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THE HOTEL INDUSTRY’S AUTOMATED FUTURE: A FRAMEWORK FOR AI WITH A HUMAN TOUCH
The Hotel Industry’s Automated Future: A Framework for AI with a Human Touch SKIFT REPORT 2016 3
Executive Summary
The Complete Automation of Customer
Acquisition and Retention
Introduction
The Ideal Customer Retention Ecosystem
Setting The Data In Motion
Using Data To Manage The Situation
Slicing And Dicing The Data
What Are Key Data Points For Action
Discoveries In the Data
Balancing The Outreach
The Ideal Customer Acquisition Ecosystem
Changing Touchpoints On Site
Keeping Guests Loyal
Optimizing The Big Picture
Test But Verify
Insights and Strategies
Executive Letter
TABLE OF CONTENTS
ABOUT SKIFT
Skift is a travel intelligence company that offers news, data, and services to professionals in travel and professional travelers, to help them make smart decisions about travel.
Skift is the business of travel.
Visit skift.com for more.
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The Hotel Industry’s Automated Future: A Framework for AI with a Human Touch SKIFT REPORT 2016 4
EXECUTIVE SUMMARYThe Complete Automation of Customer Acquisition and Retention
Data has shifted the foundation of the hotel industry. Managers can now segment
guest profiles to infinite degrees, creating a comprehensive picture of who’s staying
at their properties. Managers can also track guest habits, interests, preferences and
any unrecognized revenue opportunities or paths to stronger brand loyalty –– it’s all
in the data.
The question isn’t just how to make that data work – it’s how to make that data
work automatically. We can slice and dice it all we want but if hotels aren’t building
a lifecycle that continuously augments sales and operations, there’s little point in
having all the information.
Luckily we have artificial intelligence.
“The winning hotel companies will be the ones that make artificial intelligence
the technical foundation for improving acquisition, streamlining operations and
boosting overall profitable revenue,” says Cendyn Chief Sales and Marketing Officer
Tim Sullivan “No more guessing a guest’s specific needs. Now hotels anticipate them
and deploy automated outreach.”
We previously thought of computers as very elegant calculators but now they’ve
become consultants. Algorithms analyze. Algorithms learn. Algorithms advise.
Provide artificial intelligence engines enough information and they can distill
complicated patterns like weather or trade economics into actionable insights,
predictions that would take humans months to calculate.
Understanding a guest’s preferences and buying patterns is not unlike predicting a
stock price. Artificial intelligence engines not only unlock the future with past data,
but create feedback loops so those improvements always build on themselves.
No more courting attention with shotgun-approach emails, ads and commercials.
Marketers are shifting from a pattern of interruption to weaving offers and
touchpoints into the guest’s life on and off property.
“Making better decisions with AI is going to be the future,” says Mark Bagley, Senior
Demand Generation Manager at AMResorts. “You don’t need to have four data
scientists in a closet somewhere doing this work.”
The Hotel Industry’s Automated Future: A Framework for AI with a Human Touch SKIFT REPORT 2016 5
INTRODUCTION
Each step of the guest lifecycle contains finely-tuned datapoints; reason for
travel, booking date, date of last stay, amenity preferences, activity preferences,
dining habits, total spend, not to mention personal datapoints like email, address,
birthdate, education, income, job title, primary language and marital status ––
even listing them all feels overwhelming. But these pieces fit into one constantly
changing puzzle that intelligence algorithms analyze with ease.
While the lifecycle arrow in the graphic moves across demarcated sections, the
data from one builds answers for the next. That’s why so many industries refer to
artificial intelligence as “an engine.” These algorithms power the interdependency of
business processes.
CRSSocial
CallCenter
Web
PMSPatners
Loyalty
POS
Apps
Activities
Plan Book
Pre-Stay
Arrival
Retain
StayWorkPlay
GSS
Mobile
The Hotel Industry’s Automated Future: A Framework for AI with a Human Touch SKIFT REPORT 2016 6
Now we have the tools to mine data and understand how a specific marketing
campaign will affect certain customer segments. We can understand how specific
gestures at the front desk will change retention. We can know whether email, mobile,
social or display ads are best for certain demographics. Hotels are often triggering the
right messages at the right time to the right customers –– but how do we continue
building those smart feedback loops?
