Hotels using big data to check out guests
By putting customers into segments, they can offer a tailored and better experience
Hotel rooms are a fixed resource, but their prices are elastic, varying according to interlinked criteria like demand, time of year and weather.
Determining how much to charge is a data-intensive task - which makes it a perfect candidate for big-data analytics.
The more useful data points a hotel can get, the more certainty it can provide about future conditions, leading to better pricing decisions.
Hilton, a US multinational hospitality company, has been leveraging a modern data architecture to gain insights from data and to better serve customers. Hilton focuses on using data analytics to gain a 360-degree view of each customer, including reservations data, profile data and even details on how they use amenities of the hotel.
Gaining these insights enables Hilton to know its customers better and in turn, deliver more value to them. This results in more repeat visits and happier guests.
Along with optimising revenue per room, innovative hotels constantly strive to maximise revenue per customer.
That means understanding their behaviour and adjusting amenities.
By looking at what customers and their demographics do, it is possible to distinguish between customers in different segments.
One customer may have a high potential spend for a single weekend but is not a frequent visitor. Another may not buy many extras, but is more profitable because of regular visits.
This customer segmentation may vary by region and affect what hotels spend on services, even across different groups.
For example, one analytics-driven study of the hospitality industry found that a hotel gets up to US$30 (S$40) of extra revenue for providing a single complimentary bottle of water.
It also found exercise rooms, while generating no additional revenue, heavily influence a customer's decision to return.
Singapore's tourism industry is flourishing, with both arrivals and receipts reaching record highs in 2017, for the second year running.
The Singapore Tourism Board (STB) recognises the rising need for digital transformation. In 2017, it announced initiatives for 2018 designed to transform Singapore's hotel industry for sustainable growth.
STB and the Hotel Innovation Committee are developing a road map for the hotel industry to develop "Smart Hotels".
The road map will identify the next-generation system capabilities such as facial recognition at check-in and payment wallets that typically define a digitally-driven smart hotel.
One of the key challenges faced by the hospitality industry is that in the era of constant connectivity, customers have high expectations and demand a personalised experience.
Evolving technologies have the potential to create "personalised moments that matter" and bring joy.
These are brand interactions that demonstrate the willingness of a business to go above and beyond to provide their customers with experiences and services tailored to individual needs and preferences.
Again, the single most important aspect for hoteliers is to provide a great experience and ensure their guests are satisfied.
During guests' journey or stay, massive amounts of data are generated, which means hoteliers can now improve the quality of their service even more by using big data to cultivate insights.
If the hospitality industry is able to harness the power of big-data analytics, it will make all the difference in achieving the relationships it seeks to have with their customers.
The writer is vice-president and general manager for the Asia-Pacific at Hortonworks. This is an edited version of an article that was published in The Business Times last Friday.