Effectiveness of AI in customer segmentation and personalization Dissertation

Chapter 1-Identification Of Research

1.1 Background of the study

Artificial Intelligence [AI] refers to the science of developing machines that can act and think like human beings. In the current era, emergence of AI brought a radical change in the customer experience [CX] (Zhang and Lu, 2021). Business paradigm has been changed in the last few years and courtesy of digital transformation reaching heights. In the hospitality sector, AI is playing a pivotal role as this has been used for multiple purposes whether it’s related to the customer segmentation, personalization, monitoring and predicting requirements. The decision making in the hospitality industry has become easy in the pursuit of AI (Zhang and Lu, 2021). Chatbots and virtual assistants powered by AI led to provide specific support to the consumers as well as handle reservation and further offer personalized recommendations. Hence, this system can stimulate conversation with the customers and enhances their satisfaction to the greater extent (Chowdhary, 2020). With the help of artificial intelligence, marketers can easily understand about the customer preferences and their behavioural pattern which supports in shaping the purchasing power of the customers. Artificial intelligence is supporting UK hospitality industry in terms of allocating customer data and further develops useful insights that results in boosting engagement, sales and loyalty. Mintel estimates that the volume of guests staying in UK hotels have been changed to 53.8 million to 16.1 billion (Mintel, 2023). This shows that UK’s hospitality market size has increased from past years. From the existing studies it has been witnessed that, in UK hospitality sector, AI is used to greater extent and it led to identify patterns, correlation and trends entitled with data via machine learning algorithms (Jiang et al, 2022). As a result, valuable perceptions regarding buyer preferences can be evaluated and accordingly decision could be taken.

Artificial intelligence is revolutionizing customer segmentation across the different platforms. AI tool such as predictive analysis used for data mining algorithms and on the basis of customer behaviour different groups had been developed and personalized suggestion given to them for gaining their attention. Thus, it can be stated that AI proves to be effective in creating customer segmentation and developing personalization which further helps in enhancing the productivity of the organization (Gao and Liu, 2023). On a critical note, it concerned with the potential threat biases and stereotypes which can negatively impacts the procedure of segmentation and personalization. Overreliance on AI can inadvertently ignore uniqueness and individuality of the customers. The categorization and pre-defined segments based on a set system that often ignores human values. The current dissertation will be based on assessing the extent up to which AI proves to be effectual in consumer segmentation and personalization in Holiday Inn (Huang and Rust, 2021). Furthermore, critical analysis of the literature will be done. Moreover, selected research methodologies will be shown along with providing justification. Consequently, outcomes will be developed and research questions would be addressed.

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1.2 Aim

The aim behind initiating current study is to analyse the effectiveness of Artificial intelligence [AI] in customer segmentation and personalization in the context of Holiday Inn UK.

1.3 Objectives

• To understand the significance of AI in UK hospitality sector.
• To assess the efficacy of AI in customer segmentation and personalization with regards to Holiday Inn UK
• To evaluate the challenges comprised with AI that negatively impacts customer segmentation and personalization in Holiday Inn UK.
• To recommend the competent AI strategies that supports in customer segmentation and personalization in Holiday Inn UK.

1.4 Research questions

Q.1 What is the significance of AI in UK hospitality sector?

Q.2 What is the efficacy of AI in customer segmentation and personalization in context of Holiday Inn UK?

Q.3 What are the challenges associated with AI that led to create negative influence on customer segmentation and personalization within Holiday Inn UK?

Q.4 What are the competent AI strategies which supports customer segmentation and personalization in Holiday Inn UK?

1.5 Overview of Organisation

Holiday Inn is one of the leading organizations in hospitality sector that has been owned by IHG hotels and resort [A British multinational hospitality company]. In UK, there is an average of 7,292 employees working in Holiday Inn. The organization has captured 26 % of the market share in UK which is huge in comparison to its competitors (Holiday Inn UK, 2020). Holiday Inn uses artificial intelligence with respect to attracting the large number of customers along with providing them personalised services. The vision of the organization is to create difference in the lives of individuals by providing them personalized services (Holiday Inn UK, 2020). The present research will be based on Holiday Inn as the company has undertaken varied technological advancement in the pursuit of AI for targeting and satisfying consumers.

1.6 Rationale

Artificial Intelligence provides incredible support for personalising consumer experience. However, it is also associated with the challenges, overdependence on AI results in impersonal experience. Many times, AI tools are not able to solve the issues of consumers and provide them same information as stored in the system which led to create frustration for the consumers (Jain and Aggarwal, 2020). Also, while detecting the pattern of consumer behaviour AI is not able to identify the individuality of the consumers and as a result, wrong information has been provided by the system. AI is one of the debatable topics specifically for hospitality sector (Jain and Aggarwal, 2020). It supports in creating personalised experience for the customers but it is further high in cost which increases the cost of operations and often higher prices have been charged by the consumers. Henceforth, this can be articulated that, there are certain points which supports the contribution of AI in customer segmentation and personalization. On the other hand, AI has also been criticised due to its high cost and advance technological functions that often ignores human value (Gkikas et al, 2022). Henceforth, by conducting study in this area, the efficacy of AI in the customer segmentation and personalization can be evaluated. Furthermore, challenges can be highlighted which creating negative influence on consumer segmentation and personalisation.

1.7 Importance of research

The study is based in two most important contextual components and those are consumers and technology. AI led to create varied opportunities for consumers as it analyses the behavioural pattern of the customers and accordingly services has been designed for the consumers (Anica-Popa et al, 2021). For hospitality business it is highly essential to create significant focus on the enhancing the satisfaction level of consumers and AI is providing this opportunity to companies so they can effectively focus on gaining larger customer segment (Anica-Popa et al, 2021). However, many of the businesses are unaware about the ways in which AI led to help in customer segmentation and personalisation. The current research will lead to specify significant focus on this area and effectiveness of AI with respect to customer segmentation and personalization will be shown (Anica-Popa et al, 2021). The outcomes will be proven significant for hospitality businesses as they can use findings for consumer segmentation and personalization that further led to enhance the over-all satisfaction of the consumers. Hence, this could be stated that, current study has been proven highly important.

1.8 Scope of the study

The scope of the study is wider as it comprised with showing correlation between technological advancement and consumer satisfaction. The outcomes will create a detailed understanding regarding the importance of Artificial intelligence in shaping consumer purchasing pattern. Personalization is a kind of marketing technique that is important for attracting the attention of consumer and this has become possible due to AI (Cloarec, 2022). There is large number of customers and it’s not possible to analyse the demand of each one. In this context, artificial intelligence focuses on all of these customers in a collective manner. There is specific correlation exists between technology advancement and satisfaction of the customers which will be covered in the present study.

1.9 Dissertation structure

Chapter 1- Introduction: In this chapter, background of the study would be shown along with emphasising on aim, objectives and research questions. Furthermore, rational behind conducting the study, significance and scope of the research will be shown.

Chapter 2- Literature review: This section will be comprised with undertaking in-depth analysis of the research area. The core focus would be implemented on analysing different viewpoints of the author and appropriate analysis would be done.

Chapter 3- Methodology: This chapter will highlight the selected methodologies which have been used for conducting the research. Furthermore, rationale behind selecting each method will be shown. In this manner, appropriate justification will be provided.

Chapter 4- Findings: This section will present the outcomes gathered from allocated data, primary data will be analysed and accordingly findings presented. Critical analysis of the key findings would be done.

Chapter 5- Discussion, Conclusion and recommendations: In this chapter relation between literature and findings would be presented and discussion will be done. Furthermore, conclusive statement would be made and this will be shown whether outcomes has addressed the aim or nor. Moreover, based on the findings, recommendation will be shown.

Chapter 2- Literature Review

2.1 Introduction

Literature review is delineated as a piece of academic writing that provides written overview on a specific topic. It concerned with undertaking an in-depth analysis of the topic by including varied viewpoints of different authors. Hence, an effectual understanding can be developed through literature review in research area. The present section will be based on conducting literature review and the effectiveness of artificial intelligence in customer segmentation and personalisation would be analysed. Critical analysis will be undertaken and accordingly positive and negative aspects would be analysed. The significance and efficacy of AI will be described along with highlighting the challenges.

