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Large hotel chains with legacy technology are the least well placed to take advantage of the big data revolution and reverse the trend of sky-rocketing commission costs.
Patrick Bosworth, chief executive of hospitality revenue management specialist Duetto, told a Big Data session by digital consultancy Genesys at World Travel Market custom technology was dead.
He said modern software systems are being designed to be interconnectable, which means data can be shared between them leading to useful insights and actions.
Bosworth said most hotel loyalty programmes to date have been based on the repeat “road warrior” customer, but offer no benefits to more infrequent customers to book direct.
“We need to get out of this idea of building custom software in-house,” he said. “The advantage in the future is going to come from interactability.
“Software vendors are designing systems that are meant to be interconnectable. Custom software is dead.”
Bosworth said systems do not have to crunch masses of data, but should ensure that they are making use of data critical to the business so that it can guide its decisions.
He claimed commissions paid by hoteliers to OTAs have sky-rocketed 37% between 2009 and 2012, compared to revenue growth of just 20%.
This has led to a break in the correlation between RevPar (revenue per available room), a generally accepted measure of profitability for hotels, and gross operating profit.
Bosworth warned: “Major OTAs and technology giants are going to try to come in between you and your customers.”
Spiralling acquisition costs now mean that the hotel with the leading RevPar rate is rarely the actual top performer in its market because it is having to buy its business.
“Why is it someone went on your website and did not choose to book with you but went to another channel? You keep re-acquiring these customers but are not able to direct them to your channels.”
Bosworth said hotels should offer better prices for people booking direct and that as long as the hotel was recognising the specific customer this would not breach third party commercial deals.
Better use of customer data will allow hotels to adopt a much more customer-centric approach, he added.
“Recognise microsegments and tailor special offers. This is why ultimately the intermediaries are winning.
“But intermediaries do not create content themselves. Hotels have a tremendous opportunity to serve up better content which companies like Google value tremendously.”
BBosworth said it will be small to medium sized brands that most successfully grasp this opportunity, while the larger firms struggle to innovate quickly enough.