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Crunching big data enables targeted service
WHILE some companies in the hospitality industry may be less innovative than others, those at the front of the pack are moving at the speed of light. These hotels use big data and analytics to enhance everything from their revenue to the customer experience. They have to, as current challenges make the industry a difficult market to play in.
Yield management is one such challenge. Hotel rooms are a fixed resource, but their prices are highly elastic, varying according to interlinked criteria like demand, time of year and weather. If you charge too much, you risk losing revenue to lower-priced competitors; if you charge too little, you leave money on the table.
Determining how much to charge is a data-intensive task - which makes it a perfect candidate for big-data analytics. The more useful data points a hotel can get, the more certainty it can provide about future conditions, leading to better pricing decisions.
Hilton, an American multinational hospitality company, has been leveraging a modern data architecture to gain valuable insights from data and to better serve its customers. The hotel group focuses on using data analytics to gain a 360-degree view of each customer, including reservations data, profile data and even details on how they use amenities of the hotel. Gaining these insights enables Hilton to know its customers better and in turn, deliver more value to them. This results in more repeat visits and happier guests.
Along with optimising revenue per room, innovative hotels are constantly striving to maximise revenue per customer. That means understanding their characteristics and behaviours, and adjusting amenities to suit. By looking at what customers and their demographics do, it is possible to distinguish between customers in different segments. One customer may have a high potential spend for a single weekend but is not a frequent visitor. Another may not buy many extras, but nevertheless is more profitable because of regular visits.
This customer segmentation may vary by region and affect what hotels spend on services, even across different groups. For example, one analytics-driven study of the hospitality industry found that a hotel gets between US$3.40 and US$7 in extra customer revenue for every dollar spent on Wi-Fi, and up to US$30 of extra revenue for providing a single complimentary bottle of water. It also found that exercise rooms, while generating no additional revenue, heavily influence a customer's decision to return.
BENEFITS OF DATA-DRIVEN MARKETING
Hotels.com embraced advanced analytics to help their customers find the hotel, B&Bs and other types of commercial lodging they are looking for as soon as possible. Through the use of data sets such as customer profiles, search criteria, location, device and website behaviour, Hotels.com is able to classify its customers into different groups. For example, the business traveller's hotel expectations would be different from that of the casual traveller. The use of big data has helped Hotels.com to create a better booking experience for their customers.
InterContinental Hotels Group uses mountains of customer data to determine the interests of its hotels' customers. Its personalisation process refines every time the customer returns. It claims 500,000 possible combinations of travel behaviours and loyalty programme interactions.
Because the hospitality industry is often based on time-critical situations, there is plenty of opportunity for hotels to innovate. Red Roof Inn increased its year-on-year growth by 10 per cent partially by drawing on public data feeds to provide historical weather information. This data enabled the hotel chain to better predict where the estimated 2-3 per cent of daily cancelled flights would occur in the US. The hotel could then use targeted search advertising to offer a room to specific stranded customers.
TRANSFORMING SINGAPORE'S HOSPITALITY INDUSTRY
Singapore's tourism industry is flourishing, with both arrivals and receipts reaching record highs in 2017, for the second year running.
To sustain the industry's growth, the Singapore Tourism Board (STB) recognises the rising need for digital transformation. In 2017, it announced its new initiatives for 2018 designed to transform Singapore's hotel industry for sustainable growth. STB and the Hotel Innovation Committee, led by Singapore Hotel Association (SHA), are developing a roadmap for the hotel industry to develop "Smart Hotels". The roadmap will identify the next-generation system capabilities such as facial recognition at check-in and payment wallets that typically define a digitally-driven smart hotel.
One of the key challenges faced by the hospitality industry, in Singapore as elsewhere, is that in the era of constant connectivity, customers have very high expectations and demand a personalised experience. Evolving technologies have the potential to create "personalised moments that matter" and bring joy to the travel experience. These are brand interactions in the digital or physical realm that demonstrate the willingness of a business to go above and beyond to provide their customers with experiences and services tailored to individual needs and preferences.
Again, the single most important aspect for hoteliers is to provide a great experience and ensure that their guests are satisfied. During guests' journey or stay, massive amounts of data are generated, which means hoteliers can now improve the quality of their service even more by using big data to cultivate insights. If the hospitality industry is able to harness the power of big-data analytics, it will make all the difference in achieving the relationships it seeks to have with their customers. Singapore's hospitality industry has much to gain from big data.
With mobile in the mix, big-data marketing takes on yet another dimension. Over at Oceanfront Properties, innovators combined geofencing with highly targeted Facebook advertising to target mobile app users who fit its targeted demographic. If their cellphones showed they were within say, 5 km of its restaurant during a set Friday evening window, the chain offered this target group free valet parking. Executives said the 150-car lot filled up almost instantly.
Some hospitality companies are innovating further by using wearable technology to enhance the customer experience. Disney World's wearable MagicBand feeds back data on everything from hotel check-ins to ride access and product purchases, creating a river of data that enables the company to offer that personal touch. Armed with these data insights, servers you've never met before will greet you by name. Your journey around the park will already be planned, based on your favorite rides, to minimise your wait. What does the company get in return, apart from your loyalty? It has all the data it could want to refine how it markets to future customers.
Big-data analytics, well-trained staff and attention to detail can create a virtuous feedback loop for companies in the hospitality industry. By crunching the numbers, they can not only increase the revenue for each customer but also make it far more likely that the same customer will seek them out in the future.
- The writer is vice-president and general manager for the Asia-Pacific at Hortonworks