2.2 Understanding the significance of AI in UK hospitality sector

As per the views of Mandapuram et al, (2020) Artificial intelligence is playing pivotal role in enhancing the operations of the hospitality sector, AI technologies can lead to navigate customisation and personalisation experience of the customers. It further supports in gaining insights related to customer data which has been proven highly beneficial. Therefore, hospitality organizations have been adopting technological advancement by using AI tools. Gao and Liu (2023) stated that in current era, it has become highly important for the companies to adopt technologies so that they can effectively become able to gain customer attention. This further supports in increasing the consumer retention rate in the organization. On the other hand, Babatunde et al, (2024) stated that, AI comes up with huge cost that led to increases the cost of operations in hospitality companies. Organizations who are using AI-oriented technologies charges higher prices from consumers which often act as negative aspect and frequently creates dissatisfaction in the consumers. Artificial intelligence comes with higher cost and due to this customer gets dissatisfied. It is essential to undertake cost management planning so that this challenge can be tackled and negative impact on the customer can be managed. However, it is not easy as there is need to undertake appropriate strategic planning in this area which is further concerned with higher cost. Thus, in-depth evaluation can help in approaching different alternatives which is cost effective and appropriate results can be gained accordingly. Therefore, it is important to develop significant focus on this area otherwise, this can result in creating dissatisfaction in the customers. This results in enhancing the satisfaction level of customers and interaction with the consumers can be enhanced to greater note.

In the view point of Zulaikha et al, (2020) AI creating significant support in completing the task. 24\7 services to customers have become easy due to AI. The queries of the customers can be easily solved and their doubts can be addressed via virtual assistant. It helps in creating sense of belongingness in the customers as they get 24/7 services. It is important to focus on customer satisfaction and AI supporting hospitality businesses in this context. In current era, customers mostly demand for effectual services specially in hospitality sector. The demand related to personalised services has been increasing to greater extent and creating huge support for consumers and therefore buyers only prefer those organisations which has been focusing on their needs. Whereas, Jain et al, (2020) stated that technology does not understands the emotions of people and this results in developing major challenge for organisation in terms of attracting the customer. Many times, when customers ask their queries or suggestions then, AI assistant only respond with the messages stored in their system. Henceforth, customers are not able to develop emotional interaction with the companies.

As stated by Rane Choudhary and Rane (2023) AI technologies can result in navigating safer environment in the organisation and contactless services can ne powered by AI. The digital check-ins and virtual concierges can often minimise face to face interaction along with maintain the social distancing norms. Hence, it is creating significant supports for the customers and therefore, appropriate support needs t be assured to them. Thus, there is no doubt in stating that AI can led to provide insights about the customers needs and preferences. On a strategic level, AI supporting UK hospitality industry in terms of shifting their behavioural pattern. On a contrary note, Gkikas and Theodoridis (2022) argued that, biggest disadvantage of AI comprised with losing customers due to lack of interaction. Human interaction is one of the major aspects that is required in the hospitality sector as this results in creating effectual interaction between customers and hospitality organisation and AI reducing this interaction due to which customers are not able to develop sense of belongingness with companies. This is creating serious issue for companies as they are not able to develop sense of belongingness with the customers.

In the viewpoint of Alves Gomes and Meisen (2023) hotel revenue management has become easy due to artificial intelligence. The predictive modelling can be used for predicting the future. Thus, this helps in setting significant idea related to using predictive modelling. The historical data could be used and appropriate prediction can be developed. This prediction proves to be essential for enhancing over-all experience of the customers. Umamaheswari (2024) articulated that hospitality organisation in UK such as Holiday Inn uses AI for undertaking predictive analysis so that necessary insights can be developed and future prices can be set as per increase in the demand of consumers (Holiday Inn UK, 2020). This helps in creating significant support for the companies in terms of attracting customers to larger extent. On the other hand, Hicham et al, (2023) stated that predictive analysis by AI can go wrong and this results in creating devasting impact on overall productivity of the business. Complete dependency on AI develops serious issues for the company as there is no assurance that whatever the prediction has been made by AI is correct. This can be proven wrong as well and due to this many organisations have to face huge loss. There is no doubt in stating that, AI has been developing significant support for the companies but complete dependency over this can led to create serious issues and often results in huge loss for the business.

In the article of Haleem et al, (2022) it has been identified that AI in hospitality sector results in reducing the human errors. The procedure of data management becomes extremely easy, automation feature by AI led to reduce the extreme burden on the employees in the company. AI plays pivotal role in reducing human errors as most of the task has been performed by the machine itself. As said by Khrais (2020) automation ensures that quick information has been given to customers and reduces the chances of typos and miscalculations. AI algorithms can support in taking appropriate decisions and it also enhances the customer experience to greater note. AI adapts the customers queries and reduces the likelihood of human error that can indulged while interacting with the customers. However, Bag et al, (2022) stated that AI systems are highly prone to make errors and sometimes it can be more than human errors. The technological glitch in the system can lead to consistent error which makes situation worse. Therefore, this cannot be stated that AI does not make any kind of errors, the system it itself has been made by humans and its run in accordance with the human and machine instruction.

As per the views of Gao et al, (2023) customer confidentiality in hospitality industry is highly important. There are numerous customers who books room at the hotel and experiences the services. The personal information of all of these customers has been stored in the system. It is the accountability of the organisations that they must protect the personal data of the consumers. Thilagavathy et al, (2021) revealed that with the help of AI, confidentiality of the customer can be managed. The system processes the customer information only when there has been valid legal reason given. The specific technological procedure has been implemented by the companies for increasing the security in the system. Whereas, Yau et al, (2021) argued and stated AI is a technology due to which there is huge threat regarding the breach of confidentiality. The data of the customer is not safe as hackers can easily access it and this can be used for illegal purpose as well. Privacy and security are one of the biggest concerns within AI which led to develop potential threat for people.

On the basis of above description, this can be stated that artificial intelligence has been proven important for UK hospitality industry as this is creating an effectual support for business in terms of enhancing the satisfaction of the customers. However, on a contrary note there are certain challenges associated with the usage of AI and if the focus has not been initiated on this area, then, this led to develop serious issues for the hospitality organisations.

2.3 Assessing the efficacy of AI in customer segmentation and personalization in UK hospitality sector

In the perception of Pereira et al, (2022) artificial intelligence has the capacity of segmenting customers hundred time faster in comparison to humans. The organisation can leverage the power of AI and often identify and differentiate customer on the basis of their interest, needs and behaviours. Hence, this results in allowing companies to target the consumers whose needs matched with the services of the organisation. For instance- Holiday Inn using AI for finding out the appropriate customers and the segmentation is done on the basis of the needs of customers. This is enabling organisation to attract large number of the customers (Holiday Inn UK, 2020). Whereas, Bharadiya (2023) stated that customer segmentation with AI is really a tough task, in this context the main concern aligns with data quality. AI algorithms rely on accuracy of information and completeness. This is important to assure that data is clean, relevant and up-to date. This is highly important for undertaking the procedure of customer segmentation. In case, manipulated data has been stored in the system then, this result in creating negative impacts on the over-all procedure and further, customer segmentation cannot be done in effective manner.

As per the views of Gigante and Zago (2023) AI predicts customer agitate with 90% of the accuracy, organisations can easily identify that why consumers has stopped using their services and what is leading to develop issues for them. Accordingly, protective measures can be taken and specific support could be assured to customers. As stated by Rana et al, (2022) currently, competition in hospitality industry has been increasing to greater extent. Customers have varied kind of options and therefore, if they feel dissatisfied with the services of one organisation then, they can prefer another company. Henceforth, customisation is essential so that from the large number of customers specific group can be approached and retained for lifetime and AI supports in this. On the other hand, Kotras (2020) revealed that integration of AI in existing procedures or marker processes requires appropriate planning. Technical expertise can help in the whole process and lack of expertise in this area results in ineffective outcomes. Further, there is the requirement for investment as employees in the organisation need to be trained regarding the customer segmentation process. The training enables employees to learn about the ways in which they can effectively focus on the ways through which AI can be used to perform the practices. Learning appropriate ways are highly important so that challenges can be minimised and effective results can be gained. Hence, this results in creating significant challenges for the organisation and often impacts the efficacy of operations. Therefore, appropriate strategies are needed to be taken in this area so that hospitality organisations can get support and effective outcomes can be experienced.

In the opinion of Rane (2023) AI increases the customer's lifetime value. Implementation of AI results in boosting customer retention and often enhances the profitability of an organisation. For example- Holiday Inn uses AI for customer segmentation and based on the search criteria of customers company prefers to segment customers (Holiday Inn UK, 2020). KATRAGADDA (2022) disclosed that footprints of the consumers have been followed by organisation and accordingly, their purchasing pattern has been known and actions are taken which helps in gaining the attention of the customers. In this manner, AI proceeds with customer segmentation and AI-powered customer segmentation has been proven a powerful segment for achieving business goals and improving satisfaction of the customers. Whereas, Mich (2020) revealed that AI algorithms prove to be good until they perform practices as per the training given to them. Nevertheless, incomplete datasets and unethical practices can result in performing wrong operations and this further results in targeting the wrong customers. Thus, it is important to hire technicians who can look into such concerns otherwise, huge issues will be faced by the company. In order to undertake the process of customer segmentation, it is important to hire a technical expert who can provide suggestions to the organisation.

