Hotels are accelerating the use of artificial intelligence and lean staffing models as labour costs surge towards $131 billion in 2026, forcing a structural rethink across the hospitality sector.
John Flood, CEO of Archipelago Hotel Company said the industry is undergoing deep shifts driven by changing traveller expectations and global disruptions.
Flood said: “They're looking for experiences and solutions when they're traveling."
He likewise noted that demand is moving beyond basic accommodation to more personalised offerings.
These structural changes are compounded by rising complexity in operations. Hotels are no longer just operators but must deploy integrated systems across booking, reservations and distribution. “
Highlighting the need for end-to-end digital infrastructure, Flood added: "Technology is another thing that's no longer optional."
Where artificial intelligence comes into play
Artificial intelligence is emerging as a key lever to manage both cost pressures and service expectations.
As Flood explains it: “We have AI predictability… it helps a lot with pricing, with yielding, with forecasting."
He added that AI is also enabling more personalised services and automating repetitive tasks such as customer interactions through chatbots.
He underscored the shift towards data-led operations by saying: “Managers themselves can use AI to make faster and better decisions."
Relevant challenges
However, labour shortages remain the most immediate constraint, particularly in Europe and the US, especially as workers are now choosing to work in technology and fintech rather than conventional hospitality.
Flood said: “It's just getting more and more difficult to hire young staff."
In response, hotels are redesigning operating models to reduce reliance on manpower.
“You got to design hotels these days that they just run on fewer staff,” he said, pointing to the growing use of self-service kiosks and automation.
Operators are also adopting flexible workforce structures, with employees taking on multiple roles within a shift. At the same time, businesses are simplifying menus and services to maintain efficiency without compromising quality.
As structural change accelerates, the industry’s ability to balance automation, guest experience and workforce expectations will define its competitiveness in the years ahead.