Engines can’t run without fuel as algorithms can’t run without data. A hotel can’t
build meaningful interactions or nurture customer relationships if the data is
inaccurate or incomplete.
“That’s what we look for: an integration through our full ecosystem,” says Ramsey
Pruchnic, Vice President of Relationship Marketing and Data Management Platforms
at RLHC. “Every data point we want integrated.”
The Hotel Industry’s Automated Future: A Framework for AI with a Human Touch SKIFT REPORT 2016 7
THE IDEAL CUSTOMER ACQUISITION ECOSYSTEMHow does a hotel automate customer information upload and updates? Where does all
that information come from? How is it processed, cleaned, appended, compared?
SETTING THE DATA IN MOTION
Marketing to new customers can feel like shooting in the dark. But information
clearinghouses provide intelligent streams of data for AI platforms to understand who
exactly they’re targeting and how. Now hotels understand prospective customer habits
and can automatically append and update target lists accordingly –– before they design
campaigns to bring them into the fold.
And new emerging hotel marketing platforms allow hotels to tailor their outreach by
a target customer’s preferred digital platform and with messaging that resonates. Not
only does that drop the cost of acquisition but frees up marketing teams to analyze new
customer segments.
The first hurdle in viewing customers as a lifecycle is defining the beginning of the
relationship. Large intermediaries like Expedia, TripAdvisor and Kayak often cause hotel
management to view a reservation as the end goal. But that moment functions as the
first step for building loyalty and ideally, a lifetime of reservations.
Once a guest makes a reservation, that’s when the work begins. Pruchnic gives the
example of a California-based businessman coming to a property for the first time.
Integrating data on everything from his buying patterns to his social media habits
tailors upsells. Perhaps he tweets about the NFL and reading, the platform may then
automatically offer him a reservation at the property’s on-site bar on NFL Sunday, or let
him know about the quiet cabana rentals.
The platform can then double the value of that data by automatically tracking what
he did with those offers. If he clicked but didn’t complete, the platform can then push
instructions to the front desk staff to follow up or to try a different upsell. In addition,
that data appends to the customer’s record, helping the artificial intelligence platforms
to understand how to tailor future digital outreach.
“If we’re able to match our customers to their databases, now we’re even more
sophisticated,” Pruchnic says. “Now I can target to him specifically.”
The Hotel Industry’s Automated Future: A Framework for AI with a Human Touch SKIFT REPORT 2016 8
USING DATA TO MANAGE THE SITUATION
What information do hotels have that enables their team to understand a guest’s
expectations? How have hotels integrated it? How are hotels using that data to
manage guest expectations?
Before arriving at a hotel, guests have certain expectations. Meeting them is step one
in ensuring repeat reservations.
One of the best ways to manage guest expectations is to get them involved. A
guest who schedules an activity is 25 percent less likely to cancel a reservation. That
outreach also allows hotel managers/marketers to promote hotel experiences on their
terms. Hotel management has set proper expectations and made life easier for the
hotel’s operations team. But without having enhanced guest profiles, it’s hard to know
what to suggest.
Susan Hardy\Traveling for business\Likes Pampering\Doesn’t Drink\
Jake Masters\Is traveling with children\Has visited the hotel bar every visit\
Janet Montrose\Traveling for busines\Hasn’t stayed at property in 5+ years\
Up-sell: Discount on hotel spaDon’t offer complimentary champagne
Proposed activity: “Bring the kids to movie night!”
Proposed welcome message: “So glad to have you back, dinner is on us.”
The Hotel Industry’s Automated Future: A Framework for AI with a Human Touch SKIFT REPORT 2016 9
“If you offer a pro shop discount to someone who doesn’t own golf clubs or a daycare
reservation to someone without kids, you’ve alienated them before they’ve set foot on your
property,” Cendyn chief sales and marketing officer Tim Sullivan says.