In the context of personalization Manoharan et al, (2024) elucidated that traditional marketing methods within the UK hospitality business struggle while catering for the preferences of customers and AI-powered marketing personalized the services based on consumer needs. Thus, there is no doubt in stating that AI has been playing an effective role in creating distinct support for customers, especially by designing services as per their needs. The vast amount of data has been evaluated and AI algorithms uncover the valuable information related to customer behaviour, preferences and interest of the customers. For example- Holiday Inn uses AI-powered tools for providing suggestions to companies as per the needs of consumers and accordingly, services have been designed for specific consumers. However, Raji et al, (2024) stated that consistent personalisation of the services reduces creativity. When everything has been performed by AI then there is no creativity has been shown in the services due to which often customer gets dissatisfied. Employees in the hospitality business are not able to show their creativity as every decision is taken by AI with regard to personalising services. Personalisation is an important aspect in the hospitality industry so that consumer needs can be prioritised however, over-dependency on this area led to reduced satisfaction of buyers.

In the perception of Chandra et al, (2022) personalized services products and recommendations and customised messaging delivering the exceptional experience that leaves long long-lasting impression on the customers. AI uses consumer demographics along with past behavioural data such as; browsing history and purchasing history of the customers. Currently, social media has been used as a prime component for evaluating the behavioural patterns of customers. This platform provides an opportunity to understand buyers effectively. Accordingly, the decision has been taken and the satisfaction of the customers could be enhanced. On the other hand, Bhattacharya and Sinha (2022) stated that online platforms can often provide manipulated data related to customers which is not appropriate. The company often uses this information for the personalization of the services and this results in providing wrong recommendations due to manipulated information. The contextual information has depicted that AI can lead to impact the personalisation of services negatively if real and accurate information has not been gathered by the organisation.

As stated by Agarwal (2024) AI personalisation is concerned with involvement of artificial intelligence for providing customised consumer experience by using real-time consumer information. This ultimately led to deeper interaction with the customers and further enhanced overall satisfaction. Whereas, Yalamati (2023) argued and stated that consumer experience cannot be enhanced by depending on AI. The process of personalization only works in similar cases. There are varied numbers of customers and all of them have different kinds of needs and AI suggest similar kinds of recommendations to them. Henceforth, in many cases, customers get dissatisfied which develops significant issues for customers.

Based on the above information this can be stated that AI sets the basis for investigating consumer demographics and preferences. Accordingly, hospitality businesses make decisions and enhance the overall satisfaction of the buyers. AI supports in both components and those are customization and personalization. Technological advancement has been touching greater heights that led to support for companies to complete and automate their task. Most importantly, it has become extremely easy to develop connections with the customers. Personalised learning is used by AI for implementing customer-oriented decisions. Thus, there is no doubt in articulating that AI has been assuring significant assistance to hospitality organisations so that they can undertake specific decisions. This further helps in shaping the behavioural pattern of customers which is an important aspect for increasing the customer segmentation within the business. Henceforth, AI has been proven highly effective in enhancing customer segmentation and personalisation procedure.

2.4 Evaluation of the challenges aligned with AI that negatively impacting customer segmentation and personalization

In the viewpoint of Cheng and Jiang (2022) predictive segmentation and personalization create significant challenges for the business. However, it is the most substantial application that predicts the customer behaviour. It covers everything related to the customer, whether this is related to their behaviour, needs or any other element. It creates an effectual impact on the overall satisfaction of the consumers. The risk of the wrong prediction is equally present in the system and this results in negatively impacting the overall procedure. On a contrary note, Fui-Hoon et al, (2023) criticised and stated that wrong prediction takes place when humans who are assisting the technology make errors, employees or team who is looking upon the maintenance of AI are responsible for this. Technology works as per the instruction and system installed and therefore, it is the accountability of employees in the organisation that they must cross-check the information. Borenstein and Howard (2021) revealed that monitoring is an important component and lack of focus in this area creates destruction in the whole process and often prediction becomes wrong. Therefore, it is highly important to undertake strict monitoring so that appropriate decisions can be taken and significant support can be ensured to customers. Thus, monitoring must be undertaken at each stage to gain reliable and effective results.

As said by Regona et al, (2022) customers trust on organisations and shares their data and lack of privacy concern can result in privacy and security concerns which creates serious challenges for consumers. Customers are demanding for data privacy as AI technologies collect their personal information and there is a threat related to piracy of information. This is completely considered as illegal and therefore, organisation must specify focus on this area, not focusing on this result in reducing trust in customers. AI systems and specifically machine learning raising the concerns related to privacy due to their processing capabilities and therefore, customers are often not able to trust on AI. On the other hand, Wu et al, (2022) revealed that when an organisation uses larger dataset then the risk related to privacy and data concerns increases to greater extent and therefore, it is the accountability of the business that they must create significant focus on this area and accordingly smaller data set needs to be maintained. Lack of responsiveness by hospitality companies can result in increasing the risks of privacy concerns and therefore, significant focus needs to be placed on this area. Thus, it can be stated that privacy concerns result in unethical practices and negatively impact segmentation and personalisation. This often results in reducing the satisfaction level of customers and therefore, it is highly important hospitality organisations must adopt strict monitoring system so they can have idea regarding unethical practices and accordingly, timely actions can be taken.

In the opinion of Arrieta et al, (2020) human interaction is highly essential when it comes to developing interaction with the customers. Hospitality organisations create a seamless experience for the customers by creating a sense of belongingness in them. The food at the hotel and rooms of the hotel develops emotional connection. However, AI lacks in this area as it is completely based on technology and customers does not develop any kind of interaction when they interact with AI. Even the personalization recommendation does not work well as specific answers has been given by AI assistant. When customers start asking in-depth and cross-questions at that time AI fails in addressing queries. As a result, consumers get dissatisfied, AI is not able to form an emotional bond with the buyers and due to this customers are not able to form trust. Nishant et al, (2020) said that hospitality companies should not completely depend upon AI. The importance of human interaction needs to be understood and accordingly, support is required to be ensured to customers. A sense of belongingness needs to be developed in the customers so that the segmentation process can take place. Thus, it can be articulated that by focusing on human interaction customer service can be enhanced in the organisation and effectual support could be developed for customers.

As per the viewpoint of Bhat et al, (2021) the spread of misinformation due to AI-generated content raises a potential issue for the hospitality business. The system itself starts suggesting customers and often allocation manipulates information that leads to wrong segmentation of consumers. In such a situation, it becomes easy to differentiate between right and wrong information. It increases the likelihood of failure for the business. However, Bard et al, (2020) stated that an expert can easily track the coding and analyse whether the information accumulated in the system is right or not. It all depends upon the expertise in this particular field, technological glitches result in developing such kind of situation. Therefore, it is important to update the system frequently so that such type of situations can be handled.

In the opinion of Du and Xie (2021) AI-driven personalization enhances customer experience but at the same time, this system fails in recognising nuance within human behaviour. There is lack of emotional interaction with the customers. It is highly important to develop an emotional connection with consumers as this supports understanding their needs and desires in real period. AI processes limited information that has been gained on a practical note. This is one of the biggest limitations in this area and therefore, it is highly important to develop a significant focus on this area. Whereas, Zhang and Tao (2020) stated that cross-monitoring of the information can support in understanding the emotional values of customers. Everything should not be dependent on AI; companies must give responsibilities to employees so that can handle the system and cross check information. The AI should only be used as a supporting element rather than acting as a centre component. In this manner, effectual support can be assured to customers and further issues regarding lack of emotional interaction can be solved. Thus, there is need to implement specific monitoring system so that loopholes within the system can be identified and specific support can be assured to customers.

On the basis of the above-mentioned challenges this can be stated that there are varied types of issues concerned with AI that can significantly impact customer segmentation and personalisation. Thus, it is important for companies to look upon this area and experts must be hired who can look upon the issues and accordingly takes actions. Furthermore, cross-checking of the information is needed so that this can be assured that real-time information has been accumulated. By emphasising on this area, specific support can be assured to customers and their satisfaction level can be enhanced.

2.5 Conclusion

Conclusively; this can be stated that artificial intelligence has been proven highly significant for UK hospitality sector. It is creating significant support for the organisations in terms of undertaking customer segmentation and personalization procedure. The data has been gathered and accordingly predictions made regarding consumer preferences and effective decision making has been done. However, it concerned with challenges as well which associates with privacy concerns, lack of emotional interaction, wrong information and so on aspects. There is need to hire experts who can tackle these problems. Furthermore, the information must be cross-checked so this can be assured that no false information has been included.

