The Role of BIG DATA In Your Hotel Revenue Management

All hotel properties has several challenges in the operations, among them the continuous searching for service excellence, revenue generation, balance of costs and expenses as well as the best KPIs (Key Performance Indicators).

So, how to sell the largest number of rooms, so that we can increase the occupancy rate, average daily rate, RevPAR and, as a result, increase profitability? Of course, revenue management strategies and sales force are both largely responsible and plays an important role for it, nevertheless, let’s now deal and talk about a business solution that targets the investment in customers, particularly in the satisfaction and retention of them, which has been gaining more and more recognition in the hospitality industry called Big Data.

There are different ways of defining Big Data, but I would like to use here and share one that I believe is simple, complete and objective. Big Data is the generation of a large volume of data based on 5 "V's": volume, velocity, variety, veracity and value. Volume is related to the amount of data generated, velocity is related to the speed in which these data are generated on the Internet. The variety is related to several forms of how to collect this data, generated from different media such as website, email, newsletter, among others sources. The veracity is related to the quality of information captured, in such a way that all this data is always correct and relevant, and last but not least, the value, which is directly proportional to the return on investment that companies need to have and to do in order to implement their Big Data projects.

In fact, Big Data adds great value to your business, acting as a strategic support solution aiming  to improve work processes, provide valuable insights that can help you gain competitive advantage, identify market trends, analyze the target market behavior identifying their needs and expectations, thus supporting strategic decision making in order to make them more assertive, anticipating competition's strategic moves, among many others benefits.

Have you ever stopped to think how Facebook suggests friends that you know, even you sharing any friends in common? Still, the social network is able to determine that you probably know each other and can be potencial friends.

When you do searches on Google (with your Google account logged in), you feed the Google algorithm with information about your behavior, search routines and preferred results. The algorithm crosses the behavior data with your personal data and your previous search history. With this package of information about your life, Google returns to you more consistent results with your preferences, personal tastes, profile and personality, and certainly at the top of the first page. Giving other example, when you are browsing a virtual store searching for products of your interest, no matter if you are using the same computer or a device completely different from the one you used for the first time. Have you ever noticed that some ads  related to your last search or purchase that you made continue appearing in your browser?

Have you ever used the search box on your Facebook page to look for contents such as videos, photos, texts or find people who have interests in common with you based on specific keywords? Example: "People who like to travel", "photos in South Africa", "people living in Maputo". Behind those searches, a large volume of data of thousands of people is crossed with your data in milliseconds by the big data algorithm, bringing results of content or people who certainly are closer to your preferences and profile.

These are some examples of a large volume of data, processed at high velocity, crossing a large variety of information, which is available and captured out of the internet with veracity, in a trustworthy way, and lastly, that add value to the final result presented to the user.

In this regard, it doesn’t matter if your property is a leisure or business hotel, just imagine the amount of data generated everyday by thousands of guests who are served at the front desk, at the restaurant, who are attending the spa, which are part of your Timeshare client base, who want to know other destinations, who want entertainment or still, how much money they spent at the last time they were staying at in one of your hotels. Imagine now the unstructured way in that your hotel might have been possibly collecting those data, even the data has been collected at all.

For decision makers, obtaining a solution such as Big Data, which can support the setting of strategic actions that creates new value for target market can make a difference in determining the success of campaigns and bringing better results in marketing, sales, revenue management or operation. It can result in better experiences around the purchasing and using processes, creating offers and personalized marketing campaigns so that it must be directed to the right target market, booking the right room, at the right time and for the right price.

Big Data in Hotel Industry

The hotel chains Marriott and Starwood Hotels, for example, make investments in Big Data to support all areas of the hotels, and use this resource to forecast demand having the greatest accuracy, determining prices for their accommodation with great efficiency through data analysis on external factors, such as politics and economics, events and even weather forecast.

Connie, the Hilton robot concierge, can be deemed as a great example of Big Data in the hospitality industry, being able to answer guest questions related to general hotel information, giving dishes recommendations, touristic attractions and other suggestions for attractions in the city of Washington. Although not accepting the formulation of complex questions, it’s a way of personalizing the guest experience and providing them with the information they need to plan their travel plan and enjoy their stay.

Resources such as this one, based on cognitive systems like IBM Watson or IPsoft Amelia comes to transform the way that companies think and interact, giving them the power of knowledge about their customers, covering historical data, behavior or giving insights about good ways to stimulate and engage them in loyalty campaigns, for example, enabling companies to have more assertive decisions and consequently better results.

Big Data and Revenue Management

Data, data and data. And if is reliable, imputed and captured correctly, with quality and value, the Revenue Managers would appreciate. Big Data provides Revenue Managers the opportunity to take an important step in the revenue management of their hotels, offering custom rates for each client, according to identified behaviors and market segmentation, in addition to providing a more complete analysis of market and competition, anticipating trends and helping them to have greater assertiveness in their forecasting.

Marketing and revenue management departments always needed a lot of data to analyze and plan new strategies, always seeking to better understand the market, to sell more and looking for a better company's positioning in the market. The truth is that the more we (managers) know about the target market, the easier it is to create compelling marketing strategies that can help in the sales cycle, increasing the conversion rates of campaigns and revenues.

In addition to that, the speed in which these analysis occurs is crucial for an accurate and faster time to market of promotions, launching of new products and the anticipation of new consumer trends, aligning your business to the reality of the digital world, where decisions are taken in a split second.

This is how Big Data contributes to the company's strategy, serving as a technology solution that supports and facilitates the collection, processing and analysis of data generated internally and externally, using them as a way to gain strategic insights for conducting business and gaining competitive advantage.

For all those who are interested in developing this kind of project, I share here an excellent whitepaper of Duetto Research called "Fine-Tune Your Hotel Forecast with Big Data," bringing seven important points that can help revenue managers to have greater accuracy in their forecasting, using Big Data to support, considering historical data and booking pace, competitor pricing data, events and external factors, social reviews, airlift and weather data and demand behavior. Good reading!