Here’s where feeding that engine smart data becomes key. Artificial intelligence can
do the analysis to find the right offers, but no one can work accurately without proper
segmentation of the information.
Pruchnic advises being gradual with data-focused initiatives. Minimizing the initial
number of variables –– and building from there –– helps hotel managers maintain an
understanding of what the data’s truly saying. Nothing sends marketing efforts in the
wrong direction faster than misinterpreting results.
And like any analysis, it can induce paralysis. Pruchnic says hotels shouldn’t get too
caught up in segmenting or returns, or the return on investment for the effort will begin
to diminish. Algorithms are, for example, sensitive to assumptions. Some require normal
distribution of a data sample to be meaningful.
SLICING AND DICING THE DATA
What exactly is the marketing outreach supporting? How can the guest’s check-in be
streamlined? How does the data help to better manage confirmations and cancellations?
Hotels can start by creating relevant groups or clusters that match with activities and
amenities provided by the property, based on the guest’s lifestyle and affinity. Hotels can
then use the platform to understand how well those campaigns are working and feed
that information back into the platform to optimize, improve or overhaul the campaign
for the next cycle or overhaul.
“Smart marketers take a more simplified approach,” Pruchnic says. Let artificial
intelligence engines do the rest of the work as hotel analysts examine various clusters and
segments of customers.
Engineers design artificial intelligence engines to want overloads of data. This is no
different than someone wanting more information about a friend to get to know them.
The difference is that humans can’t know millions of people and their preferences at one
time. AI can.
“AI doesn’t mean humans can be totally hands off,” says Sullivan. “The promise of this
technology is about man/machine symbiosis. Using the massive computational power of
artificial intelligence to enable humans to be more efficient, productive, and insightful.”
The Hotel Industry’s Automated Future: A Framework for AI with a Human Touch SKIFT REPORT 2016 10
WHAT ARE KEY DATA POINTS FOR ACTION
How does a hotel’s feedback loop change depending on whether the customer
fulfills an upgrade offer? How are they targeting similar customers?
There remains some confusion in the marketplace around how a hotel Customer
Relationship Management (CRM) systems operates. Ask five execs for their definition
of CRM and you’ll get five different answers. But inarguably, enterprise hotel CRM
requires enhanced guest profiles. Guest data must go far beyond email, age and
address. Central data intelligence warehouses can weave disparate databases and
create a “Single Version of Truth,” which includes guest history, value, preferences,
behavior, satisfaction, and intent.
Hotel systems for property management (PMS), point of sale (POS), central
reservations (CRS), call center, food & beverage, and spa all contain the data to
improve guest experiences and build loyalty.
Managers often believe techniques to cluster these data points require an advanced
knowledge of statistics or databases. Not the case. A tool like Cendyn’s CRM
Audience Builder segments guests with a few clicks, sorting guests into relevant
groups and clusters.
Marketing managers should, however, always be encouraging their teams to play
with the data. Continuous mining, slicing and dicing can lead to new insights, and
with AI engines, machines are able to assist in finding new segments. AI essentially
looks for patterns and can find insights that may be hidden from humans.
DISCOVERIES IN THE DATA
What are examples of new critical business intelligence metrics? How can they drive
sales? How are they being double-checked?
Booking patterns are also subject to many predictable events like holidays and many
unpredictable events like natural disasters. Yet with enough data, hotels will start to
understand how their offers should change around the Fourth of July or an unusual
cold spell. Instinct may say send more messaging with flags or fireplaces but that
may not be the case. AI can unearth patterns humans would never be able to detect.
This is another critical area of deploying AI: discovering unknowns. A hotel manager
may have never considered that a spa promotion is actually just what X-group of
The Hotel Industry’s Automated Future: A Framework for AI with a Human Touch SKIFT REPORT 2016 11
business travelers are looking for. That habit didn’t stand out in the sales data, but with
AI’s deep dive, the algorithms surface a behavior pattern that a hotel’s marketing team
can cycle into the sales ecosystem.
