The Hotel & Restaurant Technology UPDATE Fall 1998

Everyday, the hotel industry processes immense volumes of information. CRSs accept and store guest reservations which include identity, demographic and travel pattern information. Hotels enlarge that pool of data through addition of stay information – room, services and amenities used during the visit – to form substantial records related to each visit. Generally all of this happens when it should and without error. The throughput of data in our industry, in the CRS and at the property, is impressive.

The idea of throughput is a key concept. In the hotel industry, until recently, throughput has been our priority. Our focus, quite legitimately, has been the efficient collection, storage and timely delivery of guest stay data. Potential value in that data which might allow us to better understand our guests, to understand the ever-changing travel industry and to benefit from that insight through more effective promotion of our hotels has, by and large, been overlooked. But this attitude is changing.

The business potential of the data we request, receive and then store, is receiving heightened recognition. Hotel marketing and operations executives are acknowledging that they are unhesitatingly provided with far more customer data than most of their fellow merchants. Creating an enterprise-wide data pool has not, until recently, been a hotel industry priority. This has changed as senior hotel company executives have come to see the value of the data their systems contain if it could be first consolidated, and second, analyzed. And this realization did not come in isolation – throughout the business world data warehousing (information collection and centralized consolidation) and data mining (information analysis) is   taking on a new and higher priority.

Today every major hotel company is exploring the technology options, and designing the internal processes, to allow them to pool their reservation activity and guest stay information. In some cases these initiatives are an expansion of existing data collection programs. Here the data retrieval processes created to allow centralized accounting, centralized travel agent commission payment, frequent traveler recognition and tracking and similar highly focused initiatives are being combined and broadened to accumulate a broader range of data. In other cases, such as Cendant’s Project Power-Up, they are essentially new initiatives.

Now the goal of more and more hotel companies is to collect detailed central reservation data – the reservation information plus the environmental data related to those reservations (denials, advance booking time, relationship to promotions and programs, etc.). To this is added property-level reservation data plus all folio information from every reservation company-wide, to then reside in a corporate data warehouse. This information, which can quickly grow to substantial, previously unmanageable volumes, can then be dissected on two different levels in order to allow what is broadly termed data base marketing, levels which I refer to as “macro data base marketing” and “micro data base marketing”.

(Let me digress briefly to differentiate between data base marketing which uses internally generated and consolidated data from the similarly named activity of purchasing mailing lists from data base vendors for use in direct mail campaigns.)

Once created and populated, hotel company corporate data warehouses offer an unprecedented opportunity to detect and examine trends and patterns in marketplace and guest behavior. Understanding who is booking accommodation, as well as when and why they are booking, allows formulation of segment or sub-segment sales plans and promotions. It allows informed marketing planning and sales program execution – macro data base marketing.

A new generation of data base mining software, exemplified by Cognos’ Powerplay, is enabling unprecedented “slicing and dicing” of gigabytes or terabytes worth of data to identify important patterns and spot (hopefully before the competition) business trends and opportunities.

At the same time corporate data warehouses allow a new, finer level of individual traveler tracking, examination and response. Whether within the precinct of a frequent traveler program or a guest history program, or through examination of other specific business sources (such as travel agents), a new level of data profile depth and preference/pattern determination can be achieved.

Upon this data-based understanding can be built relationships which recognize the long term value of that guest and respond appropriately, allowing proposal of what will likely be much more relevant and successful offers. I term this level of analysis and action “micro data base marketing”.

The central reservation system is a key data contributor to the enterprise data warehouse. Further, the CRS/PMS communication network is the channel through which data collection from properties to the corporate data warehouse is often accomplished. Increasingly, I predict, we will see CRSs either equipped with or tightly linked to data warehouses, as hotel companies move forward in expanding and intensifying their macro and micro data base marketing programs.