Chapter 3- Research Methodology

3.1 Introduction :

Research methodology considered as the systematic plan that is essential for resolving an issue. The present section will be based on highlighting the research methodologies that analyst has used for undertaking the current research. The study is based on assessing the efficiency of AI in customer segmentation and personalization. Hence, by looking at the research area, researcher has adopted significant methodologies. Appropriate justification behind the selection of methodologies will be provided in the present section.

3.2 Research objectives

It is based on determining over-all purpose of research strategy, it is a kind of analytical approach that is used to integrate activities in logical and coherent way. The different components of the study are structured and combined together and accordingly strategy has been formed. Exploratory and descriptive; these are the two types of research design. Exploratory research design investigate research in depth manner and analyse those contexts which has not been previously studied (Malhotra et al, 2017). Whereas, descriptive design observes and collects data on a specified topic without undertaking any kind of cost and effect relationship. The researcher has used exploratory research design in current study. The major reason behind adopting this design concerned with formulating in-depth and greater understanding related to research topic. It often supports in determining future research question on-to which further study needs to be taken. By adopting exploratory research design researcher has uncovered the facts that are important and further enabled in exploring the research area in depth manner. Hence, it can be stated that exploratory research design led to create an effectual support for researcher in terms of gaining detailed information related to research area.

Research type explicated as the phenomenon followed for conducting the study. It has been proven highly essential as it forms the basis of the research and therefore, a suitable research type has been preferred by the analyst. This is mainly of two types and those are qualitative and quantitative. Qualitative research type is concerned with gathering theoretical information and this is further easy to understand. On the other hand, quantitative research type aligns with collecting numerical information (Malhotra et al, 2017). There are high chances of errors in quantitative research as it is based on numerical facts and figures, also, it is not easy to understand. Therefore, researcher has used qualitative research type and accordingly data has been collected in the form of theories. The major reason behind selection of this research type aligns with understanding the research context in an in-depth manner. The scholar has gained an effectual understanding regarding study area and accordingly theoretical information has been gathered. This has assured higher flexibility to researcher due to which there has been fewer chances of errors developed. Thus, there is no doubt in stating that scholar has used appropriate research type in current study as this led to result in gathering wider data that is easy to understand.

3.3 Types of Data

There are two methods in which information can be gathered and those are primary and secondary. Primary method is considered as allocating information while implementing direct interaction. Under this method, direct communication with the participants has been done and accordingly, direct information has been taken from the candidates. On the other hand, secondary method associates with gathering information from secondary sources such as google scholar and other sources (Malhotra et al, 2017). The analyst has used both the methods; primary and secondary for collecting the information. In order to collect primary data interview has been conducted and accordingly questions have been prepared for participants. Interview supports in gaining accurate data and accordingly realistic findings could be developed. (Malhotra et al, 2017). Therefore, researcher has adopted this method. Whereas, in order to collect secondary data, google scholar reviewed by the analyst and accordingly peer-reviewed journals and articles selected by analyst and information has been taken from them. By using both the method researcher as effectively collected wider data which is essential for developing realistic and reliable outcomes. Thus, wider information has been allocated in research area and accordingly findings have been developed.

3.4 Research approach

This refers to the specific procedure that has been adopted by researcher for conducting study. It is important to select an appropriate approach as this sets out the activities of the research and accordingly practices can be performed. There are two types of research approaches and those are Inductive and deductive research approach. The Inductive research approach prefers qualitative evaluation, it is based on finding patterns in the themes for developing outcomes. This provides higher flexibility in research area as it focuses on qualitative analysis. On the other hand, deductive approach aligns with quantitative analysis and accordingly numerical evaluation has been done (Malhotra et al, 2017). The deductive approach is based on testing and confirming theory. As per the suitability of study, analyst has used inductive approach so that qualitative data could be analysed. Indictive approach supports in making varied assumptions, it examines pattern and develops new theories that is easier to understand. Thus, the researcher has used inductive approach and it led to provide greater flexibility that is considered essential for enhancing the efficacy of outcomes. By adopting this approach, effective analysis of the data has been undertaken that is proven significant for developing real time information.

Research philosophy expounded as basic belief and assumption of people that aligns with research area. This helps in the evaluation of thoughts and beliefs of people concerned with study context. It is important to select appropriate research methodology so that realistic outcomes can be developed. Interpretivism and Positivism; these are the two types of research philosophy. Interpretivism concerned with current assumptions and thoughts of people whereas, positivism entitled with evaluation of the existing theories related with research area. The researcher has used interpretivism philosophy as it is based on seeking out subjective meaning from the original source (Pandey and Pandey, 2021). Whereas, positivism philosophy prefers analysing of the existing data. Interpretivism philosophy allows in undertaking deep exploration of the beliefs and research area related to a shared phenomenon. It results in providing high validity data and often it is flexible in nature that reduces the chances of errors. Therefore, researcher has adopted interpretivism philosophy. Thus, by using interpretivism research philosophy analyst has effectively identified the research context and accordingly individual’s opinion has been analysed that supported in forming realistic outcomes. Thus, there is no doubt in stating that appropriate philosophy has been adopted by the analyst which led to develop significant support in creating effectual outcomes.

3.5 Research instrument

Research instrument is explicated as the tool which has been used for collecting data. In present research questionnaire has been used as a research instrument and accordingly questions have been asked from participants. The major reason behind selecting this instrument is concerned with varied benefits such as cost savings, scalability and data accuracy. Therefore, analyst has been used this instrument.

3.6 Sampling plan

Sampling refers to the subset of targeted population, it is further considered as approaching candidates for research. This plays vital role in whole research as it is important to approach appropriate samples so that data can be collected from them. Sampling is of two types and those are probability and non-probability sampling. Probability sampling is concerned with random selection of the participants without undertaking any type of discrimination. Random selection of the candidates has been done and accordingly information related to research area has been gathered (Kumari et al, 2023). On the other hand, probability sampling method is based on the judgement and consequently candidates selected for research. The researcher has used probability sampling method as it is an easy method and most importantly it is free from biasness as random selection has been done without making any kind of judgements. 5 managers of Holiday Inn have been approached as the sample size and sample population. Phone interviews has been conducted and accordingly questions were asked to candidates. Thus, it can be stated that, appropriate sampling method has been used by the analyst and there has been no discrimination performed while selecting candidates. This method is cost and time effective, further, it has reduced the chance of biasness. Moreover, probability method is easy to undertake and therefore, researcher has adopted this method.

3.7 Contact method

Contact method refers to the ways in which interaction with the participants has been developed. It is highly important to approach specific method in order to undertake interaction with the candidates so that appropriate outcomes can be developed (Kumari et al, 2023). There are different ways through which contact can be made with participants and those are- E-mail, phone and face to face interaction. The analyst has preferred phone in order to undertake contact with participants and consequently questions was asked. This method has been used in order to save time as by interacting on phone response of the candidates can be taken in fast manner and this further helps in saving cost and time which proves to be highly beneficial.

3.8 Data collection technique

Data collection method considered as the techniques under which data needs to be collected. It is important to select appropriate data collection method as the quality of information depends upon this. The data has been collected via asking questions to candidates; administered questions have been used by analyst for conducting the interview. This led to support in gaining opinion of the candidates and accurate findings were developed.

Data analysis is considered as the technique in which allocated information has been analysed and final outcomes are developed. This is considered as the significant process as final findings depends upon this (Al-Ababneh, 2020). There are two methods in which gathered data could be evaluated and those are thematic and statistical. Thematic analysis is suitable for qualitative data, under this different theme has been formulated and in this manner research question has been addressed. Whereas, statistical method is appropriate for analysing numerical information and it is aligned with developing frequency table and undertaking regression test (Mahuika and Mahuika, 2020). In current research, analyst has used thematic analysis and accordingly thematic representation of the findings has been undertaken. For evaluating primary data different themes were prepared and for secondary data evaluation literature review was done. Thematic analysis has enabled researcher to develop real findings that led to enhance the authenticity of analysis. It is often flexible in nature and therefore, analyst has effectively developed the mandatory themes. Hence, there is no doubt in stating that thematic analysis led to develop and effectual support in current study and consequently, findings has been developed in effective manner.

3.9 Conclusion

The present section highlighted about the research methodologies undertaken by analyst for conducting the study. Qualitative data has been gathered and accordingly inductive approach and interpretivism philosophy was preferred. Exploratory design was used and probability sampling method was undertaken for approaching participants. Primary and secondary both the information has been collected by the scholar and thematic analysis was done.

