How Can AI Drive Hotel Revenue?

AI-powered tools are making their way across industries and becoming integrated into everyday processes, and the travel and hospitality industry is no exception. If your organization needs a better strategy to optimize hotel revenue, it might be time to turn to new, innovative approaches built around AI.

The adoption of AI in travel and hospitality has surged, with 62% of hotels now using AI-driven solutions to improve guest services. With a range of applications influencing operations management, occupancy rate modeling, and personalized guest interactions, AI is proving to be a versatile resource with potential to increase operational efficiency, loyalty, and, through its ability to transform guest interactions and experiences, hotel revenue.

Let’s explore how AI and tools like Mobi Intent Driven Search™ can help customize the guest experience, reduce cancellations, and promote direct bookings.

AI-Driven Personalization

One of the most direct, effective ways AI can be used to boost hotel revenue is by enabling hotels to offer personalized experiences that cater to individual guest preferences.

Traditional booking searches limit personalization. They focus on fixed parameters like destination, dates, and number of guests. This process forces guests to do the bulk of their research and planning in advance of ever visiting the hotel website. Of course, engaging travelers earlier in their inspiration and discovery journey could lead to increased bookings.

Mobi’s AI tool for travel, Intent Driven Search, relies on natural language search capability and proprietary data sets to understand guest preferences and intent before matching them to your organization’s best-fit properties around the world.

Whether your guests are searching for a quiet, relaxing getaway or an activity-packed vacation, Mobi can analyze their search terms and provide tailored recommendations for destinations and properties that match those desires in real time.

The benefit of offering personalized hotel recommendations based on proximity to a guest’s ideal travel activities or specific amenities is that it can lead to increased bookings and higher overall satisfaction. A guest who can save time on travel planning or even feel inspired by their search results is more likely to book directly through your hotel. More importantly? They might also return to your website to plan and book future stays.

With Mobi, tailored trip recommendations can go beyond properties. You can use detailed information, offered by guests through their searches, to upsell services they actually want, such as room upgrades, additional dining options, or tour packages. Receiving these recommendations at the right time and earlier in the planning process could encourage guests to spend more and increase your TRevPar.

Increasing Hotel Revenue by Reducing Cancellations and Maximizing Occupancy

For many hotels, cancellations are a significant pain point. Hotel and travel management companies have seen revenue losses of nearly 7% over the past five years due to cancellations and no-shows. Unfortunately, last-minute events such as flight delays or changing weather forecasts often result in booking gaps that are hard to fill, which leads to lost hotel revenue at the end of the day.

Whether cancellations are due to unforeseen circumstances or not, hotels see fewer cancellations from direct bookings (19%) compared to higher rates from third parties (up to 39%). When you set your user experience apart by bringing AI-powered search into the fold and adding it directly to your website, your guests can more clearly express their needs and expectations from the moment they begin the booking process. With a clearer plan, easier access to the experiences they want to have during their trip, and convenient booking available on your website, guests are less likely to make changes later on. Mobi Intent Driven Search aligns guest search queries with their ideal properties and travel experiences. This cuts back on the mismatch between the expectations of your guests and your actual offerings, which might also contribute to a reduction in the likelihood of cancellations.

With more effective, AI-powered strategies to reduce cancellations, hotels may maintain higher occupancy rates and avoid losses in revenue caused by empty rooms.

The Impact of Direct Bookings on Hotel Revenue

While third-party bookings can help fill rooms, they come at a cost, with commission fees often ranging from 15–25%. Online travel agencies (OTAs) receive 52% of bookings—which means hotels are left to bring in less than half of bookings directly through their website.

Intent Driven Search gives hotels the opportunity to offer more personalized and convenient booking experiences—which can help draw guests away from third-party platforms. Instead of a generic search process built around travel dates, destination, and number of travelers, guests can ask for what they need in their own words and are met with customized recommendations that match their specific travel intentions. This makes your website the most appealing option not only for booking, but for planning stays more efficiently.

Based on their potential impact on hotel revenue, there are two clear advantages of more direct bookings. Your organization saves on commission fees and simultaneously develops better relationships with guests. With AI search, your team can gather first-party data about guests during the initial booking process, opening the door for personalized communications and offers down the line. If you’ve been looking for new ways to build long-term relationships with guests and encourage repeat bookings, AI-powered search can help you get there.

The Future of Hotel Revenue Management

With so much potential to improve guest experiences, the impact of AI on hotel revenue management could be transformative. AI search and discovery tools are revolutionizing how hotels manage search results and booking for guests—and they also provide hotels with additional information about guest preferences.

This means your organization can make more informed decisions based on popular services, locations, and experiences, helping you increase both occupancy and profitability. As AI continues to evolve, it will likely play an increasingly integral role in hotel revenue operations.