When Big Data goes mainstream for Hotels
Every year, due to technical advances or major-player-adoption, some new technology becomes available to hoteliers en masse and becomes the “next big thing” in hotel marketing, these “big things” usually last a year. This year that big thing is going to be Big Data and here is why.
What is Mainstream for hotel marketing?
First let’s understand the concept of mainstream. In hotel marketing, when something goes from niche to mainstream it stays in the news for approximately 12 month, this is probably due to the news system itself which likes to label years as “The year of X” maybe it’s other reasons but that’s not the point - it just happens to be that way.
A few years ago it was social media. We all remember when that was all the hype and hotels and chains started hiring community managers. After that we had reputation management, hotels had understood the power of guest reviews a while before that but needed some technology to aggregate and analyse the data. More recently it was metasearch, hotels suddenly had access to a unique advertising channel that could deliver direct bookings. These trends don’t come and go, rather they come and stay. But they each had their “news” year.
For some technology or advance to go mainstream it needs enough hoteliers to adopt it (or to be able to adopt it) and enough suppliers to deliver it thus making it easy to access. In late 2013 when TripAdvisor shifted from pop-up ads to metasearch they tipped the scales and made metasearch a mainstream subject. For two reasons, the first is that they are a major player that adopted this technology and secondly, they opened access to hundreds of thousands of hotels with TripConnect. Prior to that it was mainly used by some chains and OTAs and a few savvy hotels via agencies.
One could almost say that for something to go mainstream in the hotel marketing world, it needs to be accessible to the independent hotel market. It’s a rule of thumb one can use quite safely. This doesn’t mean the independent market is always late, but not having the resources of chains and OTAs they can’t build these platforms or negotiate the same level of deals. And since the independent market is quite fragmented in terms of software platforms, well one can safely assume that if it’s available for them it is no longer a niche product.
What I mean by Big Data?
While I hate the term Big Data, I’m using it because it is clear and inventing a new term will just be a waste of time as nobody will understand me. But what do I mean by Big Data, this isn’t Google Analytics or some stats you get from a back-office. The Big Data I am referring to here is using real-time cross references and related data from multiple sources, internal and external to the hotel, in order to observe use and buying trends and tendencies, which is used by applications to action changes in marketing and operation functions.
The key points here are that it’s multiple data points both internal and external (such as weather, flight information and even news and events) and it is being used for actionable change and optimization.
Just having a lot of data isn’t my idea of Big Data - but having it cross referenced and taking action based on it (preferably automatically) is a world apart.
This infographic doesn't explain it much better but gives some ideas of what goes into Big Data.
Now why is Big Data next?
Big Data has existed with some the early adopters, the major OTAs use it and some chains probably as well. It exists to some degree with Reputation Management systems. It exists in some form, though crude, with the legacy Revenue Management Systems and it definitely exists in other fields like aviation and so forth who control the entire marketing chain all the way to price. This brings me to my next point - controlling the price.
Using big data to customize the sales funnel, using big data for marketing automation, content optimization etc, these are uses of big data that are very far from hotels today, they exist to some extent with OTAs. But if you don’t control the price - your impact on the sale is a lot harder.
And that is where big data is about to go mainstream in the hotel business - price.
Yes there are Revenue Management Systems like iDeaS, EasyRMS and many others on the market and they use a lot of data, in fact they use so much data to calculate their rates that most independent hotels can either not afford it due to high prices or lack of proper data hygiene.
So why this is this the year of Big Data? Because the new generation of systems are breaking through, platforms like Duetto and PriceMatch have been testing and optimizing their systems over the last year, and now have a product available for every type of hotel, at affordable rates. And not only that, they are built to be used by Revenue Managers and non-Revenue Managers.
There is another factor that needs to be present for it to go mainstream, a big player. While both of these start-ups are still working on getting big player adoption, they have both received adequate funding to get that adoption.
But most importantly almost every hotel now has access to some of the most advanced data analytics software for prices.
Why are they different? Because they’ve been built from scratch with modern technology such as being properly cloud based and that means immense computing power and to crunch all those numbers that is going to be needed.
For example, finding the events in your area, understanding weather patterns, comparing your rates with flight prices to predict peaks and lows and more, all these data points affect your rates and there are many more, none of which are based on your historical data. And yet, most existing systems are based on historical data and forecast. But what if your pricing system has been wrong all along?
So the entry point of Big Data, in the hotel marketing space, will happen through price. Why now? because the tools are available to every level of hotel and everyone will want a competitive edge. Why Price? because he who controls price controls sales and profit, when applied to entire cities or parts of cities they can even affect global demand for a city.
How it expands from there history will tell. I believe the next step will be creating a proper marketing automation system that is scalable and customized for hotels. Which has enough data points to know how long the person has been searching, which sites they have been on etc.
That’s a platform Booking.Suite (formerly known as Buuteeq) has an edge on developing as they have complete data sets from Metasearch (Kayak), to OTA (Priceline family), to Hotel Website (Booking.Suite) and soon even PMS.
But let’s leave that evolution to the future