How Big Data Is Transforming Hospitality

There is quite a bit of confusion as to what the term “Big Data” actually means. Is it a set of tools or is it a product? Do only "big" enterprises have "big" data? Big Data is a term that refers to huge volume of data – both unstructured as well as structured. What is important here is not the volume of data but what the companies are doing with the data. Big Data can be examined for insights that lead to strategic business moves. By analyzing the big data, you can find the answers that enable smart decision making, new product development and optimized offerings, time reductions, and cost reductions.

However, extracting meaningful insights from this large volume of data is not an easy task and this is the challenge for every business today.  Understanding the relation between different pieces of information that is available in huge data sets is highly critical as they can provide vital hints about the customer preferences and help businesses enhance and provide ultra-personalized services in turn meet the expectations of a customer. As big data helps raise the service quality to newer levels, it is rapidly being embraced by almost all the sectors, and the hospitality industry is no exception.

The hospitality sector is a highly competitive industry today. A key challenge for the hospitality industry is that in the era of constant connectivity, the customers have very high expectations and demand a personalized experience. If they feel that they are not satisfied with the services provided, they have a lot of other options nearby. Fortunately, there are certain steps the hotels can take to satisfy their customers. Due to the huge amount of information that travelers generate, the big data is a natural partner for the hotel sector. The hotel companies can utilize this data to offer personalized experience to their customers starting from suggesting local restaurants to finding a price point that is irresistible. They can also utilize this data to tune their operations in a proper way.

Let us take a look at few of the major areas where big data is changing the hospitality world.

Careful Identification of Issues within Restaurants

A few voids here and there are common for every restaurant. But, every void or discount is a loss of money for the restaurant and the careful identification of what is causing these voids at the restaurant while taking steps to prevent future voids can improve the restaurant’s revenue. For instance, if you look at a report (regarding all the restaurant data) at the end of the day and observe that a specific item has been voided several times, you can ask your back of house staff whether the item was prepared properly or not or whether the ingredients were fresh or not. Missing this type of information amidst the hustle is to be expected. But, after the restaurant closes you can learn precisely what it is you have to work on in the future.

The data that is collected can be used for front of house operations as well. If you see that a server is inactive, you can use the labor data functionality and examine how particular servers are translating labor into sales. Perhaps you will learn that the server continuously gets great tips and continues to provide great sales, or you might learn that their labor-sales margin has dropped. You can proceed accordingly with this concrete and new information. So, analyzing the data that is collected is helpful for careful identification of issues in the restaurant.

Focusing on Regular Customers

Regular customers are integral to the success of a restaurant. When they keep coming back to the restaurant, they let you know that the food is good. They also contribute a fair bit to the restaurant’s revenue. The National Restaurant Association reported that regular customers contribute almost 51% of sales at fine-dining restaurants, 63% of sales at family-dining-eateries, 64% at casual dining-establishments, 68% at fast-casual restaurants and 71% at QSRs. This study confirms the need for big data in the hospitality industry.

By analyzing the data regarding the previous orders of repeat customers, you can suggest new items they may like and send them coupons or other promotions and ultimately improve customer loyalty. Identifying and promoting regular customers helps in increasing the profit and it also results in good publicity.

Working towards Gauging Preferences

To improve the customer experience, businesses must be able to determine customer preferences. The best way to know these preferences is by gathering data about every customer from different sources, especially the internet. Since this will most likely result in a huge amount of information, the data must be carefully analyzed to extract only the most relevant details.

For instance, a lodging business with several restaurants can examine a customer’s transactional data and to get an idea of his or her eating patterns. Also, it can mine for information through social media channels and on user-generated websites to know how the customer enjoyed the food at a specific restaurant. Examining information from these sources will provide the business important insights into the customer’s culinary likes. Then the next time this customer books a hotel reservation, the company can offer a reservation at his or her favorite restaurant too. The company can also offer menu choices depending on culinary likes. This kind of strategy improves the customer’s travel experience and makes it more likely he or she will check into the same hotel in the future. Consequently, the lodging business not only acquires incremental revenue but the customer is also satisfied with the personalized travel experience which in turn leads to better customer loyalty.

Marketing Plans for Different Target Segments

Big data can help organizations devise the finest marketing strategies for every target segment depending on their preferences and activities. The businesses can devise the right strategies to reach out to their customers when they properly understand them. For instance, if a company knows that a specific target group is spending an average of 30 hours a week on social media, they can devise their marketing strategies via social media channels. This kind of strategy will provide the greatest visibility for the organization within their target group.

It is possible to determine the optimal marketing spent across various marketing channels in real-time with the right big data techniques and tools. This means that the businesses can stay on top of the altering preferences of consumers and utilize it optimally to acquire the higher engagement and maximum coverage for their services and products.

Further, big data is also useful for a business to understand marketing pitfalls, particularly in the areas where its competitors are way ahead of it. For instance, if an organization examines the path to purchase on a hotel brand’s website, the point where the guests are abandoning the website to move on to competitors will be shown by the web log. Thus, the analysis of the web log helps businesses to identify the problem and provide a solution, thus enhance the customer revenue.

The big data’s power in the hospitality world is limitless. You can run your business smoothly and save a lot of money if you approach the day-to-day operations of your restaurant armed with information. The decisions must be made after they are weighed against a robust set of data. Otherwise, it will hurt your business even if you cannot see it upfront and personal. When the above tips are integrated in the business, you will certainly notice highly satisfied customers, happier employees and a more refined operation.

Savaram Ravindra was born and raised in Hyderabad, popularly known as the ‘City of Pearls’. He is presently working as a Content Contributor at Tekslate.com and Mindmajix.com. He is also an Author at Swamirara.com. His previous professional experience includes Programmer Analyst at Cognizant Technology Solutions. He holds a Masters degree in Nanotechnology from VIT University. He can be contacted at [email protected]. Connect with him also on LinkedIn and Twitter.