The Whole World Is Data – A Story of Revenue Science, Magic and Dogs
Let’s talk about data. As ubiquitous as the internet, data today is a fact of life. If you own and use any kind of technology, data is being collected about you—your usage, your likes and dislikes, and more.
The amount of data created by devices is nearly 100 times greater than the amount of data stored, according to the Cisco Global Cloud Index. Devices are expected to produce 847 zettabytes (ZB) of data annually by 2021—nearly four times the amount created in 2016.
And if that doesn’t blow your mind, IDC reports the “global data sphere” will increase from 36 ZB used in 2018 to 163 ZB by 2025.
So, let’s put that into terms we can understand.
Imagine a grain of rice is equal to one bit of data. If we extrapolate that out, a bowl of rice contains approximately 1,024 grains, which would be equal to one kilobyte (KB) of data. And further, 125,000 bowls of rice would be needed to represent one gigabit (GB) of data, or 125,000 KB.
Put your kitchens on alert, because one trillion GB is equal to one ZB, which would be the equivalent of the Pacific Ocean filled with rice grains of data. So, next time you eat a bowl of rice, consider that as data continues to increase, we are looking at 163 Pacific Oceans filled with rice grains of data by 2025.
The reality is that we are swimming in data. Oceans of it. Where is it all coming from?
Essentially, everything collects data today. From self-driving cars to the computer you carry in your pocket, the whole world is data. The emergence of platforms and applications are not immune to this trend, and within the hotel system space, the collection and use of data will be a key driver for how we utilize technology going forward.
Data and the Customer Experience
Google is one of the ultimate collectors of consumer and business data. In a 2018 study, the company revealed the complexity of the modern consumer paths to purchase. In an article from Google Think, we learned how a typical traveler uses about 700 digital touchpoints for a typical customer journey. That number is a very real statistic for the hotel industry as this typical customer will review up to five airlines and eight accommodation points or brands over a five-month period.
We also know today that people crave a personalized experience. Google revealed 57 percent of US travelers feel brands should tailor their information based on personal preferences or past behaviors, while 69 percent are more loyal to travel companies that personalize their experiences online and offline.
This shows us people do want personalization and are willing to give up a bit of their personal data to an extent, as long as it provides something of value back to them. I call this a “social contract” between organizations collecting data and the consumer giving up that data. As long as that balance is equal and people don’t feel they are being taken advantage of, people are happy to provide that information.
So how do leading companies use this data to provide a better customer experience?
Let’s take a look at Disney, another mega-data collection house. From theme parks to hotels and cruise ships to restaurants, Disney uses the data it collects not only to service its clientele better and more efficiently, but it has made it fun.
Disney’s Magic Band is the result of several years of development and several billions of dollars in investment. It has been rolled out successfully over the past couple of years to track the Disney experience, encapsulating a guest’s every need, desire and purchase from one device.
These bands are given to each guest, usually when they arrive at the park or cruise ship and are a classic example of how convenience often trumps the worry about where and how that data will be used. To prove the point, Disney reported a 90 percent satisfaction rate as the product was rolled out to its guests.
Princess Cruises has developed something similar called the Medallion which provides its guests with a seamless, frictionless guest experience from booking shows to restaurant reservations.
And those are only two examples. We would need a lot more pages to extrapolate how various industries such as healthcare, insurance, automotive, transportation and others have begun tapping into these vast oceans of data.
The Magic of Technology
Writer, inventor and futurist Arthur C. Clarke said, “Any sufficiently advanced technology is indistinguishable from magic.” So, what does magic look like when combined with technology?
I believe this is different for each individual. For me, being able to stand on any street corner, practically anywhere in the world, take out my smartphone, open the Uber, Lyft or Grab app and order a car is one of those “magic” moments. Not only will it tell me when it will arrive, it tells me how much it will cost, the make and model of the car and the name of the driver. This is where technology combines all the different bits of information to create a frictionless, enjoyable user experience.
For you, it might be the device on your wrist that counts your steps and reports on your heart rate. For others it might be the ability to speak to a little black box, have it turn on your lights, your television or order a pizza.
In the hotel industry, however, we are still far away from creating that “magic” experience. Many hotel chains around the world continue to run on antiquated technology built around 1957. There’s a reason for that, and this reasoning can be seen in other industries, including the finance and energy markets. That reason has been the 99.9 percent uptime these mammoth systems provide, in addition to their ability to manage a significant amount of data.
The problem here is this technology wasn’t built with the customer experience in mind. Its mission was, and continues to be, the efficiency of parsing or moving the data bits from point A to point B.
In the hospitality industry, we are beginning to see a shift to break down those silos. But it is slow going as the different modules a hotel depends upon are separate and share little or no data. What is becoming excruciatingly clear, however, is these disparate systems cannot provide the data needed to enhance the customer experience.
Over the next few years, this shift will begin to morph into hospitality operating platforms allowing hoteliers to take advantage of any myriad of apps being developed. These apps will feed off this single data point and, in turn, will provide insight into customer patterns. This will emerge as a single source of truth for guest data.
This shift will also allow the industry to move their data into the cloud, which will make the data much more accessible, easier to work with, store and transact with, and finally analyze. In fact, cloud service providers such as Amazon and Google provide analytics tools that ensure companies have the ability to look at their data from a usability perspective.
These cloud platforms also allow us to use artificial intelligence (AI). Some say roughly 60 percent of the IT jobs that will exist in 2025 haven’t been invented yet, and by 2025, all applications will include AI and about 85 percent of companies’ interactions with their customers will be automated.
Getting in Step with Revenue Science
Today, we are moving toward an “appification” of the hotel space, just like we have seen in other areas. Companies like Uber or Airbnb all have one advantage—a consolidated data platform. We are beginning to see an increase in the technology hotels are using as they look to apps that require a single point of data.
We have all struggled with technological advancements. How many of us have used GPS and, even though the app tells us which way to go, based on hundreds of data points, we still believe we know a quicker, faster route? Then once we arrive late at that destination, we realize the system was right after all.
This is also true when it comes to revenue management systems (RMS). These systems are so sophisticated they can handle 100 million transactions in a year, millions and millions of interactions and determine the linkages between these different variables, all of which need to go into a pricing system. Just like a GPS knows, more efficiently and more accurately, a lot of things you cannot know as a human, your RMS also needs to be trusted in much the same way.
Maybe you can make a better decision five or ten times, but can you consistently and accurately make those decisions 24/7 without the advantage of automation?
It’s time for us to switch from a manual approach to an automated one. At the same time, it will be important to let the system do what it’s supposed to do, not interfere and take a more strategic approach to revenue management and pricing.
What About That Dog?
In an interview with Dave Roberts, SVP revenue strategy and solutions at Marriott International, he outlined a simpler, albeit strange approach to revenue management: “Every revenue management system should include a computer with a sophisticated RMS tool, the revenue manager and…a dog.”
He extrapolated: “The revenue management system should do what it’s supposed to do and be sophisticated enough to do the job it was designed to do. The revenue manager should focus on strategy while the dog is there to make sure the revenue manager doesn’t touch the computer.”
How much are we willing to give up control? We cannot let go completely because there are plenty of opportunities to instruct the system and teach it things it cannot know and for us to be more strategic, instead of being tied to the spreadsheets we have become so accustomed to over the years.
It all comes down to establishing the right balance between artificial intelligence, automation and human thinking. Rather than fighting against the system—or training a dog to stop us from interfering—it is important to embrace the technology that is able to handle the oceans of data we have coming at us.
Let’s swim in it, not drown.