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Ultimate transformation: How will robots, artificial intelligence and service automation disrupt the tourism and hospitality industries?

At the end of the 20th and beginning of the 21st century, the GDSs (Global Distribution Systems), Internet, social media, websites and mobile applications, made the world smaller and changed the rules of the business and competition among travel, tourism and hospitality companies. Now the tourism industry is facing a new revolution, one more powerful, transformative and with longer-term implications than the previous changes. Tourism is entering the robotics era. Stanislav Ivanov from NTG key partner Varna University of Management, wrote an interesting blog on this matter.

 

Digital skills in the tourism and hospitality industry

The advances in robotics, artificial intelligence and service automation technologies (RAISA) allow companies from various sectors to use RAISA in order to decrease costs, streamline operations, eliminate waste, and improve productivity and efficiency, which leads to huge transformations in the way businesses (will) operate. However, the effective and efficient use of new RAISA technologies requires that tourism and hospitality employees improve their digital skills. The Next Tourism Generation Alliance (NTG) aims to identify the anticipated needs of competences and skills, which will be necessary for the next generation of tourism employees. The following analysis estimates the expected changes in the tourism industry that will be caused by RAISA technologies and the skills requirements they will raise.

 

The robotics revolution 

While during the previous tourism revolutions humans played a central role in the system, both as customers/tourists and as service providers/employees in tourism companies, the new realities would induce changes to both the demand and the supply sides of the tourism system. The robotics revolution in tourism means that we should no longer expect that a hospitality employee or a customer is a human being, but a broader perspective needs to be adopted. Robots can serve as tourism/hospitality service providers, but as customers as well.

For the moment, robots seem quite clumsy in their interactions with humans and navigation through the premises of hotels, restaurants and airports. However, with advances in robotics, we can expect that robots would become much more capable of serving guests and implementing various tasks beyond the 3D (dirty, dull and dangerous) tasks, which human beings do not want to implement.

 

So the question is: How will RAISA technologies transform and challenge the travel, tourism and hospitality companies in the future?

How will RAISA technologies disrupt the tourism industry?

All the aspects, including roles, functions and tasks of a company could be affected by the adoption of RAISA technologies. Internal organization and management of tasks; how customers perceive a company (i.e. its image) and the quality of its services; and how a company competes or cooperates with other companies will need to be reviewed as explained below.

 

Operations

 

In a new reality where service is delivered by a non-human agent, the role of participants in the whole process will need a significant shift. More automation means an increased role of the customers in the service delivery as they now perform some of the activities by themselves. The use of self-service technologies effectively transfers the responsibility for the initiation and implementation of the service delivery from the service provider to the customer – the customers are transformed into prosumers (= “producers” + “consumers”). RAISA implementation also requires reengineering of service delivery processes – new processes, activities, procedures, controls need to be implemented, new service operations manuals have to be developed and introduced to reflect the new service provider, and hence the scheduling and planning of operations. Last, but not least, RAISA technologies might improve the environmental sustainability of operations due to reduced use of resources, less waste, elimination of unnecessary activities, and less energy consumption due to better energy demand forecasts.

 

Facilities design and management

 

Often neglected when speaking about robots, the infrastructure and facilities design is essential for efficient robot service delivery. In the future, the premises of hotels, restaurants and airports, among others, would be used by a wide variety of mobile robots (wheeled, legged, flying or underwater) such as security robots, robot guides, robot waiters, room service delivery robots, robotic vacuum cleaners / lawnmowers / pool cleaners, entertainment robots, delivery drones, etc. Regardless whether these mobile robots belong to the customers or to the hospitality companies, the latter would need to ensure the robot-friendliness / robot-inclusiveness of their premises, i.e. accessible for mobile robots. When the hospitality premises are more robot-inclusive, the same task can be performed by a less intelligent robot and vice versa: an environment that is not robot-inclusive would require a more intelligent robot to navigate through it. Therefore, the robot-friendliness of hospitality facilities will be a new competitive advantage for travel, tourism and hospitality companies.

