Digital Transformation Examples: How Data Is Transforming the Hospitality Industry
The rate at which organizations have adopted data-driven strategies means there are a wealth of digital transformation examples for organizations to draw from.
By now, you probably recognize this recurring pattern in the discussions about digital transformation:
- An industry set in its ways slowly moves toward using information technology to create efficiencies, automate processes or help identify new customer or product opportunities.
- All is going fine until a new kid on the block, born in the age of IT and the internet, quickly starts to create buzz and redefine what customers expect from the industry.
- To keep pace, the industry stalwarts rush into catch-up mode but make inevitably mistakes. ROI doesn’t meet expectations, the customer experience isn’t quite right, and data gets exposed or mishandled.
There’s one industry we’re all familiar with that welcomes billions of global customers every year; that’s in the midst of a strong economic run; is dealing with high-profile disruptors; and suffered a very public data breach to one of its storied brands in 2018 that raised eyebrows around the world.
Welcome to the hospitality industry.
The hotel and hospitality industry was expected to see 5 to 6 percent growth in 2018, part of an impressive run of performance fueled by steady demand, improved midmarket offerings, and a new supply of travelers from developing regions.
All this despite challenges from upstarts like AirB2B, HomeAway and Couchsurfing plus a data breach at Marriott/Starwood that exposed the data of 500 million customers.
Online start-ups such as Airbnb, HomeAway and Couchsurfing are some of the most clear cut digital transformation examples in the hospitality industry.
Digital Transformation Examples: Hospitality – Data, Data Everywhere
As with other industries, digital transformation examples in the hospitality industry are abundant – and in turn, those businesses are awash in data with sources that include:
- Data generated by reservations and payments
- The data hotels collect to drive their loyalty programs
- Data used to enhance the customer experience
- Data shared as part of the billions of handoffs between hotel chains and the various booking sites and agencies that travelers use to plan trips
But all of this data, which now permeates the industry, is relatively new.
“IT wasn’t always a massive priority for [the hospitality industry],” says Danny Sandwell, director of product marketing for erwin, Inc. “So now there’s a lot of data, but these organizations often have a weak backend.”
The combination of data and analytics carries a great deal of potential for companies in the hospitality industry. Today’s demanding customers want experiences, not just a bed to sleep in; they want to do business with brands that understand their likes and dislikes; and that send offers relevant to their interests and desired destinations.
All of this is possible when a business collects and analyzes data on the scale that many hotel brands do. However, all of this can fail loudly if there is a problem with that data.
Getting a return on their investments in analytics and marketing technology requires hospitality companies to thoroughly understand the source of their data, the quality of the data, and the relevance of the data. This is where data governance comes into play.
When hospitality businesses are confident in their data, they can use it a number of ways, including:
- Customer Experience: Quality data can be used to power a best-in-class experience for hotels in a number of areas, including the Web experience, mobile experience, and the in-person guest experience. This is similar to the multi-channel strategy of retailers hoping to deliver memorable and helpful experiences based on what they know about customers, including the ability to make predictions and deliver cross-sell and up-sell opportunities.
- Mergers and Acquisitions: Hospitality industry disruptors have some industry players thinking about boosting their businesses via mergers and acquisitions. Good data can identify the best targets and help discover the regions or price points where M&A makes the most sense and will deliver the most value. Accurate data can also help pinpoint the true cost of M&A activity.
- Security: Marriott’s data breach, which actually began as a breach at Starwood before Marriott acquired it, highlights the importance of data security in the hospitality industry. Strong data governance can help prevent breaches, as well as help control breaches so organizations more quickly identify the scope and action behind a breach, an important part of limiting damage.
- Partnerships: The hospitality industry is increasingly connected, not just because of booking sites working with dozens of hotel brands but also because of tour operators turning a hotel stay into an experience and transportation companies arranging travel for guests. Providing a room is no longer enough.
Data governance is not an application or a tool. It is a strategy. When it is done correctly and it is deployed in a holistic manner, data governance becomes woven into an organization’s business processes and enterprise architecture.
It then improves the organization’s ability to understand where its data is, where it came from, its value, its quality, and how the data is accessed and used by people and applications.
It’s this level of data maturity that provides comfort to employees – from IT staff to the front desk and everyone in between – that the data they are working with is accurate and helping them better perform their jobs and improve the way they serve customers.
Over the next few weeks, we’ll be looking closely at digital transformation examples in other sectors, including retail and government.