Hospitality: When Disruption Checks In
Optimal use of data science can change basic expectations in the hotel business
By Benjamin Habbel, Founder of Voyat and Vice President of Business Development at Intent Media
The hospitality industry can be so idyllic. Hotels are the ultimate getaway, providing comfort, leisure and fun, an escape from the real world. And the good gets even better when the service is personalized—when we're addressed by name from the first contact, helpful suggestions match what we're looking for, and the mint on the pillow is just the kind we like.
Strategies driven by data science sometimes might seem disruptive in the often old-fashioned business of hospitality. However, change is out there already—Google research indicates that the average traveler visits 19 different touch points, using multiple devices and apps, before making a booking. It's the providers playing catch up to stand out.
That's why, far from the lobby and the concierge, some hotels now use digital platforms with a smart optimization layer that enables personalized messages to drive direct bookings on their website. This is advanced technology that boosts conversion rates by providing special incentives to the right user at the right time during the booking journey.
Here's how it works. Imagine a hotel that was just one of 165 options to turn up in an OTA search. Many visitors browse the hotel site but don't book. Imagine the establishment implementing technology that can deliver contextually relevant messages to high-opportunity visitors based on a sharper understanding of each prospect. And imagine benefits to the tune of a 72% lift in the targeted audience and 75:1 ROI since these tools don't eat into the booking margin.
Or picture a beachside resort whose business depends heavily on expensive OTA bookings. Even a small change in the channel mix would boost profit margins for the owner, but spamming all online visitors won't help the business and will hurt the brand. So it uses data science tools to study on-site behaviors and other key data points, then serves up custom-branded incentives to a select few. This initiative yields an 88% conversion rate in the target market—again, all direct bookings.
These aren't hypotheticals--they're actual cases of data science initiatives playing out in forward thinking properties around the world. It's what happens when we instantly segment users, analyze their behavior, learn about past interaction with a given location or chain, and customize messages accordingly. We can identify and track key data points—shopping habits, on-site behavior, where the user came from--and offer suggestions accordingly. That's custom, and it points the way to the future.
The hospitality industry is the ideal new-technology environment because most customer interactions begin online, then move to the real world when the customer reaches the front desk. Let's also remember that we're still in the early stages of this transformation. As these technology capabilities continue to evolve, the companies making changes now will be best positioned to keep benefiting from other advances--artificial intelligence, machine learning, etc.--as they arrive.
This is the true potential of data disruption. Some businesses resist technology innovation or keep their focus on other priorities, some use new products to do the same old things incrementally or slightly more efficiently, and some use experimentation and data to rewrite the rules. Guess which of those groups derive the greatest benefits.