The way hoteliers engage their data has come a long way in the past ten years. Technology has developed in leaps and bounds and hoteliers are more savvy than ever when it comes to utilizing digital tools. Yet it's still easy to feel intimidated by all the data and technology available. Where do you start? What kind of moves can you make that will stand the test of time?
One hotelier has become renowned among the hotel digi-rati for his confidence in wielding the 1's and 0's. Lennert De Jong, Commercial Director of citizenM hotels is part of a team responsible to for leading the way on many forward-thinking technological initiatives in hospitality. They were, for instance, one of the first to track thousands of customer data points real-time to better tailor experiences and booking.
I sat down with Lennert to chat about how he views hotel tech today, and what hotels can to do get a handle on their data and their technology.
Q: Let's talk about the current state of hotel technology. How do you see the current state of the industry, the available technology, and the data solutions?
A: The hotel industry is very fragmented today. There's not a lot of centralization taking place, and even if there is a move toward modernization, it's only within a chain. If we look at numbers in perspective, the big chains hold maybe eight to twelve percent of the total number of rooms. These guys are not using the same systems or the same data technology. Most hotels operate in a very localized culture, in different countries using different PMS's, different revenue management systems, different channel management systems, different channels, and with managers and owners having different viewpoints on all these elements. Like I said, the business of hotels is very fragmented, even among big chains.
Q: How does citizenM go about solving this fragmentation problem?
A: Well, some things you just need to buy, right? You get [what you need] off the shelf. And if citizenM cannot get it off the shelf, we don't accept no for an answer. We'll either create a solution, or we find someone to build it.
We have two parts: our marketing technology side but also the hotel technology side. citizenM was using a web-based property management system, built by Michael Heinze. In later discussions I asked Michael about the status of cloud computing and about a much needed analytics tool. Michael and his colleague David Turnbull came back saying; "We're going to make this a product." And that was a great idea because it is something that more hotels need.
That's how they started SnapShot. That story is a great example of people saying, "We cannot find it, other hotels are not putting enough effort into doing this and now we're doing it ourselves."
Q: So has this type of do-it-yourself mentality always been a part of citizenM? Was the brand created with this sort of ethos behind it?
A: Well "we're not limiting ourselves," let's put it that way. I think this is the mindset of the people that work for citizenM. We're not limiting ourselves by the rules of gravity, not in the hotel industry. This business is made of people who look at one another and either see progress, or the lack thereof. If you constantly look at the competition, and you know they're not really progressing, then it's an opportune time to innovate. As far as citizenM's culture, it's fair to say our people have always had a "Yes you can" attitude. Just because nobody has done it doesn't mean you cannot.
Q: Were there any other common industry problems that you were trying to solve as you were developing citizenM?
A: Every hotel says it is guest-centric, but is it in reality? Or, are they actually process-centric? Despite the hype, I think the process means more for brands in dealing with customers nowadays.
citizenM has looked at things purely from a customer perspective. For example, why would we limit breakfast to between seven and eleven? Would your hotel do this because it works for you? Or, is it really good for the customer? We decided to be driven by a sense of purpose as a long term gain, versus a short term commercial success.
Q: For citizenM's current system, are there certain types of data that are especially valuable to collect?
A: Well, I believe taking all the data together makes it powerful, but you can look at it from many angles. Customer data is becoming increasingly important and we're doing a lot of things in that area.
If you think about the hotel industry, we offer a perishable product. If we don't sell a room for today, it's gone. This makes us very short term focused. In the end tough, the OTA's are far more customer focused. If Booking.com is able to convince a customer to use their system, they're not convincing them to use it once, but they are looking at the total value of the customer.
One of the questions we need to be asking is; "Are we willing to spend more than we make the first time the customer stays in our hotel? Sometimes the answer there is yes, and sometimes it's no.
We get all the information from our hotels about check in times, about what room a customer stays in, what the temperature of that room is. If we have the data, we can piece it together to do more relevant ads, and for quoting the best prices, and so on.
Q: With regard to the data you're collecting, the trend seems to be to collect as much as possible, so that the business can look at it in intelligent ways. Is this a fair assessment?
A: People think that big data analytics is about compiling massive mountains of data in order to glean answers. Big data is more than this though, it's really about being the answer to the question you never asked.
We compare multiple data points and find correlations between them, or let the algorithms find correlations. In the end, some answers make sense, while others do not.
Take for instance a traffic jam in the Amsterdam. This can be an indicator of how full the hotel will be at that given time. It can be explained, but the data also shows it. Can you predict traffic jams? Are they caused by weather, or by accidents? Maybe the cause was a school holiday. The point is, you can glean some intelligence and associated actions, but never every solution.
By combining performance data together with customer data, we found that we need to optimize for seventeen billion data points across seven hotels. The numbers become staggering, which means the technology has to be there. Take for instance citizenM's need for pricing. We take the number of hotels, the times the number of days in the year, multiplied by the number of rooms, by the number of people looking for our proposition, and we make a pricing decision on this. This then leads to price one, two, three, four, five, six, seven, eight, nine; or sometimes we have thirty price points. This is every day, seventeen billion possibilities that the human brain should not be busy with, cannot do.
So that's my prediction. In a couple of years from now the human brain is going to be given a lot of rest. We're going to be using the machines that we have available to us, and SnapShot is building some of these machines.
Q: Would you say, then, the goal is to design a system to help us understand the connections between various points of data?
A: Yes. One thing to consider is the difference between what a revenue manager wants to see and what a hotel manager wants to see. The hotel manager just wants to make a decision. A sophisticated revenue manager wants to see, "How did you get to this?" They want to understand all the data points.
Q: Looking a little further down the road, what do you see the solutions to these problems being?
A: I hope that in five years from now there's a standard platform for all kinds of hotel technology, you know. From the property management system to distribution channels to pricing systems, revenue management, and reporting and benchmarking. I have the feeling in five years from now that's all going to be consolidated over one, two, or maybe a maximum of three different platforms, that also work with each other.
Q: If you were to give one piece of advice to other hotel owners trying to make their processes better, what would it be?
A: Hotels need to be more open to innovation. By simply understanding how fragmented the landscape is, they can easily reduce resistance. I've seen other hotels be really successful by just being open to adopting new things. But adapt new things that make sense. By using instinct honed from experience, managers can escape being held hostage by useless technology, and be freed up to make constructive changes.
Of course this involves not being held hostage by contracts as well. The relationship has to be mutual and fair. Every hotel counts in this ecosystem, every opinion matters. Every owner, CEO, CIO, CTO or decision maker has a role, a voice. These are the most powerful players on this stage. It is from them the industry improves, they are the ones that really define new technology.