Hospitality Operators Warn That AI Automation Risks Eroding Premium Guest Experiences

Written by:

Rudi Davis

Date:

21 Mar 2026

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The hospitality industry’s rapid adoption of artificial intelligence in customer-facing roles is eroding guest experiences and undermining premium pricing, according to operators managing luxury properties. Reuben Doetsch, co-founder and CTO of AvantStay, draws a clear line between using technology to streamline administrative work and using it to replace human judgment in guest service.

“You want to use technology to free up time so staff can focus on what matters – the human connection,” Doetsch says. “Anytime I’ve seen folks try to implement AI too quickly, it really impacts the guest experience.”

The problem is not technology itself, but how it is applied. Doetsch says AI works well for narrow, data-driven tasks that require no empathy, such as answering questions about pet policies, providing check-in instructions, or confirming amenities. When operators use AI to handle complaints, manage special requests, or address unexpected problems, its shortcomings become apparent. Guests notice when they are interacting with a bot. The lack of empathy or creative problem-solving leads to frustration that damages brand perception.

AI Cuts Come at a Cost

Operators face pressure to cut labor costs through automation, but deploying AI too broadly in guest interactions creates service quality problems that often outweigh efficiency gains. Doetsch argues that operators relying too heavily on AI in customer service are making a strategic mistake. Labor savings from automation may be offset by lower booking conversion rates, reduced repeat business, and weaker pricing power as guests perceive the brand as lower quality.

This dynamic has played out in other industries: airlines that automated customer service too aggressively saw satisfaction scores fall and faced backlash when customers could not reach human agents during disruptions. Hotels that eliminated front desk staff in favor of mobile check-in received complaints about impersonal service, especially from business travelers and older guests.

Narrow AI Use Works Best

AvantStay limits AI use to specific customer service flows where automation reliably delivers accurate responses. “We use some AI, but it’s very specific to things we know the AI can handle,” Doetsch says, such as confirming property features from a database.

For more complex inquiries, AvantStay routes guests to trained human agents who can respond with empathy and judgment. “Anything that’s a more in-depth flow, we have trained agents that understand how to answer with empathy,” Doetsch explains.

This distinction matters because premium hospitality justifies higher rates through superior service. Guests paying $400 per night expect personalized attention. Automated responses that fail to address unique concerns undermine the value proposition.

Over-Automation Led to Bankruptcy

The bankruptcy of Saunders, a short-term rental operator that prioritized technology over hospitality, illustrates the risks of over-automation in premium lodging. According to Doetsch, Saunders stripped away the human touchpoints that guests associate with quality.

“I think Saunders and some of these other players kind of lost the soul of why folks book hotels,” Doetsch says. “No front desk. You walk in, you get a key code. It’s pretty barren.”

Saunders marketed itself as a tech-forward alternative to traditional hotels, focusing on contactless check-in, minimal staff, and app-based service. While this reduced labor costs, it also eliminated the hospitality features that justify premium pricing: personal greetings, concierge services, and immediate problem resolution.

Doetsch believes success depends on balancing efficiency with guest experience. “How do you bring some life to the experience? How do you program common spaces?” he asks. AvantStay continues to operate front desks at select properties where the investment supports higher average daily rates.

Programming common spaces, including creating social environments, hosting events, and offering curated local recommendations, requires human creativity and judgment that AI cannot provide. Operators who eliminate these elements in the name of cost savings may lose the differentiation that enables premium pricing.

Automating Back Office, Not Guests

Doetsch argues that the best use of technology in hospitality is automating back-office tasks that do not directly affect guests. Tasks such as accounting, scheduling, resource allocation, and documentation can be handled by software, freeing staff to focus on guest interactions and improving the overall experience.

“Whether it’s accounting, resource allocation, or scheduling, a lot of the stuff that hospitality teams spend time on—how do you automate that so staff can focus on improving the experience and talking to guests?” Doetsch says.

This approach differs from pure cost-cutting automation. Rather than eliminating labor, it upskills staff, freeing them to focus on higher-value activities that directly influence guest satisfaction. AvantStay has invested in proprietary operations technology, including predictive analytics that identify properties likely to have quality issues before guests raise concerns. The system allows managers to monitor property conditions remotely using inspection photos and performance data.

The company’s platform manages distribution to over 50 booking channels, revenue across 3,000 properties, and automated workflows for maintenance and cleaning. These systems reduce administrative work for local teams while maintaining the human presence that defines quality hospitality.

Industry Divides on Automation

The industry is dividing between operators who use technology to enhance hospitality and those who use it as a replacement. Operators who maintain strong human service elements while automating back-office functions are better positioned to sustain premium pricing and brand loyalty. Those who automate guest-facing interactions to cut costs risk competing only on price in a commoditized market.

The failures of Saunders and ongoing struggles at Vacasa suggest that aggressive cost-cutting automation faces structural challenges in premium segments. As more operators enter the market and supply increases, service quality, not just price, will likely become a stronger differentiator. Doetsch’s approach, combining selective AI use, strong human touchpoints, and technology-enabled staff productivity, may become the standard for hospitality operators seeking to balance efficiency with high-quality guest experiences.

Human Touch Drives Premium Pricing

As AI becomes more accessible and pressure to automate increases, hospitality operators face a clear choice. Operators who automate guest interactions risk eroding the qualities that justify premium rates. Operators who use technology to augment staff, not replace them, are better positioned to deliver the service levels that drive repeat business and pricing power.

Recent failures show that the core of hospitality remains personal connection and responsive service. Technology can support these goals but cannot replace them. In an industry built on experience, losing the human element may cost more than any labor savings can recoup.