How Important is AI to the Future of the Procurement in the Hospitality Industry?


Everywhere we turn, the impact of digital transformation is tangible and undeniable. Digital innovation has forever altered how we live, work, and connect – and the pace of this ongoing transformation seems to only accelerate with each passing year. To this effect, in the best-selling book ‘The Future Is Faster Than You Think: How Converging Technologies Are Transforming Business, Industries, and Our Lives”, Peter H. Diamandis notes that (based on futurist Ray Kurzweil’s calculations) we should expect to experience twenty thousand years of technological change over the next one hundred years.

In particular, artificial intelligence (AI) technology – perhaps better described as the inevitable darling of the technology industry – has recently emerged as a prominent topic of discussion. “We’re heading toward a future where AI will make the majority of our buying decisions, continually surprising us with products or services we didn’t even know we wanted,” wrote Diamandis in his book. Similarly, AI guru Andrew Ng has likened the predicted influence of AI to the historical impact of electricity. “Just as electricity transformed almost everything 100 years ago, today I actually have a hard time thinking of an industry that I don’t think AI will transform in the next several years.”

AI is well on its way to changing the world as we know it, and there is arguably no industry exempt from its influence. This sentiment rings true within the hospitality procurement world; AI is positioned to have a vast impact on procurement in the hospitality industry in the (very) near future.

AI-Driven Decision Making

A recent Deloitte report states, “In today’s technology-driven world, many organizations still view artificial intelligence (AI) with an element of fear and uncertainty. As a result, the tangible benefits that it brings to sourcing and procurement are still largely untapped. But the critical strategic, customer, and operational insights are buried within the wealth of raw information that exists in both internal and external systems.” Simply stated, AI allows businesses to extract and analyze data at a pace (and level of efficiency and accuracy) that would never be possible via manual, human efforts. Since data informs the forecasts and predictions that procurement decisions are gleaned from, AI is expected to drastically improve the speed and quality of decisions made by hospitality procurement leaders. For example, AI can help identify patterns and trends in supplier data that can inform negotiations or supply chain management.

A Global CPO Survey revealed that 51 percent of respondents indicated they are now using advanced analytics, and 25 percent have, or are piloting, an AI/cognitive solution— a 19 percent increase from 2018. Of those implementing an advanced analytics solution, 93 percent claim to be satisfied. Procurement processes powered by AI aren’t only more time efficient, they stand to be more intelligent, which will, in turn, save businesses money and critical resources. Finally, hotels will have the tools they need to identify better and analyze patterns, predict key trends, and make real-time adjustments and data-backed decisions in a truly seamless fashion.

A Streamlined Procurement Process

AI can also be used to automate various tasks within the procurement process, such as identifying potential suppliers, negotiating prices, and managing contracts. With the power of AI at their disposal, companies will be able to critically evaluate suppliers via advanced insights and better understand industry trends on both the macro and micro levels. From a productivity standpoint, AI boasts the potential to completely transform the work of procurement leaders by automating tasks that were once cumbersome and time-consuming (such as performance reporting). More importantly, by automating routine administrative tasks, businesses can “free up” procurement resources for tasks that require more attention, skill, and/or problem-solving.

Enhanced Supplier Relationships

As a hospitality procurement professional, managing and maintaining supplier relationships constitutes a significant part of the job. Fortunately, AI can improve back-of-house tasks, data aggregation, communication, and supplier collaboration. Chatbots will likely become an essential industry standard in the near future. Through AI-powered enhancements, organizations will be empowered to build more effective partnerships.

Reduced Costs, Increased Revenue

Traditionally, procurement is focused on cost reduction – but what about revenue maximization? As procurement becomes more strategic with the help of AI, procurement teams can unlock a 360-degree view of suppliers, products, and industry trends that paves the way to more strategic decision-making and partnerships. To this effect, Deloitte notes that using AI spend classification has typically resulted in around 97 percent accuracy in data classification. “This has led to increased precision in the analysis of spend information, driving more value for an organization,” shares Deloitte. “Companies that could benefit the most are struggling to analyze their data, or businesses that are seeking to augment their data with external sources (e.g., to identify products purchased from sustainable suppliers).”

AI is here and here to stay, giving the hospitality industry a critical face-lift by providing tools for process transformation. Over the next few years, AI’s disruption into the procurement world will help streamline processes, improve decision-making, and enhance relationships with suppliers. Peter Diamandis was right – the future is faster than we think, and AI is undeniable.

About BirchStreet Systems

BirchStreet Systems powers hospitality and food and beverage enterprises with a comprehensive procure-to-pay business solution. As the global leading provider of spend management solutions in the hospitality industry, 15,500 enterprises in over 130 countries subscribe to BirchStreet to connect with a network of more than 450,000 suppliers.

Established in 2002, BirchStreet is privately held and is headquartered in Las Vegas, NV with offices in California, China, Singapore, India, and the UK. For more information, please visit

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Gareth Fraser
Director of Sales & Marketing Enablement
BirchStreet Systems


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