Using data analytics to diversify offerings is spurring innovation for hotels in 2019 and beyond
A robot that checks you in, an app that opens your door, a mirror that greets you by name—this is the hotel of the future. It's easy to get distracted by shiny objects, but hotels still must test and learn from data insights before deploying any of these hotel industry trends 2019 on a wider level.
Using Data to Better Understand the Customer
The rise of digital has transformed how customers interact with travel brands, including hotels. Whereas once a hotel may have been booked on an agent's recommendation process, today's savvy consumers turn to online travel agencies, social media, chatbots, and apps.
This move to digital has proven a boon for hotels—the potential to garner new insights into the behavior of customer segments is seemingly limitless, in turn allowing hotels to understand their customers better than ever before. By analyzing these new insights, hotels can understand the impact of decisions on not only short-term revenue and satisfaction but also on long-term loyalty.
Take, for example, the "Connected Room," a truly future-facing concept in which a hotel room knows what a guest likes and has it ready on arrival. Some hotels are currently trialing the concept, while Marriott is at work developing one in its R&D labs. By collecting customer preferences via data insights and the Internet of Things (IoT), the connected room becomes the ultimate demonstration of using real-time information to better understand the customer.
Yet it's not as simple as collecting data insights and winning loyal customers. Hotels aiming to leverage new data streams must consider customer privacy as well as issues of siloed data sets and lack of the right resources to respond to data insights in real time. Data is often stored at a property or franchise level, which complicates the process for hotel chains looking for a holistic view of the behavior of different customer segments.
Winners on this front have worked out how to unify large data sets to unlock significant value, and they know how to process data in near real-time. By doing so, data-driven hotel strategies can hone in on how behavior impacts financial performance, customer engagement, and the Holy Grail of lifetime value.
Personalizing and Unbundling Product Offerings
Travel consumers have become accustomed to unbundled offerings on their journeys and are demanding similar options at the places where they stay. Hotels are investigating how to "merchandise the room," taking the personalized hotel stay experience as far as it will go. By providing additional add-ons such as high-speed internet, access to a fitness center, balconies, or oceanside views, the in-person guest experience becomes as customizable as possible.
Hilton's new urban micro-hotel concept, Motto by Hilton, gives hotel guests the ability to customize their locations and cater to their clientele. Typically, customers will be willing to pay more for that personalized experience — for an ocean view, or for something on the top floor with less noise.
Such personalization can become a very profitable business model as hotels put data insights to work to understand the ideal experience for each customer. The important thing is to engage with the right data, and interpret it in a way that puts customer privacy front-and-center while distilling relevant insights.
Leveraging Tech Innovations to Tackle Key Challenges
There are few industries more excited about emerging technology than the hotel industry, and the potential impact on the guest experience is huge. From the aforementioned connected room, to booking your trip via voice assistant, to checking in via an app, hotel industry trends for 2019 show that companies are diving head-first into tech.
Check in at certain Hilton Worldwide properties, and you'll meet one of the world's first AI-enabled hotel concierge with a remit to empower travelers to get the most out of their trips — once you've used your smartphone to get into your room, that is. The arrival and departure side could soon become easier, too, thanks to a combination of blockchain, biometrics and advanced cryptography, as the Known Traveler Digital Identity System aims to turn travel paperless.
All of that aside, it's easy to be distracted by shiny tech. Is a robotic hotel concierge a fantastic, revenue-generating value-add, or just a novel photo opportunity? It's when answering questions like this that hotels must understand the predicted impact before rolling out new technology on a wide scale. Testing and rigorously analyzing the results can help hotels to maintain agility and sustainable growth without unnecessarily throwing money at trendy objects.
Focusing on Experiences
Previously, travel was "segmented," with different companies owning a specific component of the travel experience: hotels gave guests a place to stay, airlines took you to your destination and tour groups provided local destination activities and information. Now, spurred by challenger brands and changes in consumer travel interests, hotels want to expand beyond their core business to offer enhanced local experiences for travelers. Take, for example, The Freehand's line of chic hostel/hotels that provide guests with an on-site bar, multiple restaurants, yoga classes, concerts, a coffee shop, and well-appointed communal lounge areas. Although the rooms are a far cry from a traditional hostel, with plush mattresses and updated amenities, the focus is on providing guests with an immersive experience that reflects the culture of their locale.
Particularly in urban markets and for millennial travelers, menus of local experiences are driving revenue for hotels—interestingly, both from travelers and from locals who seek entertainment, food, and relaxation close to home. The "attractions" page of old has been replaced by "experiences," with tours and activities the desired target, and the revenue impact is tangible—in some cases, local customers can attribute as much as 50% of revenue. Marriott has expanded its loyalty program to allow guests to both earn and redeem points on its Moments marketplace—and it's open to all consumers, too. Now anyone can book a tour, a concert or 110,000 other experiences through Marriott, further helping the brand to learn more about what customers want and tap into a wider customer base.
New players are also entering the market for experiences. Fitness brand Equinox is opening its first hotels in 2019, and a new "bespoke travel experiences" arm will launch in April with a Moroccan adventure. Equinox knows its customers, and these curated experiences are clearly tailor-made.
But, like emerging tech, hotels could easily be distracted from core strategy by constantly chasing the next great experience. They will need detailed insights into markets they design such experiences for—frequency of travel, high or low-end preferences and more—to ensure that an experience strategy can attract and engage high-value customer segments.
Pursuing Both Affluent and Millennial Customers
The nature of the high-value customer is changing, too. This segment is moving from couples to families, often composed of three generations.
But it's not just the affluent segments that hotels have their sights on now. By 2020, millennials will make up more than half of the global workforce, already accounting for the largest segment of business travelers, which means preferences in business travel are evolving. A good business experience may mean potential future leisure visits, but millennials are more likely to spend on experiences than goods, have a greater interest in health and wellness and look for spontaneous, last-minute short trips. Shared experiences and sustainability are markers of millennial-favored brands.
Hotels, then, must rethink positioning and pricing for both the affluent and millennial markets — and the latter can be more intricately segmented to bring even greater insights into preferences across the generation. Already we see hotel brands bringing in hotels aimed at millennials; they're more urban, more design-focused, and more connected, like Marriott's Moxy.
Through leveraging data analytics, hotels can gain valuable insights into how they approach and influence the customer lifecycle. They can discover how and why these high-value segments travel, and use segmentation analysis to pinpoint behavior at various points in the life cycle to unlock the value of this evolving customer base. Data insights can then power stronger business strategy to ensure hotel brands are fit for sustainable growth through 2019—and beyond.
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