the hotel industry’s automated future: a framework for …

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THE HOTEL INDUSTRY’S AUTOMATED FUTURE: A FRAMEWORK FOR AI WITH A HUMAN TOUCH

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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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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.”


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


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 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.”


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.”


“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.”


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


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?


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 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,


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.


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.


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.


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.


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


ABOUT SKIFTSkift is a business information company focused on travel intelligence and offers

news, data, and services to professionals in travel and professional travelers, to help

them make smart decisions about travel.

Founded in 2012 by media entrepreneur Rafat Ali, Skift is based in New York City and

backed by Lerer Ventures, Advancit Capital and other marquee media-tech investors.

Visit skift.com for more.

LIKE WHAT YOU SEE?Skift’s content studio SkiftX helps brands such as Amadeus, American Express,

MasterCard, Travel Channel, Hilton, and others create custom content, research,

and experiences for sponsors that influence the largest audience of travel industry

decision makers on the planet.

Contact us for more details:

Rafat Ali,

Founder & CEO, Skift

[email protected]

212-564-5830

https://www.amazon.com/Lifestyle-Brands-Guide-Aspirational-Marketing/dp/1137285923

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