In today’s data world, we have transitioned from using traditional databases and warehouses to embracing technological advancements and innovations in computing.
This evolution has integrated artificial intelligence and machine learning with big data, facilitating advanced analytics, predictive modeling and real-time data processing. But what does that mean for hospitality? Why is personalization so crucial in our industry? What are the challenges we face and what are the expectations from our customers?
Let’s start by defining Big Data in simple terms: a vast volume of information collected at high velocity from a variety of sources, which provides potential economic value.
Industries such as technology, finance, health care and hospitality deal with vast amounts of data points due to the nature of their business. While hospitality is data-intensive, it may not have the most data points compared to other industries. Still, we gather information from many different places, software, customer service interactions, past history, bookings, payments, demographics, online reviews, social media platforms, loyalty programs, market preferences, online patterns, travel intent and much more.
By leveraging big data effectively, we can subsequently personalize the experience for individual guests, leading to increased customer satisfaction, better loyalty and ultimately higher revenue. This would be in effect the Holy Grail, improving customer retention with optimized pricing strategies and operational efficiency.
We are talking another new level; the combination of artificial intelligence and machine learning allows us to know if our guests are part of the loyalty program. Even when they are not logged into the program, we can predict behaviors in an ethical and non-intrusive way that is still much appreciated by the guest/visitor.
Dr Meng-Mei Maggie Chen previously shared how some hotel industry experts are advocating personalization, specifically about upgrading solutions or add-ons. Well, this is old news; we are bringing the wheel to the stone age and the results are hard to believe because we have never seen how the wheel works. Wait till they see what we can do!
Consulting firms such as McKinsey & Company emphasize that the effective use of personalization through big data has a significant impact on businesses. According to McKinsey's research, 71% of consumers expect personalized interactions, with 78% of consumers saying personalized content makes them more likely to repurchase.
Research shows that personalization most often drives a revenue lift between 10% and 15%, 40% more revenue compared to their average counterparts. McKinsey estimates that top-quartile performance in personalization across U.S. industries could generate more than $1 trillion in value. But beyond customer expectations, there’s business incentive: 50% of revenue comes from the top 10% of customers, and 90% from the top 20%.
Retaining these customers and finding more look-alike is crucial. That’s where personalization is a powerful advantage, allowing you to create tailored experiences that build lasting relationships.
In summary, personalization via big data is a powerful tool for businesses, driving significant revenue growth and improving customer satisfaction and loyalty. So, where do we start? Here is a simple plan that will be crucial.
Data Collection and Integration
Handling big data in any industry involves several challenges. One particularly big challenge in hospitality is related to fragmentation on multiple silos — customer relationship management, property management system, enterprise resource planning, social media — and integration with legacy systems, or API inoperability issues.
Build a Data Plan
A data plan can help avoid inconsistent formats and ensure reliable analysis and insights across the organization. Think about what data is needed where and how to better use the vast information at your disposal.
Invest in Technology
Cloud-based solutions can help reduce costs and store data. Consider AWS, machine learning and AI tools to identify patterns. Even something like Tableau protects sensitive data by implementing robust encryption.
Work on Personalization Pre-Stay
Mix guest experiences with your marketing efforts before guest booking to increase your conversion rate. There is no need to develop; there are small industry focus companies like The Hotels Network or big generalists like Salesforce or Adobe. You just need to value efficiency and time management.
Collaboration Between Departments
A successful digital transformation led by the chief digital officer often depends on robust technology infrastructure, the effective use of data applied in your go-to-market to maximize your results. Each step in the process is led by a different member of the company's C-suite.
In case you are still hesitant, Big Data is revolutionizing the hospitality industry by enhancing data-driven decision-making, improving revenue management and operational efficiencies, and of course, increasing customer satisfaction and retention. My question for you: Are you still playing with Excel spreadsheets and databases?
Mercedes Blanco is chief partnerships officer at The Hotels Network and a founding member of Women in Travel Thrive.
The opinions expressed in this column do not necessarily reflect the opinions of Hotel News Now or CoStar Group and its affiliated companies. Bloggers published on this site are given the freedom to express views that may be controversial, but our goal is to provoke thought and constructive discussion within our reader community. Please feel free to contact an editor with any questions or concern.