Munich, October 2022 – Personalization sells: fact. And it sells particularly well in the hospitality sector. According to McKinsey & Company, brands that use individualized marketing tactics such as personalized emails can generally expect a 40% increase in revenues¹. But when you look at the hotel industry specifically, the figure is even higher at 76%².

This is clearly an opportunity not to be missed. But why are hotels so poor at personalizing their guest communications, an art that leading OTAs have long since mastered? In this article, dailypoint examines the top four reasons why hotels are falling short in this area, before considering what needs to change for the future.

Putting the wrong system(s) at the heart of the IT stack
Traditionally, the PMS has been at the center of the hotel tech stack. As we have explored in previous blogs and White Papers, this is not the best approach. The PMS is an essential part of the IT solution, but problems arise when hotels make it the main source of guest data for marketing communications. Why? The clue is in the name – it’s a Property Management System, not a Guest Management System!

The information collected and stored by the PMS naturally revolves around front-office capabilities such as reservations, room rates, billing, etc. Customer data from other valuable sources such as F&B, POS, CRM, RMS, and IBE systems may not be integrated. This leads to missed opportunities for creating detailed guest profiles and, as a result, personalized marketing messages that really hit the spot.

Using poor quality, unenriched data for marketing communications
As noted above, a traditional hotel IT stack can be fraught with integration issues. There is no single, central repository for customer information, with the result that multiple versions of each guest’s profile being created. It becomes difficult or impossible to manage these effectively, leading to outdated, unclean information being used for marketing purposes.

Furthermore, this fragmented information cannot easily be enriched using Artificial Intelligence (AI) and machine learning. This precludes the creation of deep and accurate guest insights around personal interests, likes and dislikes, etc, which are essential for providing truly personalized communications. For example, if a guest is a frequent spa user, this information will naturally be stored in the hotel’s spa software. But if the data is not centralized, it cannot be used to create individualized messages that target the guest’s habits and preferences.

Segmenting guests into groups and email lists
It is no longer enough just to market to guests according to one or two preferences of which the hotel chain is aware. For example, being sorted into an email list with 2,000 other guests who also used the hotel’s fine dining restaurant twice in the last year is unlikely to impress. What today’s consumers are looking for is a genuine, one-to-one experience.

We have already seen that personalization sells. But it also really matters. The McKinsey & Company study cited above shows that 71% of consumers say they expect personalized communications and 76% are frustrated when they do not get these1. What is more, they will vote with their feet; Twilio segment’s ‘2021 State of Personalization Report’ revealed that 45% of consumers will take their business elsewhere if a brand does not offer a personalized experience³.

Sending irrelevant marketing communications
This naturally links to the last point as, unless communications are unique to each guest, there will probably be irrelevancies within each message. Whilst some of these may not matter too much, sending information and offers about services or facilities that a guest actively dislikes will not get good results.

To return to the above example, the guest who has used the hotel’s fine dining experience twice in the last year may well be interested in a special offer or voucher for the restaurant. They would be probably not want to know about a 50% deal for the ‘All you can eat’ budget buffet!

Priority of messaging is also key. What if the above guest has used the hotel’s golf course six times or the spa and leisure center even more? Prioritizing the fine dining preference (if this is even a real preference after two visits) would be the wrong approach and the hotel would potentially miss out on both sales and customer satisfaction opportunities.

How much better would it be to create a 100% personalized email that starts with an offer from the hotel spa, followed by the latest tee times and prices, and ending with a fine dining voucher to encourage a third visit? Other information can certainly be included in the email, some of which can be generic or even irrelevant. But the personalized messages must come first, and in priority order, so these are seen even if the guest only skim-reads the email.

So, what needs to change?
Put simply, hotels need to adopt a new process for creating and managing guest profiles so these can be used effectively to produce personalized marketing communications that work.

This process can be summarised as follows:

  1. Data – collect guest data from all systems in the IT stack through effective open API-enabled integrations.
  2. Information – centralize this data to produce a single, clean and accurate version of each guest’s profile.
  3. Knowledge – use AI and machine learning to create deep insights around detailed profile information.
  4. Action – deploy a specialized marketing solution to produce unique communications for each guest, targeting their preferences, habits and behaviors in priority order.

This may sound like a tall order! However, with leading technology such as the dailypoint suite of hospitality products, this – and much more – becomes possible. The diagram below shows how our products work together to complete the jigsaw puzzle of guest personalization, whilst ensuring compliance with data privacy legislation.

Like to know more about personalization in the hotel industry?
Download our latest White Paper today to find out more about the importance of personalized guest communications and the steps hotel groups must take to regain market share from the OTAs. You’ll also learn all about dailypoint’s latest innovation: the dailypoint Content Bot, which is set to revolutionize how hotels will communicate with guests in the future.

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Sources:

  1. McKinsey & Company. “The value of getting personalization right—or wrong—is multiplying.” November 2021.
  2. Cendyn & Apaleo. “10 reasons why the guest profile no longer lives in the PMS”. January 2020.
  3. Twilio segment. 2021 State of Personalization Report. 2021.

About the author

Dr. Michael Toedt is one of the most renowned experts in the field of Big Data and CRM. He received his doctoral degree on the subject of CRM, respectively “The influence of communication on sales performance in the luxury hotel industry” from the University of Latvia. He lectures at the University of Applied Sciences in Munich about CRM & Hotel Technology for Bachelor- and Masterclasses as well as at Hotellerie Suisse in the NDS Management Program. Michael Toedt writes articles for international magazines and online platforms on a regular basis. Among others, he wrote the official CRM guide of the Austrian Hotel Association and the book “Big Data”, which has become a standard work for the topic of Data Management. He was elected by the HSMAI as one of the “Top 20 Extraordinary minds in Sales & Marketing” in 2016.

All his publications can be found here.

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