The AI 'algorithmic audit' could be coming to hotel room checkout

Asia-pacific Images Studio | Istock | Getty ImagesArtificial intelligence can lead to surprises in all s of places where a bill once would have been considered settled

The use of AI by Hertz (and European car rental company Sixt) to scan for damage on cars, which is then charged to the customer, is a new application of the nology that is creeping into consumer life unnoticed

But it won't be the last unexpected adjustment to the travel experience courtesy of AI.Experts say consumers should expect to see es across the service industry deploying similar nology in the future, if they aren't already."As es seek to automate loss prevention and operational efficiency, we're witnessing the emergence of what I call 'algorithmic auditing' – the systematic deployment of AI to identify, classify, and monetize previously overlooked inefficiencies or losses," said Shannon McKeen, fessor of the practice and executive director for the Center for Analytics Impact at Wake Forest University School of

The Hertz gram, recently reported on by the New York Times, is the beginning of what McKeen describes as a broader transformation, and new fault line, in the service economy. "The implementation of these systems reveals a fundamental tension between operational efficiency and customer satisfaction and equity," McKeen said

The question isn't simply whether AI can detect a scratch on a rental car bumper. "It's whether es should charge customers for every microscopic imperfection that algorithms can identify but human judgment might reasonably overlook as normal wear and tear," he said.McKeen says the dialogue between service agent and customer over costs will increasingly include a new term: "the machine says."Scanning the hotel roomHotels are working their way through these changes, according to Jordan Hollander, cofounder of Hotelreport.com, a re platform that helps hotels find new digital and AI ducts to imve efficiency."I've been seeing more hotels experiment with AI across operations, but not quite in the same way Hertz is using it for automated damage detection and billing

That said, we're not far off," Hollander said.Some hotels, for instance, are already using AI-powered sensors to monitor air quality and trigger fines for smoking or vaping in rooms

But Hollander warns that sometimes the sensors trigger false positives." someone using a hairdryer or aerosol spray — and guests get hit with $500 charges without ever lighting up

It's not hard to imagine how that could go south quickly," Hollander said.But un the car rental example, most hotels haven't automated the billing step yet."They're using AI more to flag potential issues — a room that smells off, linens that don't meet standards, or maintenance blems — and then looping in a human for the final call," Hollander said

For now, the AI is acting more a very observant assistant than a judge and jury."But it's that hotels are heading in the same direction," he said. "Between computer vision that can detect damage or wear in a room, and AI that analyzes guest behavior or room conditions in real time, the is already there." Risk of customer backlashIn a hospitality industry where trust is everything, there are reasons for hotels to move with caution

To date, many hotel operators are using AI to imve things housekeeping efficiency, energy usage, and guest messaging — but they're being cautious when and how it impacts the guest directly in a way that can be perceived to hurt the experience. "There's a risk of backlash if hotels start billing guests based solely on what an algorithm says

The moment a guest gets a charge and can't get a straight answer why or how it was verified, you're in dangerous territory," Hollander said. "If guests feel they're being watched or nickel-and-dimed by a machine, it undermines the relationship completely," he added

Recent experience in the hotel industry vides at least one cautionary tale, according to Hollander, referring to a custom-modified Alexa for hotels. "Years ago, the hot thing was voice devices, and that never really took off for this reason," he said.A Hertz spokeswoman told CNBC that AI brings uniformity and consistency to the checkout cess."For years, vehicle damage inspections have caused confusion and frustration

The cess was manual, subjective, and inconsistent, and that isn't good enough for our customers or our ," she said.She added that with digital vehicle inspections, Hertz is introducing "much-needed precision, objectivity, and transparency to the cess – giving our customers greater confidence that they won't be charged for damage that didn't occur during their rental, and a more efficient resolution cess when damage does occur."Of the 500,000 rentals scanned so far, more than 97% showed no billable damage, according to Hertz, and damage incidents are declining at scanner-equipped locations

The Hertz spokeswoman acknowledged that the new system is still a work in gress."We know change of this scale takes time, and we're listening, learning, and imving every day

As we said from the start, our goal through this initiative is to enhance the safety, quality, and reliability of our fleet and to create a more consistent rental experience for our customers." AI excels at pattern recognition, but where it may fall short is with the nuanced decision-making that has historically characterized good customer service, according to McKeen."What makes these systems particularly blematic is the erosion of contextual judgment," McKeen said

Traditionally, relationships relied on human discretion to navigate gray areas "when does a scuffed tire represent normal use versus chargeable damage? When does a hearty portion in a restaurant satisfy a hungry customer versus being wasteful?"Other companies will be watching Hertz closely to see how the AI experiment works out, he said, and then jump right in on the fit opportunity if it is determined that use of the nology won't drive customers away.Automation vs. 'absolute overkill'The use of AI for cost recouping isn't widespread yet because companies have not figured out the balance between customer trust and implementing AI, and the benefit, so far, doesn't outweigh the potential loss in loyalty, said Chuck Reynolds, managing director at L.E.K Consulting and a member of the firm's digital practice.The key for companies to implement these cost recouping tools is transparency. "While the opportunity for AI is huge, organizations need to be thoughtful embedding it as a copilot, not police or enforcer," Reynolds said

Sustomers will accept AI as part of the experience, he added, if companies are fair, visible, and design the AI experience with empathy. "AI has to have customer-centricity built into its core," Reynolds said, and companies have to keep a role for humans in the cess to oversee and override the AI if necessary. "Organizations that do so without thinking through the entire cess will have challenges with internal adoption and customer adoption," Reynolds said.Customers should expect to see more of the nology Hertz is deploying in different settings, according to David Rivera, fessor of hospitality and tourism at Flagler College

In addition to hotels, the future could include restaurants using AI to itemize plates to ensure accurate billing

But Rivera says all of this is being done with the goal of operational efficiency rather than to punish the customer

Use of AI in hospitality is evolving from passive data collection to active use of real-time decision-making tools, Rivera said, and that includes things monitoring your rental car or how much you are raiding the mini-bar in your hotel room."The common thread is increased operational efficiency, enhanced guest satisfaction, and automation of traditionally manual tasks, with a layer of accountability and transparency for both guest and vider," Rivera said.Not everyone is on board with that view, however."This trend is absolute overkill with AI solution capabilities," said Daniel Keller, CEO of cloud infrastructure company Influx nologies, which vides data collection and data analysis tools. "This particular use of AI doesn't increase efficiency; it scrutinizes customers of small-margin service es looking to suck extra money out of guest experiences."watch now8:1908:19Booking Holdings CEO on Q2 results: People are still prioritizing travelingSquawk Box