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A.I. for HR in Hospitality

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July 11, 2019
Human Resources
Thomas Mielke - TMielke@AethosCG.COM

Thanks to our increasing willingness to share information about ourselves, and facilitated by an exponentially rising computing power, the existence of data is omnipresent. Its proliferation and general availability are not yet dwarfed by our heightened awareness of privacy and data security.

More interestingly, and despite tighter rules and regulations that address those concerns, experts predict that we all willingly provide, and will benefit from, analytics based on more data, not less. This is where artificial intelligence (AI) comes into play. Through its superior performance and ability to look at data and data patterns, it allows for much improved processing power and insights.
Broadly speaking, artificial intelligence is defined by the English Oxford Dictionary as computer systems able to perform tasks normally requiring human intelligence. It can be put to good use and applied in a plethora of different industries and functions. Logistics, supply chain management, sales, marketing, research and development as well as consumer insights have all already benefitted, in some shape or form, from AI. 
Cutting-edge industries are typically those associated with big money, such as banking, insurance, manufacturing and retail as well as the travel and tourism sector, to a much smaller extent. The latter is of particular focus here because we are aiming for guidance and recommendations for hospitality owners and operators on whether or not they should invest into AI and, if so, where can AI add the most value. 
A recent McKinsey study found that AI has the potential to create an additional $3.5 trillion to $5.8 trillion US in annual value for the global economy across 19 key industry segments. Specifically, for the travel and tourism sector, this figure could be $400 billion US to $500 billion US. 
With that in mind, it isn’t surprising to learn that, according to an earlier McKinsey study, leaders in the travel and tourism expect an 11 percent increase in AI spending over the next three years. Therefore, it appears that the question should not be if, but what pitfalls to avoid and where hospitality organizations should invest in and adopt AI platforms. 
One of the biggest pitfalls for organizations is to spend money and set up an AI infrastructure but not be able to use the outputs or insights gained. That could be based on incorrect choices that yield in irrelevant or difficult-to-use data points. Or it might result from a lack of in-house skills to make sense of AI outputs. 
Understanding how digitally mature your organization is and how ready employees and executives are to implement data science should, consequently, be one of the first assessments you undertake when looking at applying AI. 
Before you take out the check book, it is important to ensure alignment between the AI strategy and overall business strategy, as well as between the AI strategy and your in-house capabilities. The high-level SWOT analysis shown below can help you assess risks before officially green lighting AI investment. 
When your company opts to up its technology game, the priority should shift to identifying which areas might offer the biggest upside potential and competitive advantage. 
Looking at data points that cluster customers’ past behaviors and preferences will help your sales and marketing departments. This practice is already being used quite successfully within the hospitality industry. The same holds true for systems that help predict future performance and the price sensitivity of your key target markets and customers (think yield or revenue management). To push the boundaries and gain a competitive advantage, the travel and tourism sector should instead consider investing in Prescriptive AI. And, given the fact that the industry is a people-driven and labor-intensive business, you might want to consider applying Prescriptive AI to help your human resources and talent management department.

Leveraging AI for New Best Practices in HR and Talent Management
As indicated in the McKinsey studies, the potential value creation of AI platforms within HR is estimated to reach approximately US $100 billion. Experts predict the value creation will come from increased productivity and efficiencies, but imagine a scenario in which you go beyond workflow automation and labor planning. Our conversations with operators has disclosed that there is a clear lack of successful, innovative and fully integrated talent management and succession planning programs. Using just this small component of the HR toolbox as an example shows how much room for improvement there is. 
Travel and tourism companies complain that they have no detailed overview of their global talent pool. They aren’t sure which employees are earmarked as top talent. In fact, most companies struggle to come up with a clear, cohesive and common set of competencies that define top talent. And given the sheer size of most hospitality organizations, their global nature and (typically) decentralized HR functions, companies are struggling to define, recommend and put in motion truly groundbreaking career paths for their employees or to coach executives in areas that will help them to become better leaders.
AI could change all of that. Using data that identifies and maps past and present peak performers, tracks their career paths and combines this information with data gathered from hundreds and thousands of interviews conducted on an annual basis within these organizations, could help set benchmarks for success.
AI could integrate insights from psychometric assessments, performance reviews, individual development plans and 360-reviews, for example, to paint a much clearer picture of your organization’s talent health. Output from the AI system could range from detailed training programs based on successful methods identified elsewhere in the organization to specific recommendations in terms of career paths to take to equip a particular executive with the skill sets needed to excel at a specific, however nuanced, challenge. Such an AI platform would create a truly unique competitive advantage for your organization. Although the technology platform itself might somehow be replicated by competing firms, the system’s inherent value would lie in highly tailored HR and talent management recommendations based on something distinct to the organization itself, its employees and their institutional knowledge. 
Hospitality companies committed to implementing such an AI platform, and curious enough to find application in the HR and talent management department, would be wise to keep in mind this last piece of advice. Focus on the first mile (i.e., identify and organize the right data) as well as the last stretch of the journey (i.e., define how to use the output and how to integrate it from a management point of view). 

©2019 Hospitality Upgrade 
This work may not be reprinted, redistributed or repurposed without written consent. For permission requests, call 678.802.5302 or email info@hospitalityupgrade.com.

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