Back to blog

Why Big Data Will Transform Hospitality

March 18, 2016
Snapshot team

The hospitality industry is ripe for transformation. One driven by the massive quantities of data already being collected by everyone from the mom-and-pops to the Hiltons of the world. Just look at all the companies that were working on solving "the hotel data problem" at ITB this year. Yet there are still huge obstacles to overcome before the revolution can get underway.

The most immediate obstacle being that, for most hotels, data is still an under-appreciated and under-used asset. For example, most hotels capture data about customer loyalty, but very few go beyond the data collection stage and use that data to deepen their knowledge of their guests and the behavior, expectations, and needs of different customer segments. This means hotels are failing to identify profitable customer segments and missing out on opportunities to attract new guests, not to mention losing customers to things like negative reviews.

Hospitality's Data Aggregation Problem

The problem hotels face in exploiting data to their benefit is not collecting the data, but one of aggregating that data and actually putting it to use. The data is out there, but, as Hans Rosling, the famous data scientist observes, it's stuck behind stupid passwords, presented in boring statistics, and costs money to access.

As such, it's little wonder that hotels face challenges in identifying how and where to start the data analytics process, and those challenges prevent many from even trying to do so. , admitted Wolfgang Neumann, president and chief executive officer at The Rezidor Hotel Group, which operates more than 1,500 properties worldwide under its Radisson and Quorvus Collection brands.

Rezidor is working hard to transform itself into a more data-driven business, in particular by trying to analyze data generated by guests during their stays. One of the ways it's doing this is by trying to ensure that all of its guests have access to free, high quality Wi-Fi. Neumann argues that by not providing this, hotels are missing out on the opportunity to better serve their customer's needs, by combining the data they generate with location-based prompts, for example, so they can reach out with timely offers for what he calls "top-band customers."

That's some huge potential right there. 97 percent of all business travelers and 94 percent of leisure travelers travel with at least one mobile device. And when one considers that just one percent of hotel guests take the time to fill in a paper post-visit survey, compared to between 21 and 30 percent that engage with hotels using a mobile device, it's easy to see why Neumann is so convinced that this kind of engagement is necessary.


A Helping Hand?

Of course, hotels also need assistance to analyze the data their guests generate. By strategically outsourcing tasks like data analysis gleaned from databases like that of STR and others, hotels can save huge sums of money on the expensive IT infrastructure that's needed to generate value from their data.

This is something that's particularly important for smaller and/or boutique hotels, but there's another reason why bigger brands can also benefit from working with third-party providers. Michael Heinze, SnapShot's CIO, explains, "Large scale brands have more resources, more data, and can invest into infrastructure that will manage this in the future. [However] I believe it is such a specialized field that it should be done by highly specialized companies who can excel at delivering focused and great products in that realm."

It's a point that Rezidor's Neumann agreed with wholeheartedly, saying that third-party partnerships enable hotel brands to more affordably capture, aggregate, visualize, and use the data that he believes is critical to the future of hospitality revenue. In addition, he argues that third-parties also give hotels a chance to recapture some of the revenue-driving data that's been ceded to online travel agencies. While OTA's and ratings and review players like TripAdvisor are indispensable partners for hotels, no one knows a hotel property's operations like the owner does.

"We have given away too much ownership - and in particular relation to data, we have not utilized the relationship that we actually own, or should own, with the customer," Neumann said. "If we do that, and build on that data, we can make it a competitive advantage."

Further evidence can be found when examining how most hotels react to thinks like negative reviews. A report by the Center for Hospitality Research entitled, "What Guests Really Think of Your Hotel: Text Analytics of Online Customer Reviews," concludes that sophisticated text analytics, for instance, can give hotel managers detailed information about how to improve their guests' experience, where numerical ratings alone simply cannot.

Of course, most hoteliers know to read guest reviews and to answer them when possible. However, the significance of deep analytics technology is clear. Natural language tech, advanced algorithms and hospitality industry education will very soon lead to game changing business capability. It's time for hospitality decision makers to take advantage of this huge, possibly unprecedented opportunity.