IN-DEPTH: The travel sector is increasingly trying to bank on a consistent view of data in order to make informed, actionable decisions that support the business strategy

Published: 26 Aug 2011

IN-DEPTH: The travel sector is increasingly trying to bank on a consistent view of data in order to make informed, actionable decisions that support the business strategy

By Ritesh Gupta

An effective data management strategy can let any organisation adapt quickly or even capitalise on emerging opportunities in the marketplace.

According to SAS, by combining data integration, data quality and master data management into a unified development and delivery environment, organisations can maximise each phase of the data management process. Using a single framework with an intuitive interface empowers organisations with data that is consistent, accurate and timely.

The travel sector is increasingly trying to bank on a consistent view of data in order to make informed, actionable decisions that support the business strategy. The travel industry still has a long way to go when it comes to reducing the cost and complexity of managing data, improving business agility, and leveraging the same. The travel industry needs to be nimble as it has to take quick decisions based on an overwhelming amount of dynamically changing data.

Specifically, hotels need to harness data properly in real-time, in order to effectively adjust pricing according to the various key factors.

Among intermediaries, Expedia describes itself as a data-driven organisation competing on analytics. Expedia is using analytics to: understand what marketing promotional channels influence and drive revenue conversions on the site; optimise its marketing spend by channel; increase customer lifetime value; and improve the overall experience of customers while on the site.

Operational needs

Within the travel sector, suppliers have been relying on data management for varied purposes.

For instance, hotel companies have been working on initiatives to push revenue management from a centralised function out to the operational levels of their properties where one can now empower hotel employees that are busy providing guest services to also make data-driven revenue optimisation decisions with ease.

Hotels are looking at ways to combine current competitive and market data with historical insights. It is being highlighted that the big innovation that is on the horizon is the capability to quantify price elasticity and use that output to generate optimal prices directly. Bringing publicly available competitor pricing data into the heart of the RM system and forecasting how customers will respond to changes in price—it’s a totally different approach.

Hotels are yet to overcome certain challenges as well.

“Too much data analysis and not enough decision making can cause the very real problem of paralysis by analysis: a poisonous situation that creates slow decision-making—or brings it to a halt—due to redundant analytical processes and sheer data overload,” says RevPar Guru’s Jean Francois Mourier. “Of course, in business, the most commonly understood example of paralysis by analysis is when a project involves so much computer-generated analytical data that employees have no idea where to begin and where to end. Furthering the “paralysis” is the authorisation process that is usually required to act on the data. Such processes delay decisions by requiring slower human “re-analysis,” which usually comes in the form of meetings and/or committees.”

Another significant area is CRM, a discipline designed to both acquire and retain profitable guests. The foundation of CRM is a database, which is fed by all marketing activities and is constantly updated, segmented and fine tuned to reach guests and prospects on a one-to-one basis with targeted messages. Communicating one-to-one and encouraging dialogue builds relationships and loyal guests.

Travel companies need to build and maintain a high quality database of prospects and guests.

Caesars Entertainment has developed a comprehensive lifecycle marketing programme that triggers messages as a result of a customer’s most recent brand experience.

Referring to major challenges in terms of the timing, relevance and even the right medium for sending these messages, Monica Sullivan, VP Advertising, Harrah’s Entertainment, says “Data is a big piece of the puzzle and a big part of our success. However, managing this data across platforms is no small feat, but it's something that we are constantly working to innovate.”

In terms of the overall performance of the sector, hotels track several performance metrics such as occupancy, average daily rate and revenue per available room.

Improving planning and buying cycle

Other than suppliers, even some of the new online travel ventures are promising to change the whole travel planning and buying process.

For instance, Hopper, a startup (founded by a team of former Expedia employees) which is developing a website for consumer travel discovery, is using a new generation of Big Data analysis technologies. The company believes that in order to fix the user experience, first there is a need to fix the data. And there is a lot of data out there. The company is using Machine Learning, NoSQL databases and Big Data processing to transform raw web pages into structured and organised information, enabling a faster, more complete, and more flexible search than traditional travel sites.

What a startup can now do with analysis and aggregation of really big data sets would have been inconceivable a decade ago. And this has led to some incredible innovation in domains like web search, social media monitoring, finance, and health. But the travel industry is lagging behind, believes an entity like Hopper.

“Hopper is built on NoSQL technology, which means we don’t have a rigid data schema, and we can scale out easily to store hundreds of millions, even billions of records. In order to run this, we need to build our own servers. And we use Map/Reduce, which is a really powerful framework for distributed processing,” Hopper CEO Frederic Lalonde told EyeforTravel’s Ritesh Gupta in an interview this week.

Lalonde added, “Our partners push product data to Hopper; it’s like a live feed of up-to-the-minute flight, hotel and package offers that users on their sites have queried. And so we break from the request/response paradigm. We don’t compute optimal fares and routes; it’s not our expertise. We don’t package products, and we don’t apply discounts. We are the opposite of a meta search site.”

“All of our focus goes to computing the relevant relationships between web content, travel products and the real-world in order to make all these simultaneously and instantly search-able by keyword. Any keyword,” shared Lalonde.

Sustaining businesses

In case of online intermediaries, the travel industry has some commodity aspects, which can make it tempting to focus more on transactions than customers.

But, for its part, Expedia, which is using SAS Business Analytics to optimise online customer experiences, as well increase the lifetime value of each customer, has spent significant time building data sets, clusters and predictive models to determine which customers are most likely to buy.

Overall, analytics helping the travel industry to generate relevant offers.

Expedia has built and trained a utility model, using real-time pricing data from hoteliers and historical customer data, to predict what would be most relevant to consumers.

Keeping pace with change

Considering the way companies in the travel sector are trying to strengthen their ancillary strategy, it is not surprising to find that this is resulting in new challenges.

For instance, corporate travel managers are still grappling with the best way to tackle airline ancillary fees from a tracking and policy perspective, as well as the ongoing effects on supplier relationships. According to AirPlus’ latest survey of corporate travel buyers, the process can be so overwhelming that nearly half (44 percent) are not tracking the airline ancillary fee data in any way. When it comes to expense reporting, 38 percent rely on travellers to include their ancillary fees manually in expense reports, while only seven percent include fee menus in those tools and 15 percent have automated capabilities built into their expense reporting tools.

Understanding consumers

The industry has worked hard over the past few years to use the technology tools at hand to gauge rapidly changing consumer desires.

Not only are review sites the main way consumers get information about a travel destination, they’re also becoming a database where service providers can get information about potential customers.

“Consumers are beginning not only to like, to but expect a direct response to a negative review. Many hotels now constantly monitor multiple social media streams and directly engage current and potential guests - further humanising the company, and turning reviewing a hotel into a conversation with the hotel itself, not just a one-dimensional review,” Ben Jost, CEO, TrustYou told EyeforTravel in an interview.

Jost added, “Travel companies, hotels, and the like have gained an “information advantage” by closely monitoring the preferences of their guests, as well as the way they communicate about these preferences on the Internet. Taking this knowledge and incorporating it with involvement in social media makes it possible for hotels and destinations to gain a very “human” aspect - engaging with customers not like companies, but like end-users. Now a hotel, no matter how big the chain, is able to participate fully in the “conversation” about their hotel and their industry at large that takes place on the Internet.”

As Jost says, a firm can only stand to benefit from having more accurate consumer data at their disposal - and as such, social semantic search should be considered an essential part of a well-rounded marketing approach.