Why Hospitality has Embraced Big Data
Hospitality is about reaching out and making people feel welcome. Is it any wonder that they would be quick to embrace anything new that could help them make the experience better for their patrons? Considering the endless dynamics and metrics necessary to manage even the most basic and straightforward hotel, bar or restaurant, it’s no wonder the hospitality industry has been an early adopter of Big Data. Think about it: tens of millions of daily customers, each one with diverse expectations and intentions. How can you possibly cater to them individually? Big Data science, that’s how. The predictive nature and advanced analytics of data science allow hospitality businesses to better manage their operations and learn more about their customers – then apply what they learn, sometimes in real time. Big Data can help hotels and restaurants know what sort of customer they are facing. Is this a business traveler who will be in and out – many times, sure – but minimal spending over multiple trips? Or is this customer a leisure traveler, who will come less but stay longer and spend much more each trip? The dynamic here is called “lifetime value.” It’s an aggregate that all hospitality businesses need to understand about their return customers. Big data can help businesses determine which
customer is which, altering how hospitality businesses should address each customer. What will they want? How will they want it, and how can the business get the most out of each customer. This dynamic – known as yield management – deals with making sure each destination, each table or room or attraction, gets the best price and earns the most possible profit. This process must begin with accurate expectations. Without an accurate, reasonable goal, businesses cannot properly project numbers. Of course, the actual guests are far from the only dynamic big data can help you measure. The ebb and flow of tourist season in various locations, how the availability of various supplies affects the price, the availability of skilled workers, additional seasonal needs and the market valuation of these, and countless other dynamics. Big Data analytics can answer all those questions, crunch those numbers, and help hospitality businesses derive accurate and realistic goals and metrics. Implementing data science in one aspect of its business – bookings – has allowed economy hotel chain Red Roof Inn to increase its business by 10 percent. Several other chains implemented big data solutions to combine data from their customer interactions with more passive forms of data such as customer reviews and off-site ratings from various social and travel platforms. Those analytics show businesses what their customers are really thinking at the point of service as well as later when they are not on site. Getting real data on these issues allowed these businesses to make specific, appropriate changes to their operations, putting the best money in the optimum places improving the areas of their businesses customers cared about the most. Jonah Engler is a financial expert with a background in entrepreneurship.