Of course AI isn’t 100 percent correct, just like people, and probably never will be.
So even if AI reveals something profound in the data –– it is still necessary to always
measure and analyze outreach and segment performance.
QUESTIONS FOR AI TO ANALYZE
WHAT GUESTS STAY WITH YOU THE MOST OFTEN?
HAVE THEY VISITED LATELY?
HOW MUCH DO THEY SPEND? WHERE?
HOW MUCH HAVE THEY SPENT OVER TIME?
WHO ARE YOUR HIGH-YIELD GUESTS?
WHO ARE YOUR LAPSED GUESTS?
WHEN DO THEY STAY? WHY?
The Hotel Industry’s Automated Future: A Framework for AI with a Human Touch SKIFT REPORT 2016 12
Bagley says his team isn’t just interested in what a guest is doing, “but who they are.”
Understanding what the most valuable guests looks like, from the lens of data, allows
their platform to target guests who match similar profiles with similar offers. Such
“look-alike modeling”, as it’s known, allows them to boost revenue with those same
segments.
“We’ve had a lot of success with that,” he says. “We’ve been able to nail down who
those people are. We’re seeing that data come back around. The models are proving
to be pretty reliable.”
BALANCING THE OUTREACH
What do hotels do with that new information? How do hotels ensure people’s privacy
feels respected?
Intelligence, however, still needs to update the guest status naturally as they move
from pre-stay guests with a reservation, to on-property, to post-stay. Each one dictates
different outreach.
There is a balance however. Consumers are increasingly wary of how companies are
using their personal information and they’re very aware how much hotels end up
knowing about them. Outreach should always be targeted but hotels will have to
strike that balance between helpful and creepy. There’s a fine line between “Oh thank
you” and “How did you know that?”
Pruchnic advises being clear with data objectives: they want the data to provide
better service. If the guest experiences that honestly, they’re more liable to provide the
needed information, he says.
The hoteliers using AI to the fullest potential are summarizing their major segments
and connecting their lifestyles and stages to various experiences on and around the
property. They know how to handle a romantic getaway versus a family vacation.
They’ve set clear AI rules for catering to people with active lifestyles versus those who
want pampering in luxury. Artificial intelligence can enable everyone working in the
hotel to be the hotel’s most dynamic and knowledgeable staff member.
“It’s about understanding what’s going to have the most impact at that moment,”
Bagley says.
The Hotel Industry’s Automated Future: A Framework for AI with a Human Touch SKIFT REPORT 2016 13
THE IDEAL CUSTOMER RETENTION ECOSYSTEM
How does customer data change hotel operations at an individual level? What are the
optimal points of contact? How does staff know?
The goal of any hotel marketing department has always been twofold: find new
customers and retain them. Data also drives that second task. As the intelligence
engines learn about each customer, they’ll be sharpening the messaging, layout and
ROI of each outreach.
“That’s what’s exciting to us,” Bagley says. “We understand the type of data we have and
how we want to use it.”
Take the confirmation email, a baseline practice for any hotel. Customization is key.
“Thanks for your reservation, John. We look forward to seeing you.” But with artificial
intelligence engines understanding John’s history, the next time he makes a reservation
–– without human intervention –– that email can read, “Thanks for staying with us again,
The Hotel Industry’s Automated Future: A Framework for AI with a Human Touch SKIFT REPORT 2016 14
John. We reserved you a room facing the pool. Click here if you’d like to book a discounted
massage at the spa,” and contain images most relevant to John’s lifestyle.
The data knows John requested a room facing the pool at check-in last time. He doesn’t
have to ask again and now he knows a hotel is on the ball. The data also understands that
John inquired about a massage during his last stay, but never booked –– this time around,
the hotel can make another bid to monetize that interest.
CHANGING TOUCHPOINTS ON SITE
What should staff do with the improved information? How is artificial intelligence analysis
changing their day to day operations?
