Big Data for Big Pay-Off

Put Your Data to Work Optimizing Channel Performance

By Paul van Meerendonk Director of Advisory Services, IDeaS Revenue Solutions | March 19, 2017

Big data has been a starting player on the strategic revenue roster for years. In fact, years before big data exploded into something like a phenomenon, hotels were increasingly incorporating industry data into their revenue technologies and strategies. The opportunities afforded through the effective use of big data have grown to such an extent that today’s flourishing hotels must increasingly leverage larger amounts of available data to seize their most lucrative revenue opportunities.

But while big data might be heralded as the core of intelligent decision-making, using it effectively can prove to be daunting task for many hotels – especially for those looking to use industry data to develop new revenue management strategies, such as an increasingly essential need for hotels to strengthen their channel performance capabilities.
Channel performance refers to the management of channels or sources of business to achieve optimal revenue and maximum profitability for a hotel. However, when it comes to using industry data and revenue technology for sustainable channel execution, management and results, hotels need to not only prioritize the right types of data, but use it effectively to track and manage their costs and thoroughly understand their guests.

Prioritizing the Right Data

As hotels explore different types of data for their revenue management strategy, they need to take into account the degree of uncertainty the data brings since a high degree of uncertainty can create a risk for substandard revenue decisions and strategies. This is why identifying the right types of smart data is a critical first step for every hotel.

At the highest level, analytical revenue management technology is traditionally comprised from a combination of four data set types, with each set contributing to very distinctive outputs. To better understand the importance of each data set type – and how each one helps drive revenue results for hotels – the following is a brief breakdown of the four types of data sets: descriptive data, diagnostic data, predictive data and prescriptive data.

Hotels have been using descriptive data in their basic hotel technology to achieve their business goals for many decades. Descriptive analytics utilize data similar to standard hotel reporting, and large volumes of this data are used to give hotels a view of what happened in the past. These descriptive analytics allow hoteliers to make informed decisions about the future based on data that details what has already happened. Descriptive data falls into a category classified as “hindsight,” which is data that provides hotels with the ability to interpret their historical performance.

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Social Media: Engagement is Key

There are currently 2.3 billion active users of social media networks and savvy hotel operators have incorporated social media into their marketing mix. There are a few Goliath channels on which one must have a presence (Facebook & Twitter) but there are also several newer upstart channels (Instagram, Snapchat &WeChat, for example) that merit consideration. With its 1.86 billion users, Facebook is a dominant platform where operators can drive brand awareness, facilitate bookings, offer incentives and collect sought-after reviews. Twitter's 284 million users generate 500 million tweets per day, and operators can use its platform for lead generation, building loyalty, and guest interaction. Instagram was originally a small photo-sharing site but it has blown up into a massive photo and video channel. The site can be used to post photos of the hotel property, as well as creating Instagram Stories - personal videos that disappear from the channel after 24 hours. In this regard, Instagram and Snapchat are now in direct competition. WeChat is a Chinese company whose aim is to be the App for Everything - instant messaging, social media, shopping and payment services - all in a single platform. In addition to these channels, blogging continues to be a popular method to establish leadership, enhance reputations, and engage with customers in a direct and personal way. The key to effective use of all social media is to find out where your customers are and then, to the fullest extent possible, engage with them on a personal level. This engagement is what creates a personal connection and sustains brand loyalty. The February Hotel Business Review will explore these issues and examine how some hotels are successfully integrating social media into their operations.