 

Human resource management

 

The hottest discussion regarding RAISA adoption relates to the future of human employees. Still, there are again pros and cons. On the positive side, RAISA would save employees’ time from performing tedious and repetitive tasks, which they could use for other more creative and revenue-generating activities. For example, hotel room service employees could use a robot to deliver the orders to rooms and use the freed time for other activities in the restaurant. In this way, RAISA technologies are enhancing rather than replacing the employees. RAISA would solve some the problems with hiring and firing of employees, especially seasonal personnel and immigrants – robots and kiosks can be leased/turned on during periods of high demand, and returned/turned off during off-season without the need to deal with the bureaucracies of labour laws.

On the other hand, however, RAISA will cause reduction of human jobs, especially those whose tasks can easily be automated (e.g. reception, information provision, cleaning of common areas, menu ordering and food delivery, etc.). That is why many employees perceive RAISA technologies as a threat to their jobs and resist using them.

 

Financial management

 

From a financial perspective, the use of RAISA technologies allows for significant labour costs savings because RAISA works 24/7 and may serve numerous customers simultaneously. On the other hand, RAISA technologies are associated with various financial costs for acquisition, installation, maintenance, updates, costs for hiring specialists to operate and maintain the robots/kiosks/chatbots and costs for training human employees to use them.

 

Supply chain management

 

The adoption of RAISA technologies allows the integration of the information systems of suppliers and travel, tourism and hospitality companies. This has already started at the beginning of the century when tourism websites introduced back-to-back XML connections. These connections allow, for example, the inventory of hotels, rooms and their availability from one website to be visualised on another website. RAISA technologies allow much further integration – for example a booking made by a customer through a travel chatbot of one company (e.g. a tour operator or online travel agency) could be automatically registered into the booking system of that company’s supplier (e.g. a hotel chain).

 

Marketing management

 

RAISA technologies would transform the perception of tourism and hospitality product. In the future, we will observe the division of travel, tourism and hospitality companies into two main large groups – ‘high-tech’ vs ‘high-touch’ companies with various shades of grey in between them. ‘High-tech’ tourism companies will rely mostly on RAISA, while ‘high-touch’ ones will prefer to use human employees.

RAISA allows the implementation of automated pricing of products based on sets of rules and real-time data on buyer behaviour of customers. At the extreme case, artificial intelligence would allow personalised pricing, i.e. separate price for every single customer based on his/her willingness to pay, leading to revenue maximisation.

RAISA will change the distribution of tourism products as well. For example, it is already possible to order pizza or search for information about destination via digital voice assistants such as Amazon Echo. Travel, tourism and hospitality companies can develop applications (called ‘skills’ for Amazon Echo) which customers can install on their digital voice assistants and use them for bookings, similar to mobile phone applications.

Of course, not every process, activity or task that can be automated, should be automated. Companies need to consider the costs and benefits of using RAISA technologies and adopt only those that are relevant to their business.

 

The implementation of RAISA training at education

The proper usage of RAISA technologies would require further training of the staff so that they are able to utilize most efficiently the devices and software packages. Therefore, digital skills would become crucial for the next decade. Universities will need to change the curricula of their tourism and hospitality programmes and emphasise the digital skills that students would need to work successfully in the tourism industry of the future. Tourism and hospitality companies would have to organise regular training on digitals skills, and ad hoc training when new RAISA technology is introduced. In addition to the digital skills, tourism and hospitality employees must develop their social skills and emotional intelligence because they will allow them to stay relevant to the needs of the tourists and be more competitive on the labour market, where they will compete for jobs not only with other human employees but with RAISA technologies as well.

 

By Stanislav Ivanov: Professor, Varna University of Management, email: stanislav.ivanov@vumk.eu, web: http://www.stanislavivanov.com

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The opinion piece is based on the following publication: Ivanov, S. (2019). Ultimate transformation: How will automation technologies disrupt the travel, tourism and hospitality industries? Zeitschrift für Tourismuswissenschaft 11(1), 25-43. DOIhttps://doi.org/10.1515/tw-2019-0003 URL of the pre-print: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3335811

 

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