Unless you’ve been living under a rock (one that’s large enough to block a Wi-Fi signal), you know that Artificial intelligence (AI) is the key to unlocking the next level of business performance in hospitality. With AI, hospitality businesses can create better guest experiences, improve operational efficiency and increase revenue. But to make the most of AI, they need to adopt a people-centric approach that focuses on the true needs and desires of their team members and guests.
Enter design-led thinking. This approach to problem solving puts the needs and expectations of users at the center of the process. It involves empathizing with users, defining their problems, generating ideas, prototyping solutions and testing them, seeking user feedback to incorporate into the next iteration of the solution. By first understanding their problems and expectations, and co-creating solutions with them, design-led thinking helps to create products and services that are desirable, feasible, and more importantly, viable.
Complimentary Forces: AI and Design-Led Thinking
At the heart of the combined power of AI and design-led thinking is the notion that AI can enhance the human-centered approach of design-led thinking by providing data-driven insights, automating tasks and enabling new capabilities. Design-led thinking can also foster creativity and innovation by breaking down silos and promoting a collaborative, cross-functional approach to problem-solving.
One example of design-led thinking driving an AI deployment is Marriott’s launch of its Marriott Bonvoy Tours and Activities. While Marriott has multiple partners in its Tours and Activities platform, we are going to focus on Hopper’s PlacePass AI solution. PlacePass is an AI search engine that provides personalized and relevant recommendations to travelers based on their preferences, interests and purchasing behavior, allowing them to find and book local
experiences such as tours, activities and attractions. The PlacePass platform also enables Marriott Bonvoy members to earn points when booking an experience.
Marriott employed design-led thinking when creating Marriott Bonvoy Tours and Activities. By applying design-led thinking, Marriott empathized with its customers, who sought not only lodging, but also unforgettable and customized experiences. By integrating PlacePass into Bonvoy Tours and Activities, Marriott was able to provide more relevant and tailored recommendations to its customers based on their past stays, purchasing behaviors and feedback.
PlacePass also uses AI to optimize its pricing and inventory decisions and to monitor and improve its customer service. With its AI partner, PlacePass, Marriott transformed its business model from simply offering accommodation, to providing memorable experiences to its travelers. By transforming, Marriott will increase its appeal to Millennials and Gen Z travelers, who value experiences that are customized and authentic and are on track to become the top travel spenders, overtaking Baby Boomers, in the near future.
Smaller companies can leverage design-led thinking and AI to transform their businesses, as well. Let’s look at the Storied Collection, a new boutique hotel group launched in 2022 with 28 properties that focuses on historical buildings, such as castles, manor houses and estates across the UK and Ireland. The Storied Collection used design-led thinking to create unique and immersive experiences for its guests, based on the stories and cultures of the destinations where its hotels are located. By using AI, the Storied Collection was able to personalize its offerings and services, such as curated playlists, local guides and digital concierges based on the guests’ preferences and feedback. The Storied collection also used AI to optimize its pricing and marketing strategies based on data analysis and customer segmentation.
In the quest to identify cost-saving opportunities, systematically tracking acquisition costs offers significant opportunity. Thanks to a costly digital market, hotels in the U.S. are now paying 15 percent to 25 percent of guest-paid revenue to acquire their customers.
By contrast, in 2008, this metric was closer to 10 percent to 15 percent. Managing these costs requires tracking them, but acquisition costs are scattered on most hotel
P&Ls. Some costs, such as wholesale commissions, don’t appear at all. Commissions, loyalty costs, channel and transaction fees and sales and marketing expenses have been viewed in part as a “cost of doing business” and largely as a fixed fund with incremental increases each year. Some owners are asking their management teams to view these investment funds with fresh eyes and to align spending to a planned optimal business mix target.
That means a hotel has a target for each type of business such as OTA, Brand.com and GDS, as well as each rate category such as government, consortia and Rack/BAR. The total spending pool is set based on segment and channel targets and is capped for cost control purposes. If a hotel oversteps a predefined OTA target and overspends on commissions, that limits the funds to pursue digital campaigns through Brand.com.
