To paraphrase Edwin Starr’s 1970 anti-war soul anthem, the mantra in today’s business world might be: ‘Data. What is it good for? Absolutely everything.’
There is certainly plenty to go around. Every two years, the volume of global data doubles. This growth is unlikely to slow, unless we suddenly all stop using the internet and social media.
Meta’s data centre in Pennsylvania is bigger than many industrial plants, bigger than Boeing’s factory in Washington state, for instance. Even larger data centres are found in China, and, in Europe, there are 23 data centres in the Dublin area alone. Despite terminology like ‘cloud’ and ‘ether,’ data is not vaporous; it is held in physical buildings.
Hospitality owners and investors are well aware of the business benefits of data-driven decision-making - better profitability, higher exit values - but there is a very real risk of being overwhelmed.
A panel at this year’s IHIF underlined the extreme complexity of some data applications in hospitality, such as revenue management. While one vendor discussed the “multi-dimensional displacement challenge,” involved in implementing a total revenue management strategy, there appeared to be a significant disconnect between what the vendor was describing and the realities of doing business for the operators present.
Even making a start was out of the question for some since it was “almost impossible” to hire a revenue manager. Bani Haddad, managing director of Aleph Hospitality, a hotel operator in Africa and the Middle East, said that the availability of technology and user knowledge varied greatly from one country to the other.
“What we would love to see is some system that can collate information from the PMS, POS, and CRS and give a simple solution, because we shouldn’t forget that the people operating the hotels daily probably don’t have the skills that we are discussing,” he commented.
Necessity versus availability
When it comes to guest data, what do hotels need? Traditionally, because hotels provide services prior to receiving payment, they have collected a wealth of customer information, including addresses, credit card details and passport numbers, much of which then needs to be disposed of securely.
Then there is additional personal data. While some argue that having as much information as possible about the guest can enhance their stay, others believe there is a line between targeted marketing and straying into ‘creepy’ territory, or simply having too much information to process.
Anything more than purpose of stay, potential allergies that the guest may have, and the guest’s birthday may be considered too much.
“Especially with legislation, it’s less risky for us in a way to get the bare bones of what we need to service the guest’s stay and their future stays without going overboard,” said Vibhu Gaind, CIO, RBH Hospitality Management.
The growing use of messaging platforms introduces a whole new source of guest data. Hotels may become indirectly privy to lots of information about their guests via messaging. Tech vendors and hotels have processes in place to sort and store this information and make sure they are complying with the relevant privacy laws.
If a guest does something careless like taking a photo of his credit card on WhatsApp and sends it to the barman, that image will not only pass through the WhatsApp system but four or five other integrated systems too, which may not have the same level of encryption as WhatsApp and might be more vulnerable to hackers. Vendors use automated recognition tools that flag up problematic content like credit card details and pornography.
As with all tech processes, a great deal of complex work goes on behind the scenes, but for most hospitality businesses, this cannot be a core concern.
Cleaning things up
Branden McRill, co-founder and CEO of 5 Out, an AI-driven forecasting tool for labour and purchasing, recently wrote on LinkedIn: “Restaurants are drowning in ‘data and insights.’ We at 5-Out are as guilty as anyone. Now we are cleaning up our act.”
After a six-month period of speaking to his restaurant clients to better understand their critical challenges, McRill found that not only do restaurant operators not want or need data, they do not want or need insights derived from that data.
So, what do they want? “Prescriptive actionable decisions served up to be acted on and executed,” he said. “Some are even asking us to take the action for them. This is the world we live in now and there is no going back.”
Derek Smith, founder, Canopy Metrics, added: “99 per cent of the data available to owners and operators is descriptive. It requires the user to derive their own insights and summaries. Technology that can summarise and then prioritise insights for operators is the future, for sure.”
As we move into budget season, hotel owners and investors need a detailed audit of data usage and business intelligence within their businesses. What operating procedures are in place? Is data being used to take meaningful action and add value, or is it wasting time and a drain on resources?
A Skift survey of 1,007 hospitality executives found that investment in digital transformation is increasing year-on-year. However, the survey found that a lot of money is allocated to maintaining the status quo.
Almost 40 per cent of executives reported that their number one priority for tech investments in 2023 and 2024 is to maintain and upkeep existing legacy systems.
Hospitality businesses are performing a balancing act, one that Steven M. Elinson, director of travel and hospitality, AWS, described as: “Flying the plane, while building a new one.”
Hospitality companies can increase their profitability and value by intelligent use of data, but change needs to be managed in an appropriate way. Hotels have smaller workforces, and they may not directly employ IT specialists anymore. This requires empathy and a people-first approach from vendors, said Heather Byron, SVP of services at Alliants. It also requires consumer-grade IT products that are easy to use.
“Our support team used to interact with other service desks and these discussions were very technical,” she said.” Increasingly, there has been a shift to talking directly with the employees who are using our products. When conversing with end-users directly, it is important to remember they are strapped for time, limited on resources, and newer to the industry. More than ever, they need clear and simple communication as well as total flexibility and support from their tech partners.”