The unfortunate thing about discussing a topic as influential as artificial intelligence this late in the game is that nearly everything has been said on the topic. And so much is being said by anyone and everyone that I risk writing a piece that has already been expounded upon and put to rest by people way smarter than me. However, this AI revolution and the extreme optimism/pessimism that plagues this discourse has me just antsy to say my piece on it, and particularly how it affects the industries in which our company works.
So today I’ll express some thoughts on artificial intelligence and what effect its adoption and ultimate potential could have on the hospitality industry, and why some of that potentiality should be rejected outright.
We Can’t Seem to Escape AI
And the reason for that omnipresence is just how much freaking money is tied up in the companies and technologies underpinning the concept. Gartner reported that this year alone, there is almost $1.5 trillion being spent globally on artificial intelligence, from software and services, to hardware components and finished products. That is up from around $900 billion in 2024, and projected to exceed $2 trillion by the end of next year. That much capital invested in an industry like AI is similar to what was spent in the years before the dot-com bubble burst in the late 1990’s/early 2000’s, when adjusted for inflation.
That capital is spilling over into the hospitality industry too, with both major corporations and startups fueling the growth. Wyndham Hotels and Resorts has already rolled out AI customer service agents at around 7% of their hotels, where the automated agents take over many of the functions of a human agent, including booking travel and processing cancellations. Marriott International is using AI in a variety of ways, from deciding who gets a room upgrade to changing how search is conducted across its “Homes and Villas” platform.
One of the more ridiculous ideas I’ve seen is utilizing robots like the 1X Neo to completely take over housekeeping, maintenance and logistics tasks. In some sense this technological replacement, when functional, is an operator’s dream come true. I’ve experienced the pains of employee call offs and slow work performances and can see how this type of automation could be attractive. But my very next thought is, with all this automation, what’s even the point anymore? When you remove so much humanity from hospitality, are we still really in the business of hospitality?
What is the Place of AI in the Hospitality Industry?
Artificial intelligence, just like previous advances in technological capabilities, needs to be seen as a tool to enhance human functioning and flourishing, not as a replacement for the human element in hospitality. Just like data analytics or advances in smart technology have unlocked value for hotels and the people who work in them or own them, I believe AI can do the same. But I don’t believe that AI can have the same effect on the industry as, let’s say the internet, because the ramifications are significantly worse.
The internet, instead of replacing a large proportion of jobs in the hospitality industry, enabled its explosive growth, and the growth of whole industries, from OTAs to STRs. The internet is a medium for communication and access, and I don’t believe the same can be said for artificial intelligence. AI’s usefulness as a tool shouldn’t be construed as the replacement for the user of the tools. However, with how impersonal the hospitality industry has become over the years, that seems to be where we are heading.
Corporations and capitalists have attempted to make it clear that the proliferation of AI capabilities is only meant to help existing employees work more efficiently. But if the recent rounds of tech layoffs are any indication of what’s to come, we should stay vigilant for mass adoptions of AI that leaves tens of thousands of workers without jobs. I have very little faith in both the bigger players or the smaller opportunists to use AI responsibly, especially with costs for everything, particularly labor, on the rise. But if hospitality as a concept that puts people first, on both sides of the equation, is to endure, we must both highlight the clear negatives that AI brings about while reminding the world why hospitality should always be a people first business.
The Negative Externalities are Everywhere, We Only Have to Look
While there’s a plethora of concerns surrounding AI adoption, the most concerning one, which has not yet come to pass, could have massive shockwaves to the global economy. Of course I’m talking about the bubble:
The potential negative externality of a full on market crash from these AI companies investing in each other to juice demand for AI capabilities is both incredibly obvious and reminiscent of previous economic catastrophes (like the ratings agencies rubber stamping mortgage securities so they’ll continue to receive business from the banks that produce these securities). None of this is being done in the shadows (at least that we know of) and more of these types of deals are being announced every day, further complicating the web of money and relationships. A significant break down in a few of the major players and the whole thing comes crashing down.
Another major externality that is already causing pain in local communities is the proliferation of AI data centers throughout the country. These behemoths, holding thousands of data servers and computer chips, create large amounts of light and noise pollution and use exorbitant amounts of water and electricity, stressing local supplies and grid networks and raising costs for the average consumer. And oftentimes, there’s little in the way of these developments from moving forward, as I’ve experienced myself in my own hometown.
In Lancaster County, Pennsylvania, an AI data center at 216 Greenfield Road was given the go-ahead to proceed in February without zoning or land development approval according to a Lancaster News Paper write-up on the subject. The reason? Because the data center was characterized by developers as “ ‘electronic data processing warehouses,” which meant they qualified as ‘wholesale trade and storage.’” under the current zoning designation, a stretch if I’ve ever seen one. The public was only given the opportunity to provide comments on the development after construction was underway. Muscling through developments like these without the appropriate level of review and safeguards further erodes communities that are supposed to be great travel destinations, even if it’s in ways that are hard to measure immediately.
We’ve gotten away from our discussion on AI’s effects on the hospitality industry directly, but these concerns, in one way or another, will have an impact on what type of grip AI will have over every industry, including hospitality. Should the ballooning AI bubble pop with the severity of the dot-com bubble or the 2008 housing crisis, hotels and restaurants will feel the immediate effects of reduced demand for these services, and the longer term effects of stricter allocation of resources around IT needs. That same pop will certainly affect data center development and usage in the future, but even if that particular collapse never materializes, data center consumption of local utilities will drive up costs for everyone, including businesses in the hospitality industry and consumers thinking about their next vacation.
Reject Artificial, Embrace Original
I think what’s missing from conversation around the inevitability of AI is the why of it all. If you lead a corporation and your only goal is to maximize shareholder value, then your “why” is very clear, and your embrace of AI to reduce labor costs or sell more upgrades is expected. But hospitality should be above that. The goals that define hospitality businesses, creating memorable guest experiences, surprising and delighting customers, can’t reliably be accomplished with AI. I think we will find that with time the organizations that rely heavily on AI to do the work that humans are already incredibly skilled at will suffer, while the organizations that empower their employees to go above and beyond for their guests, which may include using AI from time to time in pursuit of that goal, will thrive. AI’s usefulness as another tool is evident, but its embrace as a replacement for humanity in our industry should be rejected.
Ascension Associates values the human touch that our services bring to our clients’ projects. We dedicate countless hours making sure our project plans meet the triple constraint, through our years of experience and knowledge. You can’t get the same type of service and support from an AI program, and I doubt you ever will. Contact us today at clients@ascension-consulting.com or through our online form to see how we can help your next hospitality project ascend today.