Chapter 4-findings And Analysis

4.1 Introduction

The present section will be based on undertaking thematic analysis and the presentation of findings would be done in the form of themes. The data has been collected via undertaking interview of 5 manager from Holiday Inn and accordingly efficacy of AI in customer segmentation and personalisation has been evaluated.

4.2 Thematic representation

The themes are based on the responses on candidates mentioned in Appendix-

Theme 1- AI is important in current era specifically for hospitality sector

Based on the viewpoints of candidates this could be stated that artificial intelligence is important in today’s era. Majority of the candidates stated that it is a type of advanced technology that creates support for the organisations in terms of developing connection with the customers. It is just not limited to developing connection with consumers. Within this, it results in boosting the operational practices as well. In hospitality sector, artificial intelligence has been developing varied kind of support so that consumers need can be prioritised and effectual support can be assured to them. The majority of the participants were agreeing on this area that signifies how important AI is. It predicts the behaviour of consumers and assist in the decision making of the organisation (Mandapuram et al, 2020). Henceforth, hospitality organisations must adopt artificial intelligence so they can become able to face the competition in current era. AI is revolutionising the ways in which people work, hospitality organisation providing 24/7 services to the customers via AI assistant and this is leading to gaining the attention of the customers to greater note (Mandapuram et al, 2020). Henceforth, there is no doubt in stating that AI is highly essential in current era as this led to understand the requirement of consumers and accordingly assist organisation to take decisions. Therefore, it needs to be used by organisations so their efficacy can be enhanced.

Theme 2- Holiday Inn uses AI for customer segmentation and personalization

From the interview it was evaluated that Holiday Inn is using AI for customer segmentation and personalisation. This is enabling company in terms of developing interaction with the customers. Customer segmentation and personalization has been proven important for hospitality business. Consumer segmentation is based on the grouping of consumers in accordance with the same attributes and features and personalisation refers to customisation of experience, products, service and content for meeting the needs of the consumers. Holiday Inn using smart technology However, the company has recently started using AI tools and they are focusing on segmenting the consumers basis on their traits. This results in developing support for the company in terms of attracting customers. Furthermore, on the basis of likings and disliking of the buyer their needs are analysed and personalized services given to them. AI is enabling company to foster at online platform so they can approach larger customers. Hence, on the basis of candidates answer it has been cleared that Holiday Inn experiencing effectual benefits while using AI.

Theme 3- AI is playing important role in customer segmentation and personalisation

Based on the gathered opinion of participants, this can be stated that AI supports businesses to develop customer segmentation based on the behaviour and preferences of the consumer. Specific audience can be targeted and retained by the organisation. AI fosters personalised marketing strategy that caters with diverse needs of the consumers. There are different types of customers in the market and all of them have diverse needs (Gao and Liu, 2023). AI parts consumers on the basis of their behavioural pattern and accordingly provide suggestion regarding the services. In this manner segmentation and personalization has become easy. Holiday Inn using AI to perform these practices and the organisation has got an effectual support from this procedure (Gao and Liu, 2023). AI’s computation abilities enabling company to decipher buyer behaviour at an unprecedented rate. This allows in real time personalisation experience that can often be implied instantly for enhancing the satisfaction of the consumers and therefore, organisation is looking upon this area. Hence, there is no doubt in stating that AI has been playing pivotal role in undertaking the procedure of customer segmentation and personalization. The company is focusing on this area so that they can implement decision on the basis of customer needs and requirements. The response of the participants clearly revealed that Holiday Inn focusing on using AI tools to enhance their practices related to customer segmentation and personalization.

Theme 4- There are varied benefits of AI experienced by Holiday Inn

During interview; varied insights has been developed from the response of candidates. The participants revealed that AI is assuring varied benefits to their organisation. It has been witnessed that AI eases the task related to approaching different segments. Some customers prefer quality while some prefer price. These are the different requirements of the consumers and AI develops focus on this area. It results in the grouping on consumers in different parts This is how AI assure benefit related to customer segmentation which is a crucial component in the business. When segmentation has been done then, it becomes easy to address the needs of the customers and AI assures significant support in this context. From the interview it was analysed that another benefit of AI comprised with processing of the larger data set. When data has been collected at online platform then, this results in the accumulation of larger information and it becomes difficult to understand the data (Gkikas and Theodoridis, 2022). Hence, AI differentiate the data and makes it easy to understand by the employees of organisation and accordingly appropriate decision could be taken. Predicting customer behaviour is an important aspect as it is a game changer in businesses specifically in hospitality sector. These benefits of AI contributes in gaining customer attention which has bene proven highly effective for managing interaction with them.

Theme 5- Personalization is linked with customer satisfaction

The participants stated that; in current era personalization has become extremely important as it is leading to enhance customer satisfaction. One of the candidates said that “In the pace of growing technology personalization has made it easy for us to enhance customer satisfaction”. It was witnessed that Holiday Inn has been focusing on personalising experience by prioritising the needs of consumers. In this manner, trust development with customer has been initiated which is ultimately leading to higher customer satisfaction. When consumers are satisfied to greater extent then they prefer to interact with the business. Therefore, it is important to adopt the personalization strategy so that an effectual interaction can be developed with the buyers and they could be retained for longer period (Huang and Rust, 2021). Thus, there is no doubt in stating that personalization of services led to enhance customer satisfaction.

On the basis of participants responses, it can be said that personalization has been proven highly effective in order to interact with the customers. The personalised customer service proves to be significant differentiator for companies. It results in providing support to organisation and increases their goodwill in the market. In present era, market has become consumer-oriented and therefore competition is high as different companies are adopting varied strategies for attracting the customers (Micu et al, 2022). Personalization is one of the effectual strategies that results in gaining the trust of the customers. Therefore, it is important that organisation must focus on this area and personalised services on the basis of consumer demand as this can results in gaining higher profitability by the company.

Theme 6-There are different ways in which AI has been supporting personalization

The interview led to present important insights related to AI that has been supporting Holiday Inn. The participants have revealed that; AI supports in performing personalisation practices by targeting offers and promotion, providing customised message and providing tailored recommendation. AI targets the offers and assist consumers about this, in this manner promotion of the company has been done. From the interview it was analysed that customers who are price conscious has been attracted via this tactic. The customised message results in gaining the attention of consumers and further supports in developing emotional connection with them. AI personalisation and real time adaption technique assures to deliver relevant recommendation which reflects that each customer’s preferences have been considered. The tailored recommendation has been given to consumers and accordingly their satisfaction level has been enhanced to greater extent (Alladi, 2024). Artificial intelligence comes with varied benefits that have been developing support for organizations and further creating effectual support for the company. The answers of participants clearly show that Holiday Inn has been experiencing varied benefits as a result of implementing AI.

This is creating an effectual image of the company in front of their customers and further appropriate outcomes are being gained. Most importantly, processes related to segmentation and customization have become easy and organizations have bene performing effectual services to gain the attention of customers. This clearly shows that in the current era, AI has been proven highly important for managing customer satisfaction (Alladi, 2024). In this manner, AI contributes in undertaking personalization procedure which proves to be highly important for developing interaction with customers. Personalisation develops a sense of belongingness in the consumer and attracts them. Henceforth, there is no doubt in stating that AI led to create significant support in performing personalisation practices.

Theme 7- Difficulty related to data quality and accuracy as a result of customer segmentation

From the outcomes of the interview, it has been witnessed that organisation experiences issues related to data quality and accuracy while using AI. Holiday Inn often struggles with data quality issues such as- lack of information and incomplete information. Without having reliable data, it is not possible to take appropriate actions. This can result in flawed segmentation. The incomplete data set result in biasness due to which misleading information has been provided to the employees. In order to undertake the customer segmentation and personalization procedure, it is important to gather the accurate data and when there is issue with the data validity then, this result in creating serious concern for the organisation. Hence, it is important to cross check the information so errors can be witnessed and reliable data can be used in the business (Jain and Aggarwal, 2020). If appropriate focus has not been ensured in this area, then this led to create major challenges for the company. The quality of data needs to be high so that real time information can be used for forming the decision.

Theme 8- Issues faced in the pursuit of customer segmentation and personalization

It has been evaluated that there are certain issues faced by Holiday Inn while undertaking customer segmentation and personalization procedure. The major challenges that associate with AI and impacts segmentation and personalization are associated with lack of human touch and cost & resource implementation. Artificial intelligence provides an effectual support to company but at the same time it comes up with high cost. As a result, this led to increase the cost of operations that further led to surge in the prices. Cost and resource implementation impacting segmentation and personalisation process in negative manner and due to this organisation is not able to interact with the customers. Lack of human touch is another significant issue in this area (Gochhait et al, 2020). Virtual assistant interacts with consumers and gather their information. Many times, these AI assistants are not able to understand the emotions of consumers and prefers to answer only that which has been stored in the system. This results in creating serious situation as the satisfaction level of customers decreased to greater extent. Thus, there is no doubt in stating that high cost and lack of human touch creating potential barrier in the process of customer segmentation and personalization.

