As the archetypal ‘people business’ it might seem counterintuitive for hospitality to be among the vanguard in adopting artificial intelligence (AI). This, however, emerged as one of the standout findings from the first decision-makers' survey dedicated to AI adoption in luxury, recently conducted by Swiss-based Digital Luxury Group (DLG).
The survey captured responses from more than 250 individuals, of whom two-thirds were in senior leadership positions, with a similar proportion playing a significant role in AI & technology sign-off.
After giving an exclusive presentation of the survey findings to Glion faculty and alumni, DLG’s Strategy Director, Dominic Weir, and Innovation Director, Benjamin Dubuc, took some time to explain more of their analysis to The Insider.
“At first glance I was a little surprised myself at that hospitality number, but we must remember that behind the human-to-human connection that’s central to hospitality we also have a lot happening in the background in terms of information processing. And where that’s concerned AI can do a lot of the heavy lifting very efficiently, without touching on the ‘final mile’ people-centric element,” notes Dominic.
Managing room allocations across multiple booking engines is just one of the back office functions that Dominic says AI is ideally suited to support. This is a key component of inventory optimization, which he believes is a task that AI can perform more efficiently than a human with a spreadsheet.
Perception vs. reality
In all, some 31% of the survey respondents said that AI was already integral to their businesses today. For what remains a relatively new technology that’s an encouraging number, but Dominic is not convinced it portrays the true reality.
“There’s a significant gap between the extent to which I know AI can be embedded and how I see most businesses using it. Plenty have taken on board applications like Copilot, but they're using them in a very basic way versus what I would characterize as fully integrated and integral to the overall business. And by that I mean much more advanced in terms of using agents and agentic processes.”
Perhaps more significantly, Dominic sees a distinct closing of the window of opportunity facing the remaining 69% for whom AI implementation remains a work-in-progress.
“What you'll start to see is that the early adopters, the firms which are able to optimize business processes and educate their teams on how to use AI, are going to start to pull away from the businesses that are lagging behind. That’s because the early adopters will become more aggressive, more adapted and able to leverage the technology more holistically through their entire organization.”
Get out of purgatory
A frequent issue for the AI laggards is what Dominic calls ‘pilot purgatory’, a situation in which AI applications continually cycle through pilot stages, preventing them from becoming fully embedded. How can organizations get over such frustrations?
“Pilot purgatory tends to be caused by a combination of both human and technology factors. The human factor is a natural resistance that comes from staff members who fear that AI is going to disrupt their job, or at worst take it away. This will often be accompanied by problems with the technological setup, and in particular the quality of data. If you start with poor quality data the implementation will inevitably be suboptimal. Put the two factors together and you can end up stuck in a continuous pilot loop.
“We believe the onus falls firmly on leadership to help push past this, change mindsets, and get things done. And that means being really clear on the outcomes and communicating the benefits to the organization, including new opportunities for employees. We mustn’t overlook this effect and the new roles that AI is going to create. We’ve seen this in the past: 20 years ago the role of chief digital officer didn’t exist, for example.
“And finally, at a practical level it’s about clearly defining the processes and issues you are trying to resolve, then identifying the inputs that you need to drive the transformation. After that, it’s about deploying rapid ‘test and learn’ processes – that’s something quite novel for the luxury sector, which is used to working across longer timeframes. But it’s essential in order to push through pilot purgatory.”
Beware the rabbit hole
Once an organization has AI systems up and running, it’s vital to set clear boundaries on what the technology should, and more importantly shouldn’t, be supporting. Dominic adds, “Because AI gives you so many opportunities it can be very easy to fall down the rabbit hole and then it becomes a solution in search of a problem. It’s always useful to step back and reemphasize ‘what’s the problem I am trying to solve, and what is the most efficient route to solving that problem?’ and not the other way around.”
As a specialist in this area, DLG helps clients to stay focused on outcomes; and one of the ways in which it does this is through its proprietary tool LuxuryIQ – a fully agentic system providing clients with access to market data and actionable insights related to both their direct competition and wider competitive landscape.
Benjamin Dubuc highlighted just one of the ways in which this tool supports business decision-making.
“Competitor benchmarking is as important in luxury as any other sector, maybe more so given the price points involved,” he says. “Using AI, our aim is to cut down on the time and effort it takes to generate these reports. At the same time, by sorting and packaging the relevant data into a clean data warehouse it means we can reduce the risk of hallucination and make sure that our clients have qualitative data to work with.”
For SEO read GEO
With his background in SEO (search engine optimization) and performance marketing, Benjamin has also taken a keen interest in the way that AI is upending the world of online search, and how this is placing ever more importance on building and retaining brand authority.
“This may feel like a complete revolution, but actually if you look at Google’s stated mission right from the beginning it has always revolved around offering one answer – the ultimate answer – to its end users,” he explains. “With SEO in the past it was possible to ‘trick the machine’ and promote yourself up the page, but as Google leveraged machine learning and generative AI that ability has largely disappeared.
“Today, brand authority really counts and it’s imperative for brands to be AI-readable. This is the new era of Generative Engine Optimization (GEO) and if your brand and story aren’t structured for machines to read, the algorithm will simply refer to a competitor.”
In tourism and hospitality especially, this really matters. The numbers, compiled by DLG from sources including Deloitte, Bain & Co, Adobe and Forbes, are striking:
- 24% use GenAI to plan & discover trips
- ~65% expected to use it by end of 2026
- +3,500% YoY growth in AI traffic to travel sites
- -61% drop in site traffic when AI overview is present
“When using AI to plan trips, people are essentially outsourcing the research and analysis to the machine,” adds Benjamin. “So where in the past we might have done a Google search and then reviewed some of the top choices ourselves, now we ask the AI to select what it sees as the best all-round option in a particular location and price segment. If you’re a hotel in that segment and you are not feeding the AI with the right information and brand storytelling, you are not going to be the property it comes up with.”
Much to ponder, then, for executives across the luxury sector. But plenty of opportunities also; among the most significant of which is the tantalizing possibility for major hotel chains to finally seize back the customer relationship from the OTAs.
Dominic notes, “It’s perhaps too early to make any definitive conclusions, but with the highly focused outputs from GenAI searches there is the potential for hotels to steer more customers back to their brand websites. To do this they’ll have to ensure the website experience is fully optimized and that they apply the appropriate marketing and communications to ensure the Geminis and Claudes of this world make them the single linked answer.
“The hotel industry was slow to adapt to the first wave of digital transformation and that allowed the nimbler OTAs to take control of the booking relationship. But with the right kinds of activations adopted early this time, it would transform the bottom line through not needing to pay OTA commissions on room bookings.”
• To discover more about Digital Luxury Group and its services, visit the website
• Click here for more AI and hospitality technology insights from Glion faculty Dr. Alessio Delpero
Photo credits
Main image: Luxento Studio/Getty
AI frustration: Sisi Liu/Getty
Rabbit hole: Hardi Saputra/Getty
