Even though the use of BI and analytics tools in hospitality is in a nascent stage, they are set to redefine customer service as we know it today. By Jasmine Desai
The hospitality industry is all about customer service and pr
oviding the best customer experience. While this sector is not too bullish when it comes to IT adoption, analytics is a different story. Presently, several hotels are in different stages of adopting business intelligence and analytics solutions.
The use of BI and analytics enables hospitality service providers to see more clearly who their target customers are, observe their behaviours through purchase history data, and tailor offers, promotions, and advertising at specific demographic and psychographic sub-segments of the market. Analytics makes it easier to find out what product or service customers really want, and helps firms provide them the same when, where and how they want it—be it text/messaging, email, mobile or the web. And, of course, at prices they will agree to pay.
The solution scope
In spite of the ongoing implementations, the adoption of analytics tools in the Indian hospitality industry is still picking up. Says Douglas Gray, Chief Solutions Officer, Blue Star Infotech, “We see hospitality companies in India just beginning to understand the concepts and apply the techniques associated with BI and analytics, including big data, social media, and mobile applications, to build stronger, longer, and more profitable relationships with their most loyal and repeat customers.”
IT solution providers, however, are eyeing this industry very positively. According to Jayashree Iyangar, Manager in Data and Analytics Solutions (DAS) Group at Mindtree, “The room for growth in BI and analytics is huge in the hospitality industry. With increasing digital foot prints of consumers, it is becoming imperative for the hotels, travel companies and leisure and entertainment companies to provide their customers a richer experience which is best suited for their needs, in addition to value differentiation they can bring in.” Consumer insights are more a necessity than a luxury for the hospitality sector.
Most of the large hospitality players have integrated enterprise solutions with BI embedded into them or mature DW/BI infrastructures. The adoption of predictive analytics by such players is also in different stages. The revenue management functions use analytics extensively.
Also, the larger hotel chains typically use business analytics for inventory management, pricing and yield management to maximize revenues as well as return on capital assets. But this technology is not really widespread among independent hotels, smaller chains and other hospitality services providers.
Inventory management, pricing optimization, and revenue or “yield” management typically result in a 4-6% increase in annual gross revenues for hospitality companies as per industry estimates. Leveraging marketing analytics to understand customer purchasing behaviour through profiling, segmentation and targeting of offers, promotions, and ads can often increase campaign conversion rates and reduce the marketing expenditures of hospitality firms.
Giving an overall perspective, Ramendra Mandal, Country Manager, Qliktech India Pvt Ltd, says, “There is a lot of potential for vendors in India as many foreign chains are establishing presence here. There is also a lot of online presence through which products are sold. These portals are increasing the reach of the hospitality industry.”
The big challenge
One of the inherent challenges in the hospitality industry is the existence of data silos across the organization, which hampers the immediate use of data to create a complete and accurate picture of the customer.
According to Gray, “A challenge associated with this industry’s application of BI and analytics is the availability of clean, well-organized, structured data to enable analytics applications to function and execute properly, and deliver actionable results and insights.”
The data often exist, but are contained in multiple information silos across the organization. For example, a hotelier may have multiple records associated with a single customer in its call centre CRM app, billing/payment system, property management system, web site/e-commerce DB, loyalty programme, on-premise retail POS DB, customer satisfaction survey system DB, and marketing/sales DB, among others.
As per Bhavish Sood, Research Director, Gartner, “The process required for analytics in hospitality is the most cumbersome compared to other industries.” Varied technology platforms across the organization leads to complexity in data extraction.
To integrate and cleanse all of the data relevant to the customer into one holistic data model that provides a single view of customer behaviour, while governing the same on an ongoing basis—be it in a data warehouse or an in-memory virtual data model—is a challenge. Only if companies are able to meet these challenges can BI and analytics tools be used effectively to explore, visualize and analyze the data and generate actionable and useful business insights for more profitable offers and promotions.
Executive buy-in is the most critical element of the success of BI and analytics tools. Marketing and finance executives in particular must see for themselves and then embrace and understand the economic benefits and business value to be derived from analytics. An investment is required to reap the benefits of analytics in hospitality. Most often, a revenue increase and increased market share and customer loyalty are the primary drivers that motivate executives to invest in analytics and the supporting data management infrastructure.
From a solution perspective, says Mandal of Qliktech, BI has traditionally been a very technology-oriented and IT-centric project. “It takes a long time to implement, typically around 16-18 months to go live. Another challenge is flexibility in terms of changing reports or including another dimension to analysis, which takes around 6-8 weeks.”
Also, most solutions are not built keeping the cloud and mobile aspects in mind—which makes them less attractive to companies looking to adopt a cloud model.
The journey ahead
Analytics is a game changer in the hospitality industry and will mature to become a prime enabler. Its use in making strategic decisions as well as tactical changes has helped customers improve their brand equity as well as opened newer revenue streams.
Says Gray of Bluestar, “Travel companies are looking at ‘gamification’ on their websites to obtain more data and also improve the customer adhesiveness on the site. This data is used to enhance the user experience on the website with relevant promotions and details as per the customer profile.”
Predictive analytics is also set to be used more and more to identify the reasons for booking failures and also understand which customers are riskier in terms of non–booking and what should be done to entice them to complete the booking.
BI and analytics tools are definitely set to change the industry by taking the guesswork out of hospitality marketing efforts—in the process revolutionizing customer service and retention. Analytics holds the potential to shatter the old advertising and marketing executive maxim: “I know I am wasting half of my ad/marketing budget; I just don’t know which half.”
By observing, surveying, collecting, cross-indexing, and analyzing data from customer purchases and buying behaviour, marketers and product managers can remove the mystery from the question “What does the customer really want?” and give it to them. At present, only the large or most innovative hospitality companies are leveraging the full potential of analytics, but the benefits are available to all those who choose to pursue them.
According to Venkatakrishnan Iyer, Lead-BIM India, Capegemini, “In the current scenario, with technologies such as big data available, the opportunities increase for the industry.” Utilizing the social media channels to identify influencers and customer service issues and respond in real time can be extremely profitable. All these are possible in real-time today with analytics and big data solutions.
The hospitality industry will continue to evolve. Earlier, it was about understanding the customer; now it is about providing the best customer experience. Analytics has a key role to play here in ensuring that consumers are treated and pampered individually for much richer and satisfying customer experience.