Legal Tips with Richard Sheinis: AI In Hospitality

By Richard Sheinis | June 25, 2023

Artificial intelligence (“AI”), such as ChatGPT, is all the rage everywhere you look, and hospitality is no different.  Before we delve into the uses and risks of AI in hospitality, let’s review what AI is and how it works.

Most AI being deployed uses machine learning.  Although machine learning is a type or subset of AI, they have come to be used interchangeably.  Machine learning is the ability of a machine to think like a human being or imitate the human thinking process.  This allows machines to solve problems like humans would, only faster and, frequently, better.  Machine learning has been defined as giving computers the ability to learn without being explicitly programmed.  It uses massive amounts of data as training data for the computer to train itself to find patterns or make predictions.

In the hospitality industry, AI tools are becoming available to enhance the guest experience, streamline processes, and control expenses.  One example is the use of Chatbots to answer questions and address guest concerns.  These Chatbots are available any time of day and can be offered in multiple languages.  Not only would this type of guest service save money by not employing live operators to respond to guest concerns, but the machine learning aspect of the process can provide better or more personalized answers and recommendations to guests.

The processing of guest transactions can also be used to provide information that is more tailored to the guest’s preferences.  AI can adjust roam pricing in real time based upon world news, social media, and even local events, to maximize pricing.  AI is being used to track guest activities and schedules for housekeeping and other hotel staff assistance.

While AI opens up a world of new opportunities, it is advisable to look before leaping into the world of AI-generated hotel service.  Understanding the risks and potential failures of AI is not only recommended, but imperative, before employing this new technology.  A few of the concerns are:

1. AI Is Not Always Right. There are numerous examples in various industries of AI platforms simply providing the wrong answer.  In my legal field, an attorney submitted to the court a brief written entirely by AI.  Unfortunately for the lawyer, he did not check the brief for accuracy. It turned out that the brief had numerous inaccuracies.  The attorney ended up drawing the wrath of the judge.  Depending upon how you use AI in the hospitality industry, consider how you will check the accuracy of the AI work product prior to its implementation.
2. Privacy Concerns. When using AI, you will likely need to submit information to the AI platform in order to obtain a response.  If the information provided, such as guest information, contains personal details, various privacy laws will likely be implicated.  You should consult with your privacy officer or privacy counsel to determine if providing personal information to an AI platform is permissible or if certain guardrails need to be placed around such disclosures so as not to run afoul of privacy laws.
3. Some uses of AI may require you to provide the AI platform with confidential or proprietary information about your enterprise.  Evaluate the risks of this potential lack of confidentiality within the AI platform before exposing such sensitive information. Since AI platforms use client data that is input into the platform to enhance its learning capabilities, make sure you know how your confidential information might be used or potentially disclosed to others.
4. Intellectual Property. Intellectual property has various protections under the law to maintain ownership rights. If you disclose intellectual property to the AI platform, you may be losing legal protections.
5. AI Security. As with any platform to which you disclose IP, confidential, or personal information, check the security of the AI platform and how a breach of the platform would be handled. Consider “red teaming” the AI platform.
6. Policies or Guardrails. Most companies feel that if they do not engage in the use of AI, they will fall behind their competitors.  While there is certainly much to be gained from the use of AI, rather than allowing employees to individually determine when and how to use AI, it is recommended that an enterprise adopt certain policies, processes, or “guardrails” to govern how they will use AI.

I hope this short primer provides insight into the benefits, risks, and mitigation of those risks, for the safe use of AI to improve your hospitality enterprise.