Data's the way to do it
EVERY guest who checks into a hotel gives a standard set of details about themselves - their name, address and credit card number, for instance. But even those few answers to simple questions can give each hotel a huge amount of information to deal with every day.
How can all that information be gathered, manipulated and then exploited to increase business, improve best practices and make more customers return again and again?
If used effectively, computer systems known as data warehouses can do just that. Each one essentially a giant database, these take the raw information from a hotel's separate systems - such as property management, central reservations and point of sale - and turn it into easily accessible, user-friendly material.
This sounds simple and hardly new at first glance - all the systems named above give their own reports every day, telling the user the number of guests they have, how long they're staying, how much they're spending and other such simple statistics. But while these facts are obviously useful, the provision of a central repository like a data warehouse can combine them with many other sources to build up a true picture of a hotel's clients, almost doing what every hotel owner dreams about - getting inside the customers' heads to find out exactly what they're thinking.
"Data warehouses can provide users with reports that aren't dissimilar to the reports that normal systems use," explains Velibor Korolija, operations director with software specialist the Bromley Group. "It's very clear, very immediate and very useful to certain types of users. But for business or marketing analysts, that isn't good enough. They're looking to interact with the information in a more meaningful way by asking unusual and atypical questions."
A data warehouse doesn't just contain internal information from transactional systems, such as the yield management or central reservations systems, it can crucially include external sources such as marketing feedback, wage databases and information coming from the organisation's Web site.
Pulling out the answers to the atypical questions referred to by Korolija is known as data mining - an analysis of the data for relationships not previously known or discovered. "We're looking to establish trends that we don't know about," Korolija continues. "We're looking to cluster our customers in meaningful segments and find classifications that we weren't previously familiar with."
This detailed examination of the guest is referred to as customer relationship management, or CRM. It can look at everything from customer retention to customer profitability to how many customers prefer still water to fizzy. Typical CRM questions in data mining could be: "How effective was our newspaper advertising over the past three years?" or "How many guests who have stayed in our hotel come back, and how is that figure related to the rate they pay?"
Says Korolija: "It's possible to cluster a hotel's most frequent guests into a very specific demographic group in this way - such as female business customers, aged between 30 and 50, who always pay by Visa card."
But it isn't all about the customer. A data warehouse can provide new information on the way the back of house business is organised - for instance, how cost-effective suppliers are, or whether the wages are too high or too low. This is known as enterprise resource management, or ERM.
"This is all about the supply side of things," Korolija says. "We're looking at the business itself and its resources, primarily people. For instance, how is our workforce cost related to the quality of service? or to inflation and industry sector salary increases? These are all the kinds of questions a well-designed and well-thought-out warehouse may answer when implemented."
This all sounds great - an easy-to-use system that can answer any questions thrown at it about a business. But, of course, luxuries like these come at a price. Setting up a warehouse could cost thousands, if not millions, of pounds for large companies. Why? Dirty data.
A data warehouse relies on its information input being in exactly the format it requires. This is fine if a company starts to collect data from a set date and then builds the warehouse from there, but the problem lies in those businesses that decide to copy existing databases into a data warehouse. If the format isn't correct, it has to be painstakingly changed. For instance, to work effectively, most hotels want each customer's home address, but how many business customers give their work address when checking in?
But where the money is available to do it, more and more companies are turning to data warehousing and data mining systems to personalise their service to customers in an age when huge chains may make the guest feel anonymous.
"It's probably more useful for larger chains than smaller organisations," says Korolija. "You're looking at at least five properties to gain any real benefits out of it. The bigger the chain, the more benefits and the better the understanding of the business." n