Alternatively, perhaps the data showed John returning to the same property next month
with his wife. In that case, staff knows to upsell the on-site restaurant. Maybe John didn’t
spend a dime at the bar last time; data can recognize that and the confirmation email
can offer him a complimentary drink to get him in the door. This messaging can also
include an opportunity for feedback, “Not a big drinker? Let us know,” to further optimize
his guest profile.
“Being able to get to that level of granularity can help us quite a bit,” says Pruchnic.
With on-site touchpoints optimized, now hotel staff has more time for non-guest duties.
They’re not in a role of data collection anymore either. No more figuring out what to do on
the spot. With the proper platform-to-hotel integration, staff receive needed information
in real time.
“We don’t have the bandwidth to sit down with every guest,” Pruchnic says. RLHC relies on
intelligence engines to do the heavy lifting.
KEEPING GUESTS LOYAL
When a guest arrives, how does the hotel know if the guests expectations are being met?
And when they leave, how does the hotel ensure their brand advocacy? Not only why they
are coming back, but are they also telling their friends to visit the hotel?
Clients of cloud-based hotel tech company Cendyn tend to include about 40 different
variables in their automated arrivals reports. Operation managers know what type
of action to take during check-in, which may include acquiring contact information,
upselling, or reminding the customer of their value.
The Hotel Industry’s Automated Future: A Framework for AI with a Human Touch SKIFT REPORT 2016 15
Building an accurate guest arrival report requires PMS data from the property,
and any and all others within the brand umbrella. An artificial intelligence engine
can then analyze recency, frequency and monetary value, alongside fields like the
guest’s arrival and departure dates, booking source, average daily revenue, rate
type, and VIP status.
“It’s about being really nimble in our ability to roll out offers and test them,”
Pruchnic says.
Of course, loyal guests are most hotel’s revenue bread and butter. Hotel managers
should always be analyzing the data for offers that contain exclusive insider
information about events, a special recipe from a hotel chef, exclusive spa
treatments, upcoming sales and special offers before those details are released to
the public. These guests are the big spenders by room type and ancillary spenders
in restaurants, spas, and shops.
OPTIMIZING THE BIG PICTURE
How can continual updates, analysis and feedback optimize overall operations?
How can it optimize by season, weather, time of day or other real-time changes?
CRM and loyalty platforms should provide a single view that managers use to
increase guest satisfaction. Targeted rewards are a hotel’s perfect counterweight
to waning guest loyalty. Some hotels offer room upgrades based on VIP levels. The
Ritz Carlton surprises guests with a handwritten card on their room’s desk along
with a complimentary pastry on a guest’s birthday.
Taking a look at the cost/benefit, some upgrades driven by guest data may actually
pay for themselves. For example, if a hotel guest spends a lot of time on social
media channels like Facebook, Twitter and Instagram and has a lot of followers,
their selfie from a room with a better view may be worth the complimentary
upgrade. Only analysis of the data can discern that answer.
Now hoteliers can leverage data to know exactly who they’re communicating
with, how to communicate with them, when to communicate, and what to say.
Personalized pre-stay emails, pre-arrival surveys, dynamic arrival reports and
recommendation engines at the front desk and guest services, post-departure
re-engagements and stay-based loyalty programs form the bedrock of outreach
cycles.
The Hotel Industry’s Automated Future: A Framework for AI with a Human Touch SKIFT REPORT 2016 16
TEST BUT VERIFY
How are hotels testing new campaigns? How can they be sure you’re building that
brand loyalty on their second and third stays?
There’s always an opportunity for hotels to improve performance through testing and
optimization. For example, a twenty property US-based hotel brand was sending the
same email campaigns to their entire unsegmented database of 1.2M guests. Utilizing
Cendyn’s hotel CRM they implemented a data-driven email marketing program to
increase guest engagement, spend and retention by leveraging reservation and guest
profile data to create a true one-to-one email marketing strategy with personalized
pre-stay and post-stay communications.
After implementing a more targeted email strategy using audience segmentation
and rules-based dynamic content, their user engagement increased 79% and revenue
increased 188%. This hotel company realized a significantly higher ROI while sending
the same volume of emails through a more intelligent and automated process.
