Red Oceans and Blue Horizons: A new Era in Hotels
Imagine two hotels next to each other. Both hotels have chic lobbys, rooftop pools and decent coffee. Yet one is bleeding profits while the other thrives, not by doing more—but by doing different. The second doesn’t compete based on price, or even amenities. Instead, it operates in its own Blue Ocean.
Today, the majority of hotels are stuck in the Red Ocean. They’re undercutting one another, chasing OTAs and trying to outdiscount their neighboring property. In 2025, when Artificial Intelligence (AI), which is rewriting value creation rules, becomes the norm, you will have a chance to take control of a market that only you can command.
This is your blueprint. Not hype. It’s not hype. Not hype.
What is Blue Ocean Strategy (BOS)?
Coined by W. Chan Kim and Renée Mauborgne, Blue Ocean Strategy is the art of making competition irrelevant by creating new value curves, rather than fighting over existing demand, you unlock untapped potential.
There are four main core actions (ERRC framework):
- Eliminate Factors that no longer add value
- Reduce your expenses Investments in areas that have exceeded expectations
- Raise The most important elements for customers
- Create New experiences that did not exist before
The strategy canvas allows you to see how your hotel compares with industry standards and where it can be different.
citizenM hotelsBlue Ocean in Hospitality: The Poster Child
Let’s begin with citizenM, a Dutch hotel brand which has disrupted the traditional hospitality industry by ignoring norms.
- Eliminated: Bellhops, concierges, oversized rooms
- Reduced: Front desk roles, decorative fluff
- Raised: Design, sleep quality (XL-king beds), tech
- Created: Self-check-in kiosks and vibrant social spaces.
CitizensM has thus captured a whole new market of design-conscious budget-conscious travellers who place value on experience rather than tradition. They did not chase after luxury guests or budget-conscious travelers. They created and filled their own sea.
AI: the Ultimate Blue Ocean Catalyst
Artificial intelligence isn’t just about automation. It also amplifies creativity, empathy, personalization, and more. Here are some examples of AI’s impact on the hospitality industry.
1. Zedwell / Criterion Hospitality UK
Zedwell Hotels The kiosks are AI-integrated and reduce the check-in time to less than 3 minutes. Their chatbot answers guest questions in real time and can respond 24/7 across multiple languages. What is the result? Staffing reductions, increased guest satisfaction and a competitive advantage in London’s saturated marketplace.
2. Henn na Hotel (Japan)
AI front desk agents will check you into this robotic hotel. AI dinosaurs are there to greet the children. Your room is unlocked by facial recognition. The hotel has fewer than 10 employees per location but maintains an occupancy rate of 90%. Prices are under $100/night.
This isn’t about gimmicks. This is about extreme operational efficiency You can also find out more about the following: curiosity-driven experiences.
3. HotelPlanner.comAI Travel Agents on Scale
The AI is trained on 8,000,000 calls. HotelPlanner.com AI voice agents are now handling 40,000+ calls per month. In just the first month, AI generated £150,000 in bookings. They’re projecting over £2.4 billion in annual revenue as this scales.
The ocean they made? Travel planning that is personalized, voice-first, and at scale.
AI Wins in the Areas of Energy, Reviews, And Reputation
Not all AI victories are flashy. Some of the most powerful AI transformations take place behind the scenes.
AI Energy Forecasting
With machine learning, hotels are able to predict energy consumption more accurately than 97% of the time. A study found that deep neural network technology had a 2.5% error margin. This allowed hotels to adjust energy loads, reduce peak consumption, and align sustainability goals.
Review Intelligence
The AI can analyze tens or thousands of reviews within seconds and pinpoint which features customers are most interested in. care about. A sentiment analysis of 2,000 hotel reviews may reveal that guests prefer quiet rooms to spa services. This can influence marketing, staffing and design decisions.
Blue Ocean thinking is about listening deeply, and then acting.
The Pitfalls – Ethics, Bias and the Human Factor
It’s not all sunny.
Delta Airlines, Hertz and other companies have recently been in the news for AI-driven prices that charge customers drastically different amounts for a similar service. While dynamic pricing may increase revenue, it could also undermine trust if perceived to be unfair.
Marriott’s AI-driven upgrade program sparked a backlash from elite loyalty members who found themselves outranked by last minute bookers paying slightly more. AI must be implemented fairly and with transparency, or it could damage a company’s reputation.
False positives and excessive police action have been reported by hotels that use sensors to monitor their guests for smoking or vaping.
AI should enhance, not monitor the guest experience. This means:
- Communication that is transparent
- Opt-in personalization
- Clear paths for human support
AI-Human Harmony: This is why it’s important to me. AI should enhance, not replace.
Three steps to disrupt your market
Are you ready to take action? Take three steps now:
1. Rebuild your Strategy Canvas
Then list the major factors that you and your competitors are investing in: service level, marketing, amenities, loyalty programs. Ask:
- What can be eliminated?
- What can be reduced?
- What are the possibilities?
- What can AI create?
Here is your blueprint for a new ocean.
2. Start Small With AI Pilots
Don’t boil the Ocean. Pilot AI in the most critical areas:
- Direct bookings using chatbots
- Smart Pricing Engines
- Automated energy optimizing
- Voice-based Room Control or Upsells
Start by focusing on the problem areas, not on the shiny objects.
3. Nominate an AI Champion
This person is not just tech-savvy. They are also cross-functional and visionary. What is their job? Bridge AI with everyday operations, ethics and experience.
This role is the heartbeat of your Blue Ocean Transformation.
Last Thoughts: You Are the Strategy
As a coach for hotel AI, I’ve seen time and again that innovation does not start with software. It begins with a mindset. With courage.
AI provides you with tools. Blue Ocean Strategy is a vision. You’re the captain of the ship.
Technology is not the cause of disruption. It’s about reimagining possible. It’s all about saying:
I’m not going to play that old game. I’m inventing a new game.
