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  • Writer's pictureSaurabh Sharma

An AI assistant will also help you in negotiating better prices


A generative AI assistant shows terrific capabilities in search. But there is more. Picture this: 

  • An AI tool helps you in identifying the best product to buy

  • It then goes on to recommend the best place to buy it from.But it doesn’t stop there

  • It goes further and also helps you in negotiating a better price

Price negotiation is a significant use case for Gen AI assistants. I’ve been researching this space as a side project. Here’s a quick summary of what I’ve discovered. 

  • There’s a distinct user need to get better prices for products and services (a vast majority of people that I spoke with were not sure if they are get the best deals)

  • People across cultures and geographies are also prepared to pay for a service that delivers better negotiated prices 

Such an AI-enabled service that delivers superior negotiated prices for consumer products and services could significantly impact many industries. Hotel booking is one that customers talked about first.

AI-led price negotiation

Tools like DoNotPay have already demonstrated the ability to negotiate better rates with service providers. In the future, AI chat products could negotiate hotel prices by interacting with hotel booking systems or even with human operators. This could involve AI presenting arguments based on market rates, customer loyalty, etc. and secure a better deal. 

Here is a high-level, five-step user flow for a hypothetical AI mediated hotel booking experience: 

This has major implications for the hospitality industry encompassing players engaged in lodging, accommodation, food and beverage, travel and tourism, and entertainment.

  • Customer Experience: AI negotiation could enhance the customer experience by securing better deals, while saving customers time and effort. This could lead to increased customer loyalty and positive word-of-mouth for hotels that accommodate such negotiations. (See this)

  • Revenue Management: AI could significantly enhance hotel revenue by using predictive modeling to analyze historical data and demographics, allowing hotels to increase revenue by targeting the right guests with the right offers at the right time. However, AI tools starting to negotiate prices could challenge traditional revenue management strategies and force hotels to adapt. (See this)

  • Marketing and loyalty programs: AI can help hotels create customized experiences that cater to individual preferences and needs, thereby encouraging long-term loyalty and positive guest relationships. This could also influence the design of loyalty programs and marketing strategies, as these tools could factor in loyalty program benefits or promotional offers into their negotiations. (See this)

This will also impact online travel agencies (OTAs) 

With an AI assistant negotiating prices and making bookings, OTAs will also need to evolve their business (E.g. Expedia Group and Booking Holdings for US and Europe and + Qunar for China; See this). OTAs like these will need to find new ways of bringing value to customers beyond aggregating booking options.

This could also reconfigure the job landscape

The automation of certain tasks, such as check-ins and housekeeping, is already impacting  hospitality jobs. If AI tools take over negotiation tasks, it could also impact jobs in sales and customer service. (See this)

So, what can hotels do?

  1. Differentiation: Will be key to avoiding commodification and will be rooted in the job the customer expects the hotel to do for them (JTBD). This could lead to ideas for unique and personalized experiences. Hyper-personalization (see this) and differentiation via location and design will become critical (see this).

  2. Find the customer job to be done (JTBD) and use it as the foundation for differentiation (CX): Customers will need to be put at the center of decision-making (more here), and identifying the customer “job to be done,” will become vital. 

  3. Differentiation through experiential marketing: Leaving a lasting impression will become more important than ever (see this). Engaging the senses (sense marketing) will become more critical in hotel marketing. 

  4. Deeper customer relationships: The ‘job to be done’ will become the primary basis of a strong customer relationship. This will make customer relationships more personal. 

Implications for other industries

The impact of AI negotiation tools won't stop here. Any industry that involves price negotiation could potentially be affected. This includes sectors like airlines, real estate, where AI tools could negotiate property prices or rental agreements. Even the broader retail industry could be impacted as AI starts negotiating discounts and special offers (see this). 

Research is revealing many opportunities for Gen AI in a consumer setting. Where do you see the next big use case? 

Balakrishnan Satyam and Derek Punsalana BIG thank you to the both of you for your feedback and inputs for this work.

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