HOW THE HOSPITALITY INDUSTRY IS USING PREDICTIVE ANALYTICS

I have always been enthralled by the idea of foreseeing what is about to come that has the potential to influence the future. So when I began studying Machine Learning, I got fascinated by the prospects of a more complex type of Data Analytics known as Predictive Analytics.

What is Data Analytics?

Datafloq defines Data Analytics as a process of extracting, transforming, loading, modeling, and drawing conclusions from raw data to make decisions. It has four types: 

Image Source: datafloq.com

1. Descriptive Analytics: It summarises the current data to help explain what is going on or what has happened in the past.
2. Diagnostic Analytics: It focuses on past results to decide what happened and why.
3. Prescriptive Analytics: It is used to suggest one or more courses of action to evaluate the results.
4. Predictive Analytics: Emphasizes the analysis of future outcomes using mathematical models and machine learning techniques.

All four analytics types are effective and help in achieving business objectives. However, the predictive and prescriptive analysis appears to be highly useful in the upper strata of any organization that follows a data-driven approach. 

Let's move with the former. As mentioned in my previous post on the rise of Artificial Intelligence, Predictive Analytics is a branch of computational statistics that uses Machine Learning to derive patterns in historical data to identify the probability of future outcomes. It is solely based on past data to create a model for running analysis. The accurate model can help to evaluate the variables and provide a  precise report of the likelihood of an occurrence, key trends, possible risk, etc.

Predictive Analytics in the Hospitality Industry:-

I have noticed a resemblance to products offered by different brands of hotels. The level of service is also more or less the same if the property falls in a similar star category. So, gaining a competitive advantage, improving brand image, or optimizing profit all boils to one aspect and that is increasing customer satisfaction. A loyal guest brings repeated business, word of mouth publicity, better reviews, and reduces marketing effort involved in hunting for new business.

The degree of customer delight is dynamic and highly sensitive. Companies need to continuously strive to maintain the client’s level of satisfaction to hold the client base before it is taken away by the competitors. This is where Predictive Analytics comes in. 

A department of the hotel that extensively make use of Predictive Analytics is Revenue Management. It is about optimizing rates to reach the highest possible profit margins. Dynamic Pricing Automation helps the hotel chain to reliably forecast demand and consumer behavior trends. Data is collected based on household profile, number of children, age group, occupation, travel history, buying behavior, people's income, and even how they spend it. This information is then used in forecasting demand and formulating pricing strategies.

Big hotel brands use the power of analytics in deciding future investments as well. By analyzing data about people’s travel habits: frequency, the reason for travel, locations, income group, the management can understand the demand for new hotels and identify whether the type of property to be built will be for leisure or business segment.

Analytics is indeed revolutionizing the hospitality sector. It is enabling the hotel decision-makers to effectively plan and formulate strategies to gain an edge over their counterparts in the ever-changing and hypersensitive hotel industry.

Abraham Lincoln once said that the best way to change the future is to create it. Analytics can help you do it. It can give you all the blocks of a puzzling future, you just have to arrange in the correct order to create the right picture.