Data-driven decision-making isn’t something new, but the way we conduct the data analysis is. Technology should be leveraged for analytics, especially in sectors dealing with a lot of data such as hospitality. Nevertheless, sensitive data should be used wisely and in line with data regulations. Hospitality providers can harness the power of data to gain valuable insights into guest preferences, market trends and operational performance.
In this blog post, we will highlight how advanced analytics can help with optimizing pricing strategies, personalizing experiences, anticipating demand fluctuations and enhancing overall guest satisfaction. It provides hospitality providers with valuable insight on how analytics can be used to stay ahead of the industry trends, maximize revenue, optimize resources and enhance guest loyalty.
Choices Based on Data
Before any analyses, data has to be collected and stored properly in real-time and empirically as well. With the proper infrastructure, a vast amount of data can be managed and analysed with a few clicks, either in real-time or empirically.
Advanced analytics tools and business intelligence dashboards empower decision-makers with valuable information, enabling them to make well-informed choices for their business and every division of it. Data-driven decision-making is particularly beneficial when setting pricing strategies, crafting marketing campaigns, and making operational adjustments in sectors like hospitality, which is seasonal and very competitive.
So, before any analysis, we must have the appropriate infrastructure, tools and staff that knows how to read and analyse data so that decisions can be made.
Here are just a few examples. When you are hesitating about whether to offer discounted spa services or discounted dinners, data from previous guest stays can help you identify what would work better. Online reviews and feedback are good sources of useful information for improvements, but manual analyses are tedious, so using advanced analytics, improvements can be identified faster. For example, consistent comments about slow check-in processes are certain signs that the check-in procedure should be streamlined. Furthermore, for catering services, the most popular dishes can be identified and therefore waste and costs reduced. Finally, various anomalies and potentially fraudulent activities can be detected and, as a result, revenue and reputation protected.
Personalization Drives More Revenue
Have you ever been in a hotel and had the feeling that every detail was just the way you liked it? If not, for sure you would like to experience it. Every person would. To get the most for money in the context of a unique experience and feeling is something special.
To be able to provide such services, hospitality providers should understand guest preferences.
This is essential for delivering personalized experiences that create lasting impressions.
Through advanced analytics, based on unique customer insights, hospitality providers can gain deep insights into individual guest behaviours, preferences and past interactions.
Tailor-made services and offerings that match each guest's unique expectations result in improved guest satisfaction and loyalty. Compared to requirements known in advance, expectations are very important and specific and therefore more challenging to meet. This is why hospitality providers should leverage data and analytics and, based on that, recommend the ideal product or service for each guest.
In addition, this affects revenue lift. As shown by McKinsey research, personalization most often drives 10 to 15 percent revenue lift (with a company-specific lift spanning 5 to 25 percent, driven by sector and ability to execute). The returns are greater the more the hospitality provider is skilled in analysing and applying data to offer a personalized experience.
More Accurate Forecasting and Better Strategic Planning
The hospitality industry is specific because of constant demand fluctuations. That's why accurate forecasting is extremely important.
Using advanced analytics, hospitality providers can better predict and prepare themself for the future. For example, future demand patterns can be predicted based on historical data, seasonality and other factors. Therefore, room pricing can be optimized, inventory managed effectively, and resources allocated more efficiently.
Advanced analytics solutions aggregate data and help demand forecasting optimization because new revenue opportunities can be recognized faster. Based on demand indicators aggregation, outlier periods, when the market is behaving unusually, can be identified up to a year in advance. In other words, hospitality providers can track high, low and normal demand and be notified if there are some demand changes. With accurate forecasting, hospitality providers are able to prepare themselves for high, normal and low demand. For example, in a low-demand period, providers can capture market share by proactive tactics that drive booking.
These insights enable them to better understand the market and guests. This is important for better strategic planning that will result in proper positioning and maximizing revenue.
The Right Offer to the Right Guest at the Right Price at the Right Time
Capacity allocation and dynamic pricing are the basis of Revenue Management. Initially developed for the airline industry, revenue management finds its place in a wide range of industries, especially hospitality. By analysing booking and occupancy data, hospitality providers can identify trends and patterns influencing revenue generation. It is a very useful tool for allocating capacity to different customer segments in a way that maximizes revenue. Unlike Yield Management, hospitality revenue management is broader since it is aimed at maximizing revenue opportunities from all services and amenities. In other words, it includes upselling, cross-selling, add-on packages, food and beverage, housekeeping, and all other property departments.
Thanks to advanced analytics, hospitality providers can identify the strengths and weaknesses of their facilities. It helps them to better understand which amenities or services guests prefer and therefore helps with investment prioritization and resource allocation. Also, time-based pricing requires automated data reporting and people that are able to make data-driven decisions. To promptly adjust pricing strategies, monitoring competitors' rates and offerings is crucial and advanced analytics enables it. The overall improvement is a result of strengths enhancement, improved guest satisfaction and experience, all based on optimal prices.
An important part of revenue management is customer segmentation, which provides valuable insights into the effectiveness of advertising and marketing campaigns. Data-driven findings can be used for measuring campaign success and marketing efforts optimization through personalizing ads and segment targeting. The results are higher conversion rates and ROI.
At the end of the day, revenue management is there to help hospitality providers detect the most profitable pricing options, conduct demand forecasting, analyse revenue loss, analyse revenue by channel and segments, as well as other particular revenue management tasks.
Identifying Partnership Opportunities
Advanced analytics in the hospitality industry can also be used to identify strategic partnership opportunities. Based on data analyses, potential collaboration opportunities with various industry players such as airlines, tour operators, local attractions and event organizers can be identified easily.
Knowing guests and their preferences enables hospitality providers to seek out partnerships with businesses that offer services or experiences that align with their guests' interests. For instance, if the data reveals that a significant number of guests enjoy adventure activities, partnerships with nearby adventure tour operators could be a good option. Similarly, transportation or any other guest preferences can be identified.
The benefits of such partnerships are two-fold. On the one hand, guests benefit from a holistic and personalized experience and therefore repeat visits and positive reviews are more likely.
On the other hand, new guests interested in combined offerings can be reached as such cross-promotions promote both partners, driving mutual growth and revenue generation.
Good to Remember
Incorporating advanced analytics into hospitality empowers providers to make data-driven decisions, deliver personalized experiences, optimize pricing strategies, outperform competitors and identify new partnerships for additional revenue generation. By partnering with a software development company that possesses the needed understanding of hospitality as an industry and has proven experience, hospitality providers can easily implement advanced analytics to offer exceptional services to their guests in this technology-driven era.
Leveraging the data enables hotels to adapt to fast-changing market conditions while enhancing guest experiences, ultimately leading to long-term success in the hospitality sector. Advanced analytics is no longer a luxury but a necessity for hospitality providers who are seeking to stay ahead and offer exceptional guest experiences.
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