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The hospitality industry is ramping up the volume, velocity, and variety of data it collects and stores. Hotels are tracking everything from simple online and offline transactions to social media, customer relationship management, search, clickstream, geo-location, and mobile data records. The goal is to leverage this information to attract new guests and provide better service than competitors. In the process the industry’s storage and processing demands have accelerated.
Hotels are in many ways facing what their patrons and guests are facing: There’s just too much information. Most hotels understand that the answers to their business challenges are in their own data, but lack the ability to make sense of those answers. For many hotels, consolidated information about their guests is essential to delivering on customer service, managing loyalty programs, and targeting potential clients with appropriate offers. The pressure to access this information in near real time in online and mobile environments exacerbates the problem. With data sitting out in silos this may seem like the impossible dream; however, organizations that are taking a solid data management approach are paving the way to analytic success.
When done right analytics can leverage this data to predict future behaviors, collect preferences, identify cross-sell and up-sell opportunities, and find new customers. Analytic solutions can be used in all areas of hospitality operations, from revenue management to marketing, finance and service operations, helping hotels achieve that delicate balance between delivering memorable experiences and driving revenue and profits.
But in order for this kind of analysis to take place the data needs to be organized in a way that makes it easy to mine information. It starts with a solid data management system that pulls the information from different sources, cleaning the data up and rationalizing it by key assets, such as by customer or by product. All of that sits on top of an enterprise foundation that makes it easy and seamless to access multiple data sources, allowing any area of an organization to leverage its strategic data assets.
Once accurate and credible data is flowing across the organization, the game speeds up. Through master data management you can create, maintain, and surface a single, accurate view of key information about your guests. With instant access to this information, line level employees can make faster and more profitable decisions about how to treat guests—no matter the situation.
Reaching a point of maturity
Once your data is in order and accessible to the entire organization, you can start to use analytics to gain an edge in your market. Different organizations operate at different stages of analytic maturity (see “Stages of Data Analysis,” page 40). For hospitality companies this format is particularly useful when assessing the analytical maturity of your organization, and can be invaluable in developing a strategic analytic culture. The eight stages can be divided into two categories that support reactive and proactive decision making. For example, a mature analytic organization does not only base its marketing mailing list on the specific criteria of the guest, but can also predict who is most likely to respond, and who will be most profitable.
Reactive decision-making relies on historical information. When you work with standard reports that show you past data, the best answers respond to “what happened?” This occurs when a hotel owner reviews his or her past month’s performance and finds that room-based revenue has dropped when compared to last year.
To investigate, you may produce some ad hoc reports that show exactly which segments of your room revenue have dropped and by how much. Then, using queries, you can find out where this problem originated, and how you missed the budget or target. To avoid a reoccurrence, you may try setting up some alerts for similar conditions to help determine what actions are needed when this situation occurs. All of these actions are based on historical data, and as a result are reactive. Past data can be used to improve business performance over time.
Proactive use of analytics is the real game changer for hospitality companies. What if, when going into a quarter, you could see the trend, predict the outcome, and put programs in place that would allow you to deviate, thus avoiding the problem and protecting your revenue stream? Predictive analytics support proactive business decisions. Business performance is improved continually by asking and gaining insight into proactive, rather than reactive questions. These are questions such as: Why is this happening? And what will happen next? In today’s economic climate, you need to ask forward-looking questions.
Beyond revenue management
Predictive analytics, like forecasting and optimization, have been used in revenue management applications for some time and they’ve provided an analytics entry point for many sub segments of the hospitality industry. But revenue management is revenue focused, not customer focused. Hotels can also focus predictive analytics on their guest relationships.
Each contact that your customer has with your organization is an opportunity to increase the value of that relationship. A good data management approach can help you capture all the details of these interactions, but it is how you use this data to answer the forward-looking questions that gives you the ability to apply a strategic analytic approach and gain competitive advantage. Along with data management, a strategic analytic vision for hospitality incorporates a 360-degree view of your guests, which enables you to optimize your offers to them based on their value to you. This will not only benefit your organization in terms of profits, but also by increasing your customer loyalty. Imagine the impact on customer sentiment if your operations teams were able to personalize service for guests and patrons based on their previous interactions. Would knowing that a guest always dines in a specific restaurant influence how their check-in process was handled? Would an accurate demand forecast for your restaurants ensure that you had the right amount of staff on hand to adequately serve your guests and patrons?
Customer intelligence and targeted marketing are also areas where predictive analytics can help improve the customer experience. If you could segment patrons according to booking trend and behavioral factors, and then leverage this in assessing your customer’s preferences and their likelihood to respond to promotions, then you could use this information to automate and personalize marketing campaigns, making them less costly and more successful. You can also adapt your customers’ experience on your website based on the searches that they have performed or reach out with an offer that they are highly likely to respond to at the same time they are engaged with you.
Analytics can also optimize your operations, making it possible for you to serve guests in a more personalized and profitable manner. Think of it as high tech and high touch. Uncovering the preferences of customers can help influence your service design, ensuring your space is dedicated to the right activities and resources are deployed where they will be most effective. These preferences can also help identify the differentiating elements of your brand or service and how to target new customers with similar profiles. For example, applying social media analytics to hotel review sites can help you understand the triggers for good customer experience, allowing the opportunity to embed those in every interaction. It can even help provide you with the language that can most resonate with your guests, deepening those valuable relationships.
Building a strategic analytic culture
Hospitality companies often struggle to balance profits with providing an excellent customer experience. Analytics can help achieve that balance, but they must be part of the culture to have full effect. The real advantages come when analytics are used to integrate decision making between departments. For instance, bringing together demand forecast information from your revenue management system into the marketing optimization process means you can figure out which customers are most likely to respond and when you should target promotions and offers, all at the right price to avoid diluting revenues by offering unneeded discounts.
Integrating decision-making between departments will help break down silos and allow more predictive decisions at a higher level. As the use of data permeates the organization, effective presentation of analytics results becomes crucial. Busy executives do not have the time to consume analytics at the same level of detail as analysts must. Presenting analytic results visually—in charts, graphs, or even written stories—is crucial when elevating the use of analytics to the executive level. Painting the picture in an engaging format, with a foundation of analytic rigor will get the attention of executives, owners, shareholders, and stakeholders. Buy-in at the highest level of the organization is crucial for sustaining a proactive, integrated analytics program.
To successfully implement game changing analytics hospitality companies must first get control of their data by implementing solid data management practices and creating a strategic analytic vision that taps into every aspect of guest interactions. When you are confident that you have the answers to the question, “What is the best that can happen?” you have the perfect opportunity to build a competitive advantage, innovate, and truly change the game.
Natalie Osborn is the senior industry consultant for SAS Institute’s hospitality and travel global practice.
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