Hotels turn to AI, automation to drive profitability
Hotels turn to AI, automation to drive profitability
NATIONAL REPORT – Amid macroeconomic pressures, rising costs and a decline in international travel, the hotel management sector is cutting spending in some areas, but technology investment is viewed as a crucial strategy to maximize profitability in the years to come. In fact, hotel operators and investors see technology as a potential solution to current economic challenges.
Hoteliers are investing in a range of artificial intelligence (AI) applications, including revenue management, personalization and automation of everything from guest services to tax compliance. According to a recent Phocuswright survey of hotel management companies and hotel investors with U.S. holdings, AI is key to helping hoteliers survive and thrive via unprecedented operational efficiency.
Macroeconomic pressures reshape hotel strategies
While U.S. economic indicators have been mixed in 2025, ongoing inflation, high interest rates and a sluggish economy are taking their toll. Hotel management companies and investors indicate a range of macroeconomic trends are impacting hotel cost structure. More than half (55%) include labor costs and staffing shortages among the highest-impact trends, and roughly four in 10 (41%), cite inflation and insurance premiums/risk management costs, respectively.
The hotel sector is also being impacted by a decline in international visitation. Inbound international visits to the U.S. are projected to decrease 6.3% in 2025. More than half of survey respondents indicate business from international travel has decreased in 2025, while only 12% report an increase.
These mounting pressures have forced hoteliers to adjust their operational strategies in a variety of ways. Most commonly, hotels are reducing staffing levels and delaying new hires, stretching existing resources. Notably, however, economic uncertainty is also fueling technology investment. Technology is viewed as a key way to improve operational efficiency, and these tech investments are more likely to be prioritized over other strategies.
A multifaceted technology playbook
Hotel managers and investors often consider multiple factors when evaluating the ROI of a new operational technology tool. Improved guest satisfaction is the most commonly cited goal influencing tech investment, but hoteliers also consider how seamlessly the tool will integrate with existing systems, the ability to reallocate staff or reduce headcount and cost and/or time savings.
In the current environment where hotels are already operating with limited staff, technology that automates processes and maximizes efficiency becomes even more important.
“At the core, AI enables us to shift from reactive to predictive and prescriptive decision-making, driving efficiencies, enhancing guest experience and unlocking entirely new revenue streams,” said one hotel management leader in a survey response. “Ultimately, AI is not just a technology investment for us, it’s a profitability engine, a cultural shift and a long-term competitive advantage.”
While AI is the top strategy for driving profit overall, the technology is also powering many of the other profit-driving efforts hotels are focusing on, including revenue management, personalization, marketing and operational efficiency. Hoteliers see the highest potential ROI in AI applications focused on guest service automation (56%), revenue forecasting and dynamic pricing (50%) and marketing and personalization (46%). However, hotel managers and investors are investing in AI across many areas other of hotel operations.
Hotels’ multi-faceted approach to AI encompasses several different objectives. Among them:
- Improving the customer experience (e.g., guest service automation)
- Optimizing decision-making (e.g., prediction and analytics tools to drive pricing and marketing decisions)
- Optimizing operational efficiency (e.g., automation)
Some of these technologies are flashier and more visible than others but all play a role in boosting hotel profitability. AI robots, for example, may garner the most headlines, but the technology tools that drive behind-the-scenes insights and efficiencies are essential for hotels to remain competitive in the years to come.
Optimizing efficiency across all areas of operations
AI is creating huge opportunities for automation across hotel operations. Some AI efficiency tools enable capabilities that simply were not possible previously, such as intelligent scheduling, optimized energy management, inventory control, predictive maintenance and supply chain optimization. Other AI tools and complementary approaches, such as robotic process automation (RPA), make it possible to automate tasks that have traditionally been done manually, freeing up crucial human resources at a time when staffing levels are strained.
One hotel management executive said, “I believe that introducing end-to-end automated workflows (RPA/workflow engine) in the hotel management side can significantly reduce the burden on the operation team, allowing human resources to focus more on high-value activities.”
Another respondent said, “We are investing in AI tools that streamline guest communication and overall experience to mitigate the downside of the labor shortage (and high overhead in general). We believe this will help increase our NPS [net promoter score] and therefore RevPAR [revenue per available room].”
Agentic AI for compliance workflows
One opportunity for automation that is sometimes overlooked is tax compliance. Compliance is an operational necessity in hotel management and much of the process can now be automated, saving time and resources. Lodging tax compliance can be a burden on organizations, particularly at times when organizational change is underway. Only four in 10 respondents (42%) are confident in their organization’s ability to maintain lodging tax compliance while scaling or restructuring operations.
By transforming compliance from a manual process into an intelligent, automated function, Avalara helps hotel operators reduce errors, lower costs and free staff to focus on growth and guest experience. In a period of economic pressure and lean staffing, automation in compliance isn’t just a convenience; it’s a competitive advantage.