Theme 9- Privacy concern issue proves to be topmost barrier

From the interview it was evaluated that; - Privacy is an important component as it supports in gaining the trust of customers. The organisation needs to store the personal data of the consumers and therefore, it is the accountability of the business that they do not share this information with anyone. However, technology comes up with risks and privacy is one of the major risks that can results in creating potential barrier (Gochhait et al, 2020). The personal information of consumer has been stored by following their footprints and in case any third party hacks the system then, this led to breach of security and raises privacy disputes. This is considered as an unethical practice and this results in creating dissatisfaction in consumers to greater extent (Gochhait et al, 2020). Therefore, it is highly important to develop significant focus on this area so that privacy issues can be maintained.

Theme 10- Personalization often led to exploit individual desire

The interesting insights has been developed from the interview; one of the participants stated that “Personalization procedure is based on technology hence, it does not understand human values and as a result it exploits individual desire”. It was quite interesting and shocking at the same time as personalization often exploits the individual’s desires. Too much personalization results in the overexposure of information and there is invasion of privacy as well. Furthermore, this led to decrease authenticity and increases the risk of alienating consumers. The complete dependency on technology can create this situation, when organisation only prefers online data and does not interact personally with consumers then such kind of situation arises (Micu et al, 2022). There might be possibility that wrong information has been given by AI and customers does not get satisfied with the services. Consistent personalization reduces the chances of prioritising needs and requirements of buyers as the practices are performed on the basis of system results instead of gaining personal insights from customers (Micu et al, 2022). Therefore, it is equally important to implement emotional bond with the customers so that their issues can be understand along with prioritising their needs.

Theme 11- Measures that can be taken

From the opinions of candidates, it was reviewed that setting specific budget supports in maintaining the additional cost and solves issues related to higher cost. Hence, appropriate planning regarding the budget needs to be done so that cost management can be done. Furthermore, one of the participants stated that experts need to be hired as they can train employees in relation to using AI tools, there is need to develop specific focus on training employees so they can become able to use the tools and information can be cross-checked. Thus, this led to reduce the chances of biasness. Another measure that was analysed via interview is setting strong password so that privacy concern can be reduced. Participants revealed that there is need to focus on setting strong password which led to reduce risk related to privacy. There is need to update the system along with undertaking appropriate monitoring, this results in reducing the issues related to privacy (Micu et al, 2022). Thus, these are the measures that can support in reducing the challenges in the procedure of customer segmentation and personalization.

4.3 Analysis

From the primary findings it has been witnessed that artificial intelligence proves to be highly significant for hospitality industry. In current era, customers have become highly advanced and they prefer online platform. Therefore, it is highly essential to develop significant focus on this area and accordingly company needs to adopt advanced technologies which can led to result in creating support for them. AI enables in gathering insights so that idea regarding needs and requirement of the customers can be taken and further decision making can be implemented in the organisation. Artificial intelligence is supporting hospitality organisation in terms of developing an effectual experience for the customers and therefore, companies are adopting this technology to greater extent (Babatunde et al, 2024). Holiday Inn has been using artificial intelligence for undertaking the process of customer segmentation and personalisation. Customer segmentation supports in grouping of different consumer groups based on the same traits and features. Whereas, personalization concerned with prioritising needs and requirements of customers and accordingly customising services. AI has been supporting organisation in terms of undertaking both of this procedure. However, Holiday Inn recently started using AI and therefore, organisation has been facing varied types of challenges as well. There is need to create significant focus on this area so that proper actions can be taken on tine.

Artificial intelligence supports in predictive analysis and accordingly prediction regarding customers could be made. Predictive analysis has eased the task for organisation as they can make prediction regarding customers. The footprints of the customers at online platform have been followed and on the basis of their searching criteria prediction regarding them has been made. Hence, AI creating specific support for business in terms of increasing the customer segmentation. The efficacy of AI proves to be high in customer segmentation and personalization as it is enabling company to interact with consumers to greater extent and further guides in solving their issues. Artificial intelligence providing varied kind of benefits while undertaking the customer segmentation and personalization procedure (Reddy, 2021). From the interview, it has been known that AI results in improving accuracy for identifying the consumer segment. The different groups have been developed on the basis of customer behaviour and it becomes easy for company to implement different consumer groups. It is not easy to maintain the dataset on online platform as there are large number of consumers and all of them have varied types of needs. AI process all of these dataset and part it in smaller parts so it becomes easy to understand.

Predicting consumers behaviour results in boosting the sales and making consumer happy. However, there is need to understand the factors behind the behavioural pattern of customers so purchasing decision of buyers could be shaped. AI analyses the past data and predicts what types of products and services has been purchased and used by customers in the past. As a result, consumers behaviour has been predicted and data driven decision has been taken for enhancing the satisfaction of the consumers (Gkikas and Theodoridis, 2022). Thus, AI is playing pivotal role in predicting the customer behaviour. Henceforth, there is no doubt in stating that Ai creates varied types of benefits of the customers and therefore, it is important to use AI tools. Currently, organisation focuses on shaping the behavioural pattern of the customers and this can be done via understanding the purchasing behaviour of consumers. Artificial intelligence developing enormous support for the business so they can effectively take customer-oriented decision which is important for gaining the attention of the buyers (Gkikas and Theodoridis, 2022). Apart from this, AI led to grouping of the consumers on basis of similarities and differences which is creating significant support for taking informed decision. Thus, there is no doubt in stating that AI providing advantage to business by easing the task and predicting the behaviour. Furthermore, larger data-set can be understood that is highly important to take informed decision in the organisation.

It is not easy to predict the customer behaviour. Nevertheless, AI supporting in this area and due to this company become able to take informed decision which results in enhancing the satisfaction level of consumers. In order to increase the interaction with the customer it is highly important to provide them option for customisation (Babatunde et al, 2024). Personalising services enables consumer to gain an enormous experience as everything has been done in accordance with their needs and requirements. On other hand, many times personalization does not provide effective outcomes as AI is not able to understand the emotional aspects of customers and due to which this gets neglected and results in creating dissatisfaction for the consumers. Henceforth, complete dependency on AI does not provide desired outcomes (Gkikas and Theodoridis, 2022). AI tools reduce the chances of human errors but at the same time it lacks in understanding human emotions which makes it as a part of criticism. AI is supporting the procedure of segmentation and personalization in varied manner. It targets offers for customers as per their preferences and gains their attention to greater note. The tailored service recommendation has been proven highly effective in terms of gaining consumer attention. The recommendation is comprised with customised message that creates sense of belongingness in the customers.

Analyzing buyer behaviour has been proven important so that further actions can be taken by the organization. In case, the company does not focus on analyzing customer behaviour then, this leads to a negative impact on the satisfaction level of consumers. In order to predict customer behaviour technology is essential and AI proves to be that technological tool that is composed of parting larger data sets into smaller ones. Henceforth, there is a need to undertake such steps for predicting consumer behaviour. The footprints of the customers can be analyzed and based on their previous purchases their behaviour can be evaluated. AI promotes customer value by considering their priority as their consideration is taken as the topmost aspect and accordingly the recommendations are made (Patel and Trivedi, 2020). Based on the evaluation this can be said that AI is just not limited to helping with segmentation and personalization procedures. It performs varied roles by gaining the attention of customers. Henceforth, it is important to develop a significant focus on this area so that accordingly AI tools can be used in the business. Predicting customer behaviour helps in evaluating their needs and wants which are important to be carried out for taking important actions at the organization (Babatunde et al, 2024). By focusing on this aspect effectual support can be developed for consumers and further interaction can be developed with them

However, on a contrary note, there are certain loopholes witnessed while using AI for personalization and segmentation procedures. It is important to focus on these challenges otherwise this can lead to major issues for the business and it can also impact the interaction abilities with customers (Babatunde et al, 2024). There are possibilities that AI provides wrong information due to which wrong decision has been taken. Many times, AI provides incomplete data that leads to misleading people and due to this wrong information is passed to consumers. Thus, this raises issues related to data accuracy and customer dissatisfaction (Kedi et al, 2024). Data needs to be highly accurate as the decision-making process related to the personalization of services has been done on the basis of available information and when this data is wrong then inaccurate decision has been taken, thus challenge cannot be ignored as this can create miscommunication with the buyers. Privacy concern is another major challenge in this area, the personal information of the customers has been stored in the system.

