Solving the Big Data Analytics Riddle for Hotels

Hotels and other hospitality oriented businesses have received the message, big data analytics can solve for major business challenges from price optimization, to predicting touristic flows. However compelling this new realm may be for current and future operations though, not all big data solutions add the same value.

Here’s a look at how critical incorporating new technologies is, and at how hotels can overcome barriers to adopting these new innovations. In the end, all hotels will begin to innovate for a “best case” for creating an out-performance strategy.

Early Big Data Innovators

A recent IBM Institute for Business Value (IBV) survey of more than 1,000 business leaders revealed a “technological core” key business innovators now focus on. The assumption that the “big data” wave was all about simply introducing innovation and methods was foolish. Today tuned in hotel executives realize innovation is less about collecting massive guest and market data, and more about creating a critical business process. According to the IBM survey:

“Leading organizations are investing in innovation that leverages the ever-growing opportunities to collect new data, combine external and internal data, and apply big data and analytics to outperform competitors.”

It is with this fairly obvious mindset we find a new community of competitive advantage seekers. Within this “community” there are those hoteliers and marketers who do not simply embrace analytics for the sake of gaining insight, but instead begin to integrate this capability into a larger innovative process. Or as the IBM study puts it; “They pursue innovation more effectively – with enhanced data quality and accessibility, superior skills and tools, and a more innovative culture.” As I said, the trend is set, all industries are looped in, and defining the new analytics landscape need only be a matter of following innovators to an extent. Hundreds of billions in investment are being funnelled into powering predictive intelligence, as illustrated by the $20 billion valuation of Palantir Technologies. Furthermore, similar vestments in Uber and in Airbnb, should be enough stimulus for every hotel or travel agency to take note.

The IBM synergy in this direction demands businesses create an atmosphere for success, or more appropriately a quantitative innovation culture. This crucial component is fundamental whether the business is a single hotel, a large chain, or even the third party booking channels for hotels.

The Analytics Barrier

At the hotel operational level, and on a practical applicative course, many questions remain largely answered. Logistical questions dealing with the migration from a the singular siloed data warehouse approach, into running in parallel with a new data lakes schema. These and many more technical hurdles hamper hotel adaptation. Even more cumbersome than the technological hurdles, are the “self induced” barriers for change. A recent Eye for Travel interview with citizenM Hotel’s Lennert De Jong (at right), who shared insights from his association on the hotel level, and via the new innovations of SnapShot Travel. De Jong discusses something he refers to as an “interval of adaptation,”  when asked about the current state of current hotel industry adoption:

“Believe it or not, the one thing hotels need to do is to be open to an ‘interval’ of adaptation. So many times I hear from frustrated interns or staff in traditional hotels, how they’ve heard ‘this is how we’ve always done it’. I’ll advise every hotelier out there to take a look at their guest behavior, to look at their youngest employee, and then to challenge themselves as to whether or not they are truly open to change operationally.”

So we discover once again an age old dilemma of progress. Facing an evolution of this magnitude, hoteliers are caught within a matrix where technological necessity meets critical human resistance. Put more simply, the biggest hurdle we see in gleaning truly meaningful Big Data business focus comes from the business owner, the board of directors, or the person in charge of the property in question. Financial considerations, in this case, are meaningless in a survivalist competitive atmosphere. Hotels have no choice, this is the ultimate truth. De Jong sheds some more light on overcoming this obstacle too. When asked about the convergence of vital analytics use, and strategy adoption, the citizenM executive had this to add:

“There are a lot of articles about the clash between the CMO and the CIO in terms of technology spend. Is it technology spend or marketing spend? But let’s not forget about the CEO. He needs to take a look at unified and holistic data. Data becomes the glue of the organisation and I see it as the job of the current leaders to fix this.”

No Time for A-B Testing

Now that we’ve cemented the idea advanced analytics “culture” within hotel organizations, the only real hurdle that remains is choosing components of these strategies. Educating employees, integrating the whole process of value analytics into a hotel ecosystem is one big step, but mating with the right technology will end up defining winners and losers. If’s clear the age of excel spreadsheets and antiquated industry analytics will be long gone soon. The question remains, “What will take the place of these cumbersome and often fragmented tools?” Most conservative operations experts would ask first off, “What if we chose the wrong solution?” Choosing the right “engine” is going to be mission critical, that’s for sure. No hotel operation has the resources or the time for experimentation.

The landscape in the hotel analytics space is so-far splotchy, to say the least. There are enterprise solutions such as SAS, IBM, the aforementioned SnapShot Travel, and even Sabre. Tools like Simply Measured do a nice job of simple analysis of segments like social media impact for direction finding too. Even companies like Booz Allen Hamilton (PDF), the noted defense contractors have come up with hospitality analytics solutions. But as you’ll quickly learn, searching out the best of these solutions reveals the dynamic nature of this growing trend. Put simply, the very best tool has not yet arrived. So the trend for hoteliers is just to stay behind until the best tool emerges from the clutter. And maybe this is a good thing?

Turning to HeBS Digital and leading expert Max Starkov, we find more evidence of a point of “tool differentiation” in the statement:

“Hoteliers must use a sophisticated analytics tool that can paint the full picture of today’s multichannel campaigns and multi-device usage to understand the true conversions, ROIs, pathing and behavioral metrics.”

Starkov, and colleague Sara O’Brien are discussing one of the hotel business’ biggest failure equations, namely trying to “cheap out” on misunderstood technology. As is the case with most early innovation, adoption is hampered by first lack of information, slow uptake, lagging technology, and overly frugal outlay to get the best possible solution. A better solution for the moment might be to do due diligence, be informed, and to wait for the next phase to arrive. Adding the wrong tool to integrate now could be disastrous, or at best uncomfortable should T.H.E enterprise solution become evident. This does not however, take us back to the drawing board. Most hotels already have in place interim solutions, and the educational resources are available to make the right decisions when the tools are right.

Maybe a first step should be to develop the right culture, so that your “interval of adaptation” is shortened. Next we’ll assess some of the best tools out there, and we’ll try and give sound advice as to current and future developments in this space. For now it’s vital to at least begin to understand the gravity this digital phenomena has on your success. Knowing interpretive analysis has arrived is the start, applying this to your business’ success strategy correctly is the next mission. There’s simply no sense in performing a needless A-B test, unless of course your hotel group has limitless resources.