Big Data

How big data analytics help hotels gain customers' loyalty

Find out how analytics offers insights to hotels that want to determine which amenities are mostly likely to attract and delight customers.

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Image: iStock/ymgerman


To attract visitors and to encourage guests to return, hotels have come up with many unique amenities over the years. But until recently, many of these hotel amenities were determined by "gut feel" and manual surveys of customers in which guests were asked which free amenities they enjoyed most. Now, thanks to analytics, the task of determining the right amenities for a hotel to offer has become more scientific.

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"We want to help hotels determine which free amenities give them the best chance to boost their hotel's appeal, increase sales, and improve customer satisfaction," said Anil Kaul, CEO of Absolutdata, which provides marketing and customer analytics to hotels.

Kaul characterizes the hotel industry as a "constant war of amenities." Hotels know that free amenities bring in customers, but they also know they're competing against other hotels that offer free amenities, so it's important to offer a set of amenities that customers are most attracted to.

Hotels deal with two scenarios when it comes to attracting customers. "The first scenario is when the customer first begins to seek a hotel. You want to offer a free amenity package that will convince him or her to choose your hotel over many other possibilities," said Kaul. "The second scenario is providing a great customer experience to your guest during his or her stay. Part of this customer satisfaction is achieved by offering the right free amenities. If you do this well, the guest is likely to return."

So, which free amenities are most likely to get customers in the door the first time?

From Kaul's research and analytics applied to many types of hotels, he says free Wi-Fi nearly always ranks towards the top of what guests expect to find at any hotel. Next in the rankings is free bottled water, or at least an introductory free bottle of water.

"Often, determining what types of free amenities you offer depends on your brand and the type of hotel that you are," said Kaul. "Because the impact of the amenity is going to differ between a luxury hotel and a hotel that is more economy-oriented."

Kaul said that analytics helps hotels with ROI (return on investment) that is attributable to free amenities.

"If you are spending one dollar on a free bottle of water for your guest, what are you getting in return for that up front investment?" he asked.

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According to Kaul, a hotel typically gets about $3.40 to $7 in additional customer spend at the hotel for each dollar spent on Wi-Fi, and between $3.40 and $30 of extra spend for a free bottle of water. "We base these figures on the cost of the room, together with the extra charges that the customer incurs at the hotel," said Kaul.

There are certain free amenities might not get customers in the door the first time, but that figure prominently in the customer's decision to return in the future.

"Exercise rooms are a very big draw, even though not everyone uses them," said Kaul. "The customer likes the feeling that he or she has access to an exercise facility if he/she should choose to use it."

To gather the data and compute a hotel's amenity analytics, Absolutdata uses a methodology that taps into the hotel's reservation system and then combines this data with survey data from customers on amenities and other elements of their stays. The benefit for hotel management is that it doesn't have to try to determine the value of free amenities manually anymore.

"We work with various hotel chains to model different what-if scenarios that will improve their customer loyalty and also the revenues," said Kaul. "For instance, hotels are finding that it is more cost effective for them to offer free points than it is to offer free air miles. We can also predict revenues based on different combinations of free amenities."

Kaul is quick to point out that the system is still evolutionary, but at least it begins to offer hotel operators a more scientific approach into understanding what attracts customers and keeps them coming back.

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About Mary Shacklett

Mary E. Shacklett is president of Transworld Data, a technology research and market development firm. Prior to founding the company, Mary was Senior Vice President of Marketing and Technology at TCCU, Inc., a financial services firm; Vice President o...

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