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Artificial Intelligence (AI) is here. It’s already changing how you deal with companies (chat bots, Alexa, Siri) and it’s transforming business operations across multiple industries. And in the luxury sector, it’s being used by disruptors and industry leaders to enhance the customer experience and deliver new levels of personalization.

But before we delve into that, what is AI? Stanford University defines AI as “…the science and engineering of making intelligent machines and computer programs, and using computers to understand human intelligence”.

In the real-world, this takes the form of technology that responds intelligently to requests, understands customer preferences and can predict experiences that they will enjoy.

What is the specific business benefit of AI?

AI adds extra capability to existing Customer Relationship Management (CRM) databases, allowing systems to identify patterns in data and use analysis to predict what customers may like. Once AI has done this, it can trigger completely personalized user journey. In the luxury sector, this technology is already proving to be a complete game-changer.

The ability to have an app, customer database or even a digital screen that can leverage the power of AI to deliver a surprisingly tailored customer experience is a powerful differentiator. It can also empower staff to create unique and completely individual moments, combining traditional soft skills and standards of excellence with data analytics to create luxury on a whole new level.

Driven by demand

The emergence of AI has been accelerated by – and has accelerated – a shift in customer expectations. Millennial and Generation Z consumers demand more than traditional luxury, they want experiential and emotional moments that are completely unique. Moments they can share on Instagram or TikTok and know that no-one else will have the same content.

This new age of consumer also wants everything on-demand, which is another major reason why AI is so important for luxury businesses. AI gives brands the opportunity to go one step further than on-demand, allowing them to predict ‘needs and wants’ and serve them before the user knew makes the request. And even further – curating whole new experiences and desires based on past behaviours.

What is the specific customer benefit of AI?

Let’s say you stayed at Hilton New York and it was the first time you’ve stayed at a Hilton hotel. They did a great job looking after you – they booked the shows you wanted to see, arranged the taxis, delivered the room service, made your eggs just the way you like them, and met all those unique-to-you individual needs.

You were a satisfied guest, so you booked again when you were heading to Sydney, which triggers your unique AI-driven customer journey:

– Before you board the plane for Australia, you receive an email suggesting theatre shows recommended by people who saw the same show as you in New York. The specific show times fit with your schedule.

– You get a WhatsApp message just before take-off telling you your taxi has been pre-booked automatically at Sydney airport – it’s even adjusted the time for your delayed take-off.

– When you get in the taxi, your Hilton app pings you to welcome you and give you your room details, matched to the same floor and aspect you requested on your last stay.

– The taxi automatically plays a playlist of the tunes you listened to in your NYC room through the hotel’s complimentary Spotify account.

– All those individual requests from NYC are already met when you arrive, along with additional services that the AI system has predicted you would like. (From an operational standpoint, these are actioned automatically, with no need for an employee to review and approve.)

– At breakfast, your eggs are done just how you like them.

…And so on, you get the idea.

As a customer in a hotel, restaurant, car showroom or any luxury business, it begins to feel like the user experience is built around you. No longer are you using a generic service, you are their number one and you feel the warmth of a true relationship.

But it can’t all be good, can it?

It’s clear AI offers advanced levels of personalization for luxury brands in both hospitality and retail, so what’s stopping companies adopting the technology? Here’s a rundown of the main issues that – right now around the world – are holding major international businesses back:

– Data security concerns

While a reputable business will always comply with data protection regulations, many customers simply aren’t keen on their data being analysed and used through AI. Some even find the increasing levels of personal insight disconcerting, which can lead to a loss of trust in the brand – a major concern for luxury companies.

– Out-of-date leadership

Some companies have resisted adopting AI because of lack of understanding of the benefits and shifting user demands at leadership level. This incompetence poses more of a risk to the organisation than AI ever could.

– Integrating AI

For many of the larger market-leaders, the integration of AI and understanding how it impacts human resources has been a major stumbling block in moving with the times. These businesses accept AI is essential, but they lack the agility of smaller startups to quickly begin maximising its beneficial impact.

– The cost

Whether provided by an external tech company, or an in-house team, the skills needed to create a solid AI platform are in-demand and highly-priced. The significant short-term costs of AI development and implementation has put many companies off investing, despite the long-term benefits.

– Losing luxury emotion

Many businesses feel that AI just can’t create the level of emotional experience delivered by the traditional human approach. The reality is, AI is creating immeasurably more powerful experiential user journeys through a true understanding individuals and previously unthinkable levels of personalization. For these businesses, an urgent mindset shift is needed, or they will be left behind.

Summary – As AI learns, so do we

AI is redefining luxury in hospitality and retail. It’s creating ever-more experiential moments for a new generation of consumers looking for unique experiences. It’s also empowering businesses to deliver increased standards of excellence, through a more complex analysis of data to create intimate and individual relationships with customers.

As well as helping brands know their customer better, AI is also helping them know themselves better. By having a clearer picture of what customers want, and will want, a company can better know what it needs to be for today’s market, and in the near future. Ultimately, AI is informing luxury businesses and helping them deliver increased excellence. All they have to do, is analyse and implement change in regular cycles.

Why it’s not too late to implement AI

Whilst AI is increasingly common in the luxury sector, the personalization benefits it brings to the customer are by no means ‘expected’ – just yet. Those brands that move now can still leverage the greatest impact from this technology, surprising and delighting customers with moments and relationships that can represent the leading edge of modern-day excellence.

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About the author

Glion Institute of Higher Education
Glion Institute of Higher Education is a private Swiss institution offering bachelor’s and master’s degrees in hospitality, luxury and event management to an international student body across three campuses in Switzerland and London, UK.
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