This is a new opportunity for a hotel to manage a meaningful cost category. It gives the revenue team a dual focus, which lets them control costs. In the digital market,
they not only have to source their demand, they have to do it as efficiently as possible given what’s available in their markets. This shifts them from a top-line focus to one concerned with flow-through to profit.
What’s Next? A Practical Guide to Getting Started Design-led thinking is a non-linear process, comprised of the following six (6) steps:
There are many possible steps that hospitality organizations can take to kick-start a design-led thinking AI deployment, but here are four examples that can be used to begin to think strategically about the process:
- UNDERSTAND: Identify a specific problem or opportunity that can benefit from a user-centric and innovative solution, such as improving customer satisfaction, increasing revenue or reducing costs.
- EMPATHIZE: Conduct user research to empathize with the target audience and understand their needs, pain points, and expectations relative to the specific problem/opportunity you’re addressing. Use methods such as interviews, surveys, observations, and the creation of user personas to gather insights.
- DEFINE: Define the problem statement and the user goals concisely. Use tools such as problem statements, user stories, and “how might we” questions to frame the challenge. Following is a sample problem statement: “How might we create a seamless and personalized check-in experience for hotel guests using facial recognition technology?”
- IDEATE: Generate as many ideas as possible to address the problem/ opportunity and meet the user goals. Use techniques such as brainstorming and sketching to explore different possibilities.
Eliminate Friction: Design-Led Thinking and User Adoption
According to research published in the Harvard Business Review, of the nearly $1.3 trillion spent on digital transformation in 2022, approximately $900 billion was wasted. This implies that only 30% of the digital transformation projects achieved their intended outcomes, while the rest failed to deliver value or meet expectations. One of the main reasons for this failure is the lack of user adoption, which is often caused by poor change management and communications, complex software and resistance to change.
The Skift/AWS 2023 Digital Transformation Report for Travel and Hospitality had a similar finding, reporting that 31% of respondents cited “Employee Adoption or Support” as the second biggest challenge they faced in their digital transformation efforts, second only to the 42% that cited “Budget Constraints”.
Using the human-centered design-led thinking approach can help foster user adoption by creating solutions that are more relevant, impactful and user-friendly. Human-centered design is a product development methodology that focuses on empathizing with the end users and addressing their needs and expectations.
By involving the users throughout the design process, from research to testing, human-centered design can ensure that the solutions are aligned with the users’ goals, pain points, and feedback.
The Future Landscape: A Paradigm Shift in Hospitality
The marriage of AI and design-led thinking (Design/AI) is the industry’s new “power couple” that holds vast potential for reshaping hospitality from the ground up. By aligning organizational teams and putting the needs and expectations of users at the center of the process, fostering a culture of change and managing AI development and deployment strategically, hospitality companies can transform their operations and elevate the overall guest and team member experience. This represents much more than a technological advancement; it signifies a true paradigm shift in the way hospitality is approached.
As the industry embarks on this transformative journey, the integration of AI with design-led thinking is poised to redefine standards and set new benchmarks for excellence. The future landscape of hospitality will be characterized by a seamless blend of integrated technology and genuine human-centric design, creating an environment where guests and team members not only experience the myriad benefits of AI but also feel a deeper connection to its creation, application and adoption.
By embedding design-led thinking into the process, organizations are not merely applying a methodology for development; they’re embracing a powerful philosophy that places human experiences at the forefront of innovation—which is the very essence of hospitality.
Using the human-centered design-led thinking approach can help foster user adoption by creating solutions that are more relevant, impactful and user-friendly. Human-centered design is a product development methodology that focuses on empathizing with the end users and addressing their needs and expectations. By involving the users throughout the design process, from research to testing, human-centered design can ensure that the solutions are aligned with the users’ goals, pain points, and feedback.
