This data still needs to be in a format that is accessible and usable, however. To achieve this, organisations need a customer data platform (CDP) that can clean and improve the accuracy of their information.

These platforms provide a solid data foundation – a great advantage when it comes to AI deployments. Our research shows that businesses with a CDP are twice as likely as those without, to be confident about acting on customer behaviour – and twice as likely to also be using AI in guest‑facing applications.

The latest generation of CDPs – AI-empowered customer data clouds – also ensure that, in addition to consolidating data, any identity issues are detected and resolved automatically. This provides businesses with a true, 360 degree profile of each customer, based on all interactions across each channel.

Although this should be a key area of focus, only 18% of hospitality businesses say they are currently deploying AI to ensure customer data is unified and ready for use in marketing or analytics.

The hospitality sector is clearly at an inflection point on its road to full AI adoption. Businesses are starting to move from pilot projects and early stage experimentations to broader deployments and scaled execution. But to enable AI-powered customer experiences, they first need to solve their data problems.

Enterprise level data management solutions and modern CDPs are allowing businesses to do this. Providing a solid data foundation holds the key to understanding customers and succeeding with customer facing AI applications. Enabling meaningful connections will build brand loyalty, drive up the lifetime value of a customer and, ultimately, give businesses the competitive edge.