A Practical Guide to Big Data for Hotels

By Kelly McGuire Vice President, Advanced Analytics, Wyndham Destination Network | March 08, 2015

Big data has become a big buzzword. Like any buzzword, all of the talk about big data has created big confusion in the marketplace, and it can be easier to tune it out than to take it on. The reality is, whether you want to call it big data or not, there are now new opportunities to take advantage of data to drive decision making and ultimately competitive advantage.

Identifying these opportunities and understanding what to do about them is the challenge facing hotel managers today, particularly in revenue management. It is time for some plain speaking and practical advice about this complex phenomenon.

What is Big Data? A Reminder

Gartner defines Big Data as occurring: When the volume, variety and velocity of data exceeds an organization's storage or compute capacity for accurate and timely decision making (Gartner 3-D Data Management 2001). The reason why big data has become a big deal is not just that we have suddenly have a lot more data, but rather that the technology to capture, store and analyze that data is now not only available, but also accessible.

Innovations in technology have dramatically improved the speed at which data is gathered and processed, and driven down the cost of data storage as well. Big data, therefore, is not a singular thing, but represents a variety of opportunities for organizations to improve business and drive innovation.

Hospitality transactional data sets are by no means as large as an online retailer or a credit card company's might be, but in many cases, they have started to stretch the limits of the legacy technology environment. Reports and analysis are bogged down, and sacrifices are made, both in the storage of data and also the analytics run against it. This is certainly a missed opportunity. However, in my opinion, the biggest challenge that hospitality companies face is in the variety and velocity part of the definition. Useful, even critical, information is coming to us in a variety of new formats, many that we have not had to deal with before, like text data from reviews, click stream from web interactions, or location data. Integrating this unstructured data into a traditional relational database is difficult, if not impossible. Further, much of the data, like tweets and location, is stale nearly as soon as it is created. If you don't have a mechanism in place for taking advantage of these fast moving data sources, opportunities will be missed.

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Eco-Friendly Practices: Corporate Social Responsibility

The hotel industry has undertaken a long-term effort to build more responsible and socially conscious businesses. What began with small efforts to reduce waste - such as paperless checkouts and refillable soap dispensers - has evolved into an international movement toward implementing sustainable development practices. In addition to establishing themselves as good corporate citizens, adopting eco-friendly practices is sound business for hotels. According to a recent report from Deloitte, 95% of business travelers believe the hotel industry should be undertaking “green” initiatives, and Millennials are twice as likely to support brands with strong management of environmental and social issues. Given these conclusions, hotels are continuing to innovate in the areas of environmental sustainability. For example, one leading hotel chain has designed special elevators that collect kinetic energy from the moving lift and in the process, they have reduced their energy consumption by 50%  over conventional elevators. Also, they installed an advanced air conditioning system which employs a magnetic mechanical system that makes them more energy efficient. Other hotels are installing Intelligent Building Systems which monitor and control temperatures in rooms, common areas and swimming pools, as well as ventilation and cold water systems. Some hotels are installing Electric Vehicle charging stations, planting rooftop gardens, implementing stringent recycling programs, and insisting on the use of biodegradable materials. Another trend is the creation of Green Teams within a hotel's operation that are tasked to implement earth-friendly practices and manage budgets for green projects. Some hotels have even gone so far as to curtail or eliminate room service, believing that keeping the kitchen open 24/7 isn't terribly sustainable. The May issue of the Hotel Business Review will document what some hotels are doing to integrate sustainable practices into their operations and how they are benefiting from them.