“It’s working to continually raise the bar every time we do stuff,” Pruchnic says, noting
that his team at RHLC A/B tests all customer outreach. “The only way all of this works is
if I have customer data on the backend to look at performance.”
Tried and true methods are still important. Hotels should send a post-stay survey to
measure the effectiveness of data-driven actions. It’s important for that data to feed
back into the CRM platform to power future outreach. The feedback loop must remain
in motion so that AI engines have the fuel to suggest improved campaigns.
The Hotel Industry’s Automated Future: A Framework for AI with a Human Touch SKIFT REPORT 2016 17
INSIGHTS AND STRATEGIESHotels should make artificial intelligence engines the backbone of
customer acquisition and retention efforts. The days of spreadsheets and
querying databases are over.
Even with the automation of certain communications, it’s important
that hotels never lose that human touch. While AI may provide next level
insights, hotels still need humans delivering the on-site personalized level
of service that hotel guests have come to expect.
Artificial intelligence offers near infinite power to discover new revenue
streams. Uncovering new guest behaviors and preferences reveals starting
points for new products and services. Hotels of tomorrow will never stop
shining the AI spotlight around their customer bases in search of new
growth strategies.
Hotels should push the impact of artificial intelligence to the farthest
corners of their business. The more data integrated into the platform, the
more artificial intelligence can understand how to help overall marketing
and operations.
Hotel marketing departments now have one of the world’s most
incredible tools at their fingertips. The cost of trying new ideas is
decreasing, so hotels should inspire staff to think outside the box. If
everyone in the marketplace is using artificial intelligence to drive sales, it
will still be the human minds that make the difference.
The Hotel Industry’s Automated Future: A Framework for AI with a Human Touch SKIFT REPORT 2016 18
As we look to the future at Cendyn we spend an inordinate amount of time thinking about and analyz-
ing the traveler lifecycle – from planning and booking - to traveling, arriving, and on-property activities
- to check-out and post-stay communications. And not just for a single trip, but the collection of trips
that happen over the guest’s lifetime as they move through different life-stages and new generations
start to enter the travel marketplace. Throughout this journey there are thousands of touchpoints and
each one provides an opportunity to engage with your guests resulting in three possible outcomes:
1. The relationship gets better
2. The relationship stays the same
3. The relationship gets worse
What if every interaction resulted in a deeper and more meaningful relationship with your guests? This
is the driving philosophy behind our product vision – enabling automated, predictive, personalized,
and relevant, one-to-one guest engagement across the entire traveler lifecycle.
At its core, Cendyn’s Hotel CRM platform is a decision engine, and data is the fuel that drives the
engine’s performance. The more data the faster and more efficiently the platform drives the desired
outcomes. This is why we have over 100 pre-built data integration to the widest range of systems of
any provider in the industry. And why we continue to develop new data interfaces and partnerships to
constantly expand our guest profile and guest intelligence capabilities.
We then make all of this data actionable via advanced audience segmentation, marketing automation,
data automation, and real-time reporting. With rules-based automation we provide RFM, Look-alike,
and bespoke modeling capabilities. We work with our clients to implement sophisticated business
rules that will predict future outcomes based on guest history, behavior, intent, and scoring. These
models can then be automated to drive campaign performance and guest interactions. Our focus in
this area is around enhanced audience segmentation and recommendation engines for pushing guest
intelligence to the front lines of your business. This technology enables more meaningful interactions
with your guests across your entire enterprise: sales, marketing, front desk, concierge, guest services,
operations, or in the call center.
We are extremely excited about our role in helping to create the automated
future of the travel and hospitality industry and in the promise of removing the
friction from the traveler’s journey through innovation and smart data.
Tim Sullivan
Cendyn
Chief Sales and Marketing Officer
EXECUTIVE LETTER
The Hotel Industry’s Automated Future: A Framework for AI with a Human Touch SKIFT REPORT 2016 19
ABOUT SKIFTSkift is a business information company focused on travel intelligence and offers
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them make smart decisions about travel.
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backed by Lerer Ventures, Advancit Capital and other marquee media-tech investors.
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