Looking ahead
The hotel sector is at an inflection point. Economic pressures are unlikely to ease soon, and operators will continue navigating staffing shortages, cost inflation and shifting demand patterns. Yet the path forward is clear: Leaders increasingly are betting on technology, led by AI and automation, as both a buffer against disruption and a catalyst for long-term competitive advantage.
Vici to acquire seven Nevada casino resorts, including icon on Las Vegas’ skyline
Vici Properties, a publicly traded real estate investment trust focused on gaming and entertainment properties, has a deal to acquire seven Nevada casino properties from Golden Entertainment for $1.16 billion in a sale-leaseback agreement.
The deal would strengthen Vici's foothold in Las Vegas' gaming real estate market and establish its entry into the lucrative local gaming segment, which primarily targets residents rather than tourists.
The Golden Entertainment portfolio includes the Strat Hotel, Casino & Tower on the North Las Vegas Strip; Arizona Charlie's Decatur; Arizona Charlie's Boulder; Aquarius Casino Resort; Edgewater Casino Resort; Pahrump Nugget Hotel & Casino and Lakeside RV Park & Casino. The properties total roughly 362,000 square feet of casino space, more than 6,000 hotel rooms, 4,306 slot machines and 78 table games.
The Strat is the premier casino resort in the portfolio, known for a 1,149-foot structure that's the tallest freestanding observation tower in the United States, according to Golden Entertainment. The Strat offers thrill rides, an 80,000-square-foot casino, 10 restaurants, two rooftop pools, a fitness center, retail shops and entertainment facilities.
The proposed deal arrives as Las Vegas' hotel performance has cooled following three years of strong post-pandemic recovery, according to CoStar analysis. Revenue per available room declined 11% year to date through August compared to 2024. Group demand has dropped sharply, though transient, or short-term, travel remains slightly positive. The market faces tough comparisons against 2024's historic highs, including a record-breaking Super Bowl weekend.
Golden Entertainment reported third-quarter revenues of $154.8 million, down from $161.2 million in the third quarter of 2024. Net loss for the third quarter was $4.7 million, compared to net income of $5.2 million for the same period a year earlier.
Golden Entertainment attributed the revenue decline and quarterly loss to lower hotel occupancy rates at its casino properties during the year.
Vici's rationale
Vici structured the deal as a triple-net master lease with an initial annual rent of $87 million, representing a 7.5% acquisition capitalization rate. The 30-year lease includes four 5-year renewal options. Rent escalates 2% annually beginning in the third year. Blake L. Sartini, Golden Entertainment's chairman and CEO, will control the newly formed operating entity through the lease.
In connection with the transaction, Vici would assume and immediately retire Golden Entertainment's outstanding $426 million of debt.
Vici said it is pursuing the acquisition for multiple strategic reasons. The company favors diversifying its Nevada real estate holdings in a jurisdiction known for stable regulation and low tax rates. The deal also requires no external financing, as Vici plans to fund the transaction using cash on hand, net proceeds from forward sale agreements and its revolving credit facility.
"Vici has sought exposure to the attractive Las Vegas locals gaming market since our inception," John Payne, Vici's president and chief operating officer, said in announcing the deal.
Upon closing, Golden Entertainment's operating company would become Vici's fifth-largest tenant by annualized cash rent and 15th tenant overall, furthering the REIT's tenant diversification strategy.
The transaction requires approval from a majority of Golden Entertainment's stockholders. Sartini, his son Blake Sartini II, and affiliated trusts, holding about 25% of the firm's voting power, have signed an agreement supporting the deal. The companies expect to complete it in mid-2026.
Frank Sinatra once owned this hotel and casino. Business has been anything but melodious since.
Trouble Ahead
A New Life
That plot twist in the story of Cal Neva is over, and the current owner is hopeful that the curse of the property has been lifted. McWhinney partnered with Proper Hospitality to convert the Cal Neva as a Proper-branded resort. Proper currently operates hotels in downtown Los Angeles, Santa Monica, Austin and San Francisco. Proper’s website states that the new Lake Tahoe Proper Resort & Casino will open in 2027 with 198 guestrooms, suites and private villas, two lakefront pools, multiple restaurants and bars, a casino and, of course, the historic Frank Sinatra Theater.
“The Cal Neva is one of those rare places that transcends hospitality. It’s an icon of American culture with a deep history and a lasting connection to Tahoe and to many of us who grew up spending time there and still see it as one of the most special places on earth. Reviving a property with this kind of legacy is both a privilege and a responsibility we take seriously,” said Brian De Lowe, co-founder and president of Proper Hospitality.
Redesign of the property is being led by celebrity designer Kelly Wearstler, well known in the hospitality space for her past work on the Viceroy Hotels brand. She has also done work for clients such as Gwen Stefani and Cameron Diaz. Wearstler is married to Brad Korzen, who, along with De Lowe, co-founded Proper Hospitality in 2014.
Cal Neva is Proper’s third collaboration with McWhinney. “The Cal Neva deserves a revival that honors its past while making it relevant and inspiring for the next generation,” De Lowe said.
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