Due to technological glitches or hacking, this personal information can be hacked by a third party. This led to a breach of confidentiality which has been considered unethical.AI is a type of technological advancement that comes up with high cost and due to this, it led to an increase in the cost of operation. As a result, higher prices have been charged to consumers. It led to dissatisfaction among the consumers. AI is not able to deal with the emotions of people and due to this as well customer feels dissatisfied. AI assistants only suggest personalized services stored in their system by considering customer preference. In case, a consumer asks a cross question then AI is not able to understand their emotions.

Thus, it can be stated that, AI focuses on gaining knowledge related to customers and then provide recommendations to them. Thus, it can be said that customer segmentation and personalization procedure can be performed in effective manner within adopting AI tools. The AI driven customer segmentation is highly personalised and dynamic. The more refined insights have been developed via AI along with performing real time adjustment. AI itself performs most of the task and provides final result to employees (De Mauro et al, 2022). Afterwards, cross checking of the information has been done and accordingly decisions are taken in the organisation. This is how AI creates ease for people at the organisation and enhances the satisfaction of consumers. Thus, there is no doubt in stating that customer segmentation and personalization procedure has become easy due to AI. Hence, this can be stated that artificial intelligence has developed an effective support for hospitality business (De Mauro et al, 2022). The core benefit aligned with making predictions regarding consumers and working upon this. Similar findings witnessed from secondary sources that proves that AI is highly effective in undertaking customer segmentation and personalization procedure.

Further, in order to develop connection with customers, it is highly important to develop sense of belongingness with them. However, AI is not able to develop an emotional bond with consumers as it is a type of technology and runs according to the instruction. On the other hand, human interaction results in understanding the emotions of consumers and it supports in developing an effectual bond with the customers. The AI driven assistants streamlining digital interactions and often rouse human-like conversation (Zulaikha et al, 2020). However, AI assistants are not able to show empathy and moral support to consumers and this results in developing dissatisfaction for the consumers. In order to prioritise customer values, it is important to understand their issues and AI is lacking in this area which ultimately lead to reduce interaction between organisation and customers. Thus, on the basis of the gathered information this could be stated that, excessive use of AI decreasing human interaction to greater note and due to this organisation is not able to focus on core values and morals of the consumer (De Mauro et al, 2022). There is need to implement significant focus on this area so these issues can be managed and appropriate actions can be taken by the business. If Holiday Inn chose to ignore these issues, then, they will face varied hurdle that directly impacts their profitability. The loopholes must be analysed and based on these proper recommendations are needed to be implemented which supports in managing these challenges.

From the responses of participants, it has been clear that AI proves to be highly significant in the current era as this is leading to the development of varied opportunities for hospitality businesses. AI has changed the operational procedure within the hospitality sector. It led to the development of ease for companies in terms of making decisions. Currently, the market has become a customer-oriented market and therefore, it is important to analyze the needs and requirements of the consumers. Artificial intelligence supports the company in terms of evaluating the needs and preferences of the consumers (De Mauro et al, 2022). Customer segmentation has made it possible to segment customers on the basis of their likes and preferences. Customer segmentation is considered highly important in the current era so that different groups of consumers can be developed based on their likes and preferences. Artificial intelligence has made it possible and based on the activities and purchases of the consumers they have been parted into different groups and accordingly appropriate strategies have been set. Artificial Intelligence is further enabling in undertaking the personalization procedure, this is supporting in recommending services to consumers based on their preferences. In this manner, higher satisfaction has been assured to customers (Zulaikha et al, 2020). AI made it easy for companies to segment the customer and based on their liking services are suggested to them. In the current era, it is highly important to focus on undertaking customer segmentation and personalization procedures so that customer attention can be gained and success can be assured for business. AI has made this possible by developing support for companies so they can target customers and personalized services.

This research led to develop significant insights and the role of artificial intelligence in customer segmentation and personalization has been analyzed. It has been identified that artificial intelligence plays playing important role in understanding the customer's needs and values and accordingly, this has been prioritized which significantly enhances the overall satisfaction of the consumers. Technology in the hospitality sector has been booming on a greater note by attracting the attention of people and therefore, it is important to undertake varied types of technological changes that led to enhancing the satisfaction level of consumers. This can be done via segmenting the customer market and personalizing services. AI has been supporting this procedure and enabling organizations to attract customers. Without Artificial intelligence, it is not easy to undertake this procedure and therefore, significant focus needs to be implied in this area (Zulaikha et al, 2020). This helps in enhancing the over-all satisfaction of customers along with increasing interaction with them. In this manner, support can be assured to customers and effective service can be performed. On the basis of outcomes, it is suggested to Holiday Inn that they must focus on certain areas so they can effectively become able to tackle the challenges and quality services can be assured to consumers.

There is a need to focus on managing quality and privacy issues as this can result in creating a major threat to the business in future. It has complete potential in relation to shifting customer attention. Henceforth, appropriate actions are needed to be taken which can lead to solving issues in this area and significant support can be developed for the consumers. If emphasis has not been made on this area, then, Holiday Inn might face a severe threat that can impact their customer segment and it can further lead to a reduced customer segment as well. Thus, by taking corrective measures the challenges can be tackled.

4.4 Conclusion

Based on the findings this can be stated that artificial intelligence has been proven highly effectual for undertaking the customer segmentation and personalization procedure. In current era, hospitality sector is fostering to higher extent and it is important analyse the consistent needs of consumers so that appropriate actions could be taken and support can be assured to customers. AI enables in segmenting the group of consumers based on their likings and disliking’s. Accordingly, suggestions have been given to them and in this manner process of personalization is undertaken. The suggestions from consumer are received and consequently, actions are taken and services has been made personalized.

Chapter 5-discussion And Conclusion

5.1 Discussion

On the basis of findings and analysis this can be said that AI enables hospitality businesses to develop customer segmentation that is based on the behavioural and preferences elements of consumers. It paves the ways in which targeted organisations resonate within significant audiences and groups for developing support for customers. This approach has been fostering the personalised marketing strategy catering to varied kinds of needs of the consumers and fulfils their satisfaction to greater note. Artificial intelligence has been deemed within customer segments and the unique features and characteristics of each buyer have been evaluated. This is supporting companies in terms of sharing their market messages and offerings (Ljepava, 2022). This enables the company to improve its customer segmentation. From the secondary sources, it has been further evaluated that, artificial intelligence uses machine learning and analyses the customer journey which aligns with the behaviour and choices of customers. It provides ideas about important insights that can support tailoring customer experience along with boosting interaction with them (Raj et al, 2023) In this manner, effectual support has been developed for consumers and their attention has been gained. The traditional personalization system often led to operating in a specific set schedule which can update elements in a periodic manner.

Whereas, the AI system adjusts as per the requirements of consumers automates the personalization procedure and provides up-to-date information to them. AI has been setting higher standards for companies so they can deal with different types of preferences of consumers. The customer data has been used for developing a holistic view of each buyer that associates with their social media activity as well. The analysis of this data proves to be highly useful for gathering customer attention and accordingly, recommendations can be made for them which are important to gain the attention of consumers. Hospitality organizations such as Holiday Inn are using AI to segment the customer group and recommend personalized services (Ahmed, 2024). AI has been revolutionizing the ways in which business operates and offers unprecedented accuracy and insights which are important to be taken into consideration for understanding the diverse needs of customers (Ahmed, 2024). In order process the complex data set in real-time supports predicting the future behaviour of consumers. It is important for boosting customer engagement within organisation and further this led to the development of significant support for the business in varied manner.

From the primary findings as well, the same aspects have been witnessed and this was analysed that AI is playing a pivotal role in predicting customer behaviour. This supports in undertaking specific actions that promote customer satisfaction. Real-time segmentation has become possible due to AI which is contributing to enabling companies to form their segmentation strategies and appropriate outcomes can be developed. AI is excelling the future customer behaviour which is often based on historical information and the latest trends. Thus, by analysing all of these patterns appropriate results can be developed and AI can further forecast actions, preferences and the requirements of buyers (Ahmed, 2024). This capability led to initiating the proactive segmentation and marketing efforts are anticipated accordingly for gaining effective results. AI facilitates personalization by developing micro-segments in a significant manner, AI can easily process the larger data sets and segment them into smaller sets which is further easier to understand (Campbell et al, 2020). Hence, the larger data sets can easily be processed and when information related to the customer has been acquired then, it consists of larger data sets. AI segments this information and changes it into smaller sets which is further easy to understand. Studies have shown that AI undertakes automated decisions as well which are based on the liking and preference of consumers (Raj et al, 2023).

