The hotel sector is ripe for a Big Data-drive transformation, but there are still huge obstacles to overcome before that happens.

As an industry, the hospitality sector captures huge volumes of data that has the potential to dramatically change how the industry is run. Unfortunately, for most hotels, that data is still an under-appreciated and under-used asset. For example, most hotels capture data about customer loyalty, but very few go beyond that data collection stage and actually exploit their data to deepen their knowledge of their guests and develop a better understanding of the behavior of different customer segments, their expectations and needs. What this means is that 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, and etc.

Hospitality's data aggregation problem

The problem hotels face in exploiting data to their benefit is not collecting the data itself, but one of aggregating that data and actually putting it to use, industry experts say.

"The data is out there," notes Martin Soler, CMO at SnapShot, a company that offers a data analytics platform for the hotel industry, in a recent whitepaper sponsored by travel intelligence firm Skift. "but, to use Hans Rosling's explanation, it is stuck behind stupid passwords, presented in boring statistics and costs money to access."

As such, it's little wonder that hotels face big difficulties in identifying how and where to start the data analytics process, and those challenges prevent many from even trying to do so. In fact, even some of the largest hotel brands are struggling to know what to do with their data, 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. In its whitepaper, Skift notes that a whopping 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. And rather than try to tackle this alone, Rezidor is looking instead to embrace partnerships with third-party technology providers like SnapShot, in order to reduce spending on its internal technology profile. 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, notes Michael Heinz, co-Founder of SnapShot, but there's another reason why bigger brands can also benefit from working with third-party providers, he argues.

"Large scale brands have more resources, more data and can invest into infrastructure that will manage this in the future," says Heinz. "[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 make usable 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 "claw back" some of the revenue-driving data that's been ceded to online travel agencies. While OTA's and ratings/review players like TripAdviser are in fact indespensible 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 shown in how most hotels react to such things as negative reviews. A good example comes to light via a report by the Center for Hospitality Research (which HN covered) entitled, "What Guests Really Think of Your Hotel: Text Analytics of Online Customer Reviews," by Hyun Jeong "Spring" Han and colleagues. This study's conclusion was, 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 where possible. However, the significance of deep analytics technologies 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 "snap" awake, or to wake up to the competition having passed by.

Phil Butler
Pamil Visions PR