Big Data or holistic and intelligent data management has become a popular topic within the hospitality industry. A lot of hotel companies talk about it, but hardly anyone is even close to doing it right. In my new book I predict that by the year 2020 many hotels will have disappeared for exactly that reason. But I have to admit I was mistaken – the process is already in full swing.
The takeover of Starwood by Marriott shows that those who will not act in time will eventually disappear. Barry Sternlicht, founder and former CEO of Starwood Hotels & Resorts, put it in a nutshell by saying that Marriott’s goal for the merger was to fight the OTAs and to enhance their market position. Marriott is taking action against these data-driven and progressive companies, but will the size of a company really be decisive for survival in the Big Data age or could it rather be a constraint?
Data has become the commodity of the 21st century, the heart of the 4th industrial revolution. It is, however, not only important to own data. A clear advantage of the hospitality industry, as hardly any other industry knows more about their customers. Owning alone is worthless, if the data is not used properly and management has no expertise in doing that. In a world where propositions are similar, the product is no longer the decision-making factor. Look at “Marwood“ (Marriott plus Starwood) with its 30 brands. Hardly any hotel expert knows them all, understands what they stand for or knows their brand promise. If experts fail, how should the end consumer get it? Not those with the best product will win the race, but those with the most consumer data and expertise to make use of it. Data has become crucial for the success of your business. If you are good at using the data, like the OTAs, you will “own” the customer.
Intelligent data management has a considerable impact on the quality of communication, service level, operations, and decision-making.
The fact that Starwood could be taken over shows how fast a former model company can disappear from the market, if management ignores the necessary changes. Big Data has become a catalyst and will filter out companies, which have missed or have acted to late to the changes. Or like Truman Capote once said “Either you move with the times, or you will be removed over time“.
2016 will be a crucial year, as things are happening much faster and on a much larger scale than expected! The dynamics are actually quite scary. Therefore, it is vital to take action now, to establish interlaced thinking within the management, and to consolidate all relevant data sources. The PMS, the once leading on-property system, is losing its importance. It will gradually be replaced by the so-called Master Data Base. The existing operating systems are not able to meet the requirements of the modern data management and have not been built to connect many different data sources, or clean, analyze and handle huge amounts of data.
The success or even survival of the chains is hugely dependent on their data management. In 2016, it will be key to have a good data strategy or to quickly start developing one.
For quite some time, we have been visiting hotels and doing so-called reality-checks. We analyze the status quo, identify the systems in place, find out where the data is data stored, check data quality management, look how the existing tools are connected, indentify the communication channels, etc. We ask many questions which could be painful, as they confront our clients with the reality. And although the results are mostly not very satisfying, this process lays the foundation for a data-driven holistic company strategy, which, however, can only be executed if management fully supports and drives the change processes.
Holistic data management is by no means just an IT project, which drags through the entire organization. It requires changes in responsibilities and reporting lines. This is one of the main reasons why so far only a few smaller and mid-size hospitality companies have been able to efficiently use Big Data.
It is only a matter of time until the next hotel icon will vanish. And not the OTAs will be to blame, but the management, which has failed to adapt to the changes. A good example is Kodak. The company was founded in 1888 and during its peak times had up to 145,000 employees worldwide. In 2012, the former global player went bankrupt and disappeared. In most big companies management just focuses on increasing revenue but ignore that the world around them is changing. Clayton Christensen, the father of disruptive innovation, called this phenomenon the “dilemma of innovators“.
I believe that 2016 will be crucial and decisive for many companies and I am not sure how many managers are really aware of that.