The automation results in reducing the requirement of manual decision making and by looking upon the consumer needs and requirements, recommendations have been given to them. This saves time and gains the attention of customers, personalization and segmentation are linked with each other and both of these processes have become possible due to AI (Ahmed, 2024). Thus, by integrating information from different touchpoints AI can initiate comprehensive consumer profiles that prove to be helpful in providing recommendation. Different benefits have been provided by AI to companies, primary outcomes revealed that it contributes to targeting promotion and offers. The customised messages are sent to customers on the basis of their preferences (Raj et al, 2023). Furthermore, tailored service recommendations are provided to buyers which fosters motivation in them and creates an urge to interact with the customers. There is no doubt in stating that AI is creating significant support and segmentation and personalization have become easy due to this.

On the other hand, there are certain challenges associated with AI which has been creating significant impact on the business. The issues related to quality and privacy concern developing dissatisfaction among customers. There is a need to focus on this area so that challenges can be tackled and appropriate actions can be taken. Primary findings further stated that AI increases the cost of operation within the business due to which the final price of the products and services increased to a greater extent. This led to distracting customer and shifted their attention as well (Ahmed, 2024). Henceforth, it is important to undertake cost management so this issue can be solved. Additionally, there is a need to organise training for employees so they can learn about how practices need to be performed while using AI. These are the important areas that need to be focused on to gain effective results.

Based on the aforementioned discussion this can be said that artificial intelligence has been playing a vital role in the process of customer segmentation and personalization. This is creating significant support for the customers as their needs have been prioritised and on the basis of this further actions are taken. This led to gaining the attention of customers and further created significant support for them. However, there are certain challenges that need to be focused on so that the implementation of AI can be done in an effective manner without facing huge difficulties. Certain measures need to be taken that solve barriers related to privacy concerns, quality issues, higher costs and so on.

5.2 Conclusion

From above analysis it is concluded that artificial intelligence is one of most powerful and beneficial technologies for business sectors including hotel industry. This research has explained about the effectiveness of the artificial intelligence in customer segmentation and personalisation. AI is using by my most hotels in order to improve the efficiency of the business and provide fulfil the expectations of the customers. By adopting and implementing AI, the company can get insights regarding needs and demands of the customers as well as new market trends which further provide benefits to business strategies. It is analysed that Holiday Inn uses the AI for discovering potential customers and completed the segmentation based on consumer’s requirements. This research has discussed about the importance of artificial intelligence for the hotel in an outstanding way. Furthermore, this research has also observed that AI technology possesses some challenges that could affect the business operations of the Hotel.

It is discovered that this technology involves the possibility of wrong prediction which can influence the business in negative manner. The other problem with the AI is data privacy because there are many hackers who can easily hack the confidential data of customers. Because of this risk, customers think twice before giving the personal information to the hotel. The excessive use of AI in everyday business activities can reduce the interaction between employees and managers which is not good for the company. In addition, this research has utilised excellent research methods to collect the relevant data and information related to the topic. Primary as well as secondary data collection method were used by the researcher to complete this research in an effective manner. This study has followed all ethics and principles while collecting the data and information and articles validity was properly checked which helped to perform this research commendably.

5.3 Recommendation

Below mentioned are the ways through which measures aligned with the implementation of AI for customer segmentation and personalization can be tackled-

Strong privacy – From analysis, it is recommended to the Holiday Inn to focus on strong privacy of their customers, employees as well as business related information and data. Privacy of the data is most important aspect of the hotel business because they handle multiple information from visitors including, contact number, s, and addresses to account details (Buhalis, and Moldavska, 2022). When, Holiday Inn will implement the AI technology in the business, it is most crucial for the hotel to put encryption techniques to make sure that confidential data and information are not shared with third party. AI will definitely provide the advantages to the hotel sector but any new method including technology brings problems as well. So, the company can reduce these problems by securing information. Setting strong privacy can help in tackling this situation and further appropriate support can be assured to customers. This led to solve issues related to breaching of security and further contributes in managing privacy of the users (Buhalis, and Moldavska, 2022. Therefore, it is recommended to organisation that they must focus on this area and strong privacy needs to be set by creating strong password so that third party cannot hack the information.

Training and development –In order to implement advance technology like AI, training related to AI is compulsory to implement technology effectively. Technology is considered as quite complex in nature and it can create difficulties for the business. Employees also do not want to leave their comfort zone and adopt difficult new working ways. Hotel should develop an inclusive training program in order to provide knowledge about new technology to the employees. By training, employees will be able to know the use of artificial intelligence and its importance in their job. Once, employees will understand completely about AI they will perform best tasks and provide great experiences to the guests (Buhalis, and Moldavska, 2022). Customers will also attract to the seamless services of the hotel and will choose particular hotel over other. Providing training to employees supports them and they can further learn about the complexities they faced while working at online platform. Training and development play essential role in creating significant support for employees (Buhalis, and Moldavska, 2022). On-the-job training method concerned with guiding employees at the workplace and this must be adopted at the organisation so that employees can be guided about the aspects which are needed to be performed for gaining effectual results. In this manner, significant support can be developed for the employees and they can be guided about appropriate ways in which Artificial Intelligence must be used.

Setting specific budget – AI technology plays a most valuable role in the hotel industry and increase the success chances of business. Nonetheless, technologies need huge investment which can impact the other operations of the hotel. So, it is suggested to the Holiday Inn to set budget before applying technology (Mariani, and Borghi, 2021). By setting budget, the hotel will understand the expenses regarding buying artificial intelligence technology and decide how to make payments. Setting specific budget will provide chance to the hotel to ensure that they make the most utilisation of their resources. Budgeting procedure will also help to create strategies and ways to spend less on unnecessary things.

Hiring expert team – Hotel can invest in the outstanding technologies like AI but the advantages will be limited without experienced and talented team to develop and implement them. It is recommended to the company to focus on hiring expert team such as; AI engineers, data scientists etc. so that they can easily work with the complex systems of AI. The HRM of the hotel can make strategies and apply them in proper way to attract and hire top talent. HR team can use mix interview approaches like coding challenges, data analysis assessments, panel interviews etc. It will be highly useful for the company to identify and recruit skilled employees (Mariani, and Borghi, 2021). Team who is expert in handling AI tools and software can help hotel to implement advance technology and take business to the next level. So, it is crucial for the organisation to recruit expert team to achieve business goals.

5.4 Alternate research methodology

In this research, I have used the qualitative method for conducting the research and this led to the development of effective insights for me in terms of learning about how qualitative research needs to be conducted. I have used the interview method for gathering responses from participants. This method led me to gain in-depth opinions of the candidates related to the research area. Accurate information has been gathered by interacting with the respondents. Thus, I can say that I have had an effectual opportunity where I learned about the methods in which research needs to be conducted. In future, I will be using alternative methodologies to gain wider knowledge. Therefore, I will adopt the quantitative method; this enable me to understand numerical aspects and data will be gathered in numerical form. In this manner, I will be able to develop a wider understanding of research methods. The statistical analysis will be done in future as it is appropriate for evaluating numerical information. Therefore, I will use alternative research methodology in future so I can develop an effectual insight. Furthermore, it helps in understanding different types of research methods that can be used in order to conduct the research. In this manner, effective learning will be implied.

5.5 Ethics in the research

Ethics are considered as pivotal element in whole research; it is highly important to follow mandatory ethics as this led to enhance the efficacy of outcomes (Pandey and Pandey, 2021). Thereupon, researcher has assured significant focus on this area and all the mandatory ethics has been followed. While collecting primary data, confidentiality of the participants has been maintained and no disclosure of their personal information was done. Furthermore, concept of informed consent has performed and participants were made aware regarding the research area and afterwards, their responses were taken in consideration. On the other hand, while collecting secondary data reliability and validity of the articles were checked via identifying latest articles. The researcher has followed academic integrity and no plagiarism was done (Pandey and Pandey, 2021). Appropriate referencing was done and credit to the authors has been given. Hence, there is no doubt in stating that analyst has followed all the mandatory ethics which are important to be followed so that efficacy of the outcomes could be enhanced. No harm to anyone has been created and the research has performed social good by focusing on the effectiveness of AI in customer segmentation and personalization. The outcomes led to develop insights for hospitality sector so they can take decision with regards to enhancing customer satisfaction.

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Online

• Holiday Inn UK, 2020. Online. Available through: < https://www.ihg.com/united-kingdom >
• Mintel, 2023. Online. Available through: < https://www.mintel.com/united-kingdom >

Author Bio

Riley Thompson   6 Years | PhD

Greeting students! I am Riley and I did my PhD in engineering at New Castle University. I have a great reputation among academic writers as I have published tons of research papers. Now my current motive for 6 years has been to work with UK students to write excellent assignments.