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The Profitable Path to Personalization for Hotels.
By Kelly McGuire
Wednesday, 25th November 2015

As consumers have moved to digital channels and digital interactions, competition for the hotel consumer has increased dramatically, now, hotels not only compete with each other, but also with third-party online distributors, and even new disruptors from the sharing economy like AirBnB.

However, hotels have one advantage that these other players do not. They “own” the guest throughout the stay.

Only hotels have access to key information about preferences and behavior on property that can be used to build meaningful, engaging relationships, and encourage repeat direct bookings. This is why many hoteliers are advocating for personalization.

Personalization at its core is nothing but providing the same good service that hotels have been providing for generations, but doing it on a mass scale across channels, boarders, brands, and interactions.

To execute this effectively, hotels need to be able to surface the right messages to the guest at every interaction point throughout the guest journey, whether through a live interaction or through a digital channel. With the wide variety of interaction points, this can be a very complex, technology and business process heavy undertaking.  

It is further complicated by the fact that different departments “own” different components of the journey. For example, marketing is in charge of the pre- and post-stay experience. They must deliver the right content and communications that encourage conversions and repeat visits. Once the guest is on property, operations needs to profitably deliver on the experience promised during the pre-stay phase.

Finally, if revenue management has not set up the right pricing structure for rooms, upgrades, and even ancillary services, the hotel loses an important revenue generation opportunity. All departments need to set up their business processes such that the hotel can capture as much relevant, detailed behavior and preference data to augment the guest profile so that they can continue to be relevant to each guest and to the business mix as a whole.

To execute on this vision, hotels need to be able to capture data at every interaction point in the journey, comprehend that data through advanced analytics, and then act appropriately based on the results.

The big hospitality brands are investing in specialized databases to handle large volumes of data, as well as new, non-traditional data like text or location. Teams of analysts apply advanced predictive models to understand guest behavior, recommend actions to drive results, determine profitable pricing and identify areas of operational efficiency. Websites surface relevant content based on guest profiles and current search context. Real-time technology delivers messages and offers to the guest while they are on property, and powerful visualization technology puts analytic results in the hands of decision makers at the speed of business.

The good news for smaller players is that recent innovations have made the personalization technology that supports the capture, comprehend, and act cycle accessible even to smaller organizations. Responsive web design is surprisingly accessible. Cloud delivered, SaaS solutions provide access to advanced analytics without the need for a large IT footprint or a team of analysts. Accessible visualization technology is putting information in the hands of decision makers faster.

All hotels, regardless of size, should start by pulling together a cross-functional team to map out what they want the guest experience to be, and identify any operational constraints to profitably delivering on that experience. Specifically, the team should look for opportunities to use their hotel or brand’s unique assets to gather behavioral data to augment the guest profile.

Once the entire organization is aligned to the personalization vision, they can together determine where to begin the strategic technology investments to support that vision. Remember that execution of the vision is just as important as the vision itself. This is why it is crucial to have all aspects of hotel operations involved to ensure that profitable delivery is possible within the constraints of the business.

The key to successful personalization initiatives is in the organization’s ability to balance the meaningful, relevant, and engaging experiences with their revenue and profit obligations. If the organization does not maintain a focus on driving profitable revenue across channels and outlets, the personalization initiatives cannot be successful.

Revenue management, therefore, has a crucial role to play in analyzing demand patterns and establishing a pricing structure that assures a sustainable, profitable revenue stream, because operations need to execute profitably. Analytics can help shore up this balance, ensuring that the guest experience is maintained with an eye toward profitability.

Demand forecasts for proper staffing levels, calculating segment or customer profitability, and even analyzing guest feedback to identify training requirements or process improvements, can all contribute to the profitable foundation to support personalization.

In my new book, “Hotel Pricing in a Social World,” I explain how changes in consumer behavior have put new pressures on pricing, but are also providing new opportunities for guest engagement. The book describes personalization in greater detail, including the analytics that support this kind of guest engagement. I also discuss how hotels can foster the revenue-oriented culture that can support strategic, cross-functional initiatives like personalization. You can order a copy here:

Kelly A McGuire, PhD - Executive Director, Hospitality and Travel Global Practice, SAS

Kelly McGuire leads the Hospitality and Travel Global Practice for SAS. In this role, she is responsible for driving the offering set and setting strategic direction for the practice. McGuire works with product management, sales, alliances and R&D to ensure that SAS solutions meet the needs of the market. She also works closely with IDeaS Revenue Solutions, a SAS company, helping to integrate IDeaS revenue management solution with SAS’ Customer Intelligence solutions. She has 20 years of experience in the hospitality industry. Before joining SAS, McGuire consulted with Harrah’s Entertainment on restaurant revenue management strategies for their major markets. Prior to that, she was a senior consultant at Radiant Systems. She also worked for RMS (Restaurant Revenue Management Solutions) providing menu item pricing recommendations to major chain restaurants.

McGuire has a BS from Georgetown University and a MMH and PhD in Revenue Management from the Cornell School of Hotel Administration. Her research has been published in The Cornell Hospitality Quarterly, Journal of Pricing and Revenue Management and the Journal of Service Management. 

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