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big data in the travel industry

Big data in the travel industry: Why it’s valuable and how to make the most of it

With digital transformation, nothing is the same as before, and this is especially the case for growing Travel & Tourism sector, which is responsible for generating about 10.4% of the world’s GDP and 319 million jobs (about one in 10, internationally). (See data here).

Marketing and customer care professionals in the industry know what we’re talking about. They know how difficult it is to operate in a changing playing field every day, where one of the most important themes is that of disintermediation. Digital transformation has essentially removed the middle man or third parties from how people make their travel arrangements. And while this may be a real disruption for many companies, they must also be aware of the many opportunities that lie behind these changes.

Digital transformation has triggered an enormous series of consequences that have placed the customer at the center of things. Today, it’s no longer the customer following the brand but the opposite. This is true for many sectors, but especially for travel and tourism.

The journey, in fact, is increasingly tailored. Tourists may be loyal to the same brand, to the same hotel, to the same restaurants, to the same destinations, to the same ways to reach them are gradually disappearing. At the same time, the reasons and methods of travel have multiplied, and the times of year that people travel are much more diverse.

To put it another way, travellers are becoming more and more “loyal to themselves,” to their own needs, and they want to live tailor-made experiences, to be treated as “individuals,” according to their own individual needs and characteristics, and no longer as one of many.

In such a scenario, with the customer who has become the center of business and no longer a satellite, what should operators in the sector do? In short: follow the customer and, even better, learn how to predict what he or she will do next.

How is that possible? Again, thanks to the technologies made available by the digital revolution, following the tracks that each of us continuously leave online. This is the so-called big data.

 

What is big data? And how can companies make the most of it?

“Big data” by now is a buzzword that is often used without an understanding of what it actually refers to.

According to Gartner’s technical definition, big data is: “high-volume, high-velocity and/or high-variety information assets that demand cost-effective, innovative forms of information processing that enable enhanced insight, decision making, and process automation.”

Big data is high-volume, high-velocity and/or high-variety information assets that demand cost-effective, innovative forms of information processing that enable enhanced insight, decision making, and process automation.

Technicalities aside, big data is the most advanced tool that companies can use to know as much as possible your customers and target customers, no matter how large. Knowing the users you are addressing is the best way to communicate with them effectively, keep them loyal, and ensuring that they don’t turn to competitors.

At first glance, the online behaviors of people looking for inspiration for their travels, searching and preparing to book accommodation and experiences, can appear completely unpredictable. There is not a uniform path that is the same for everyone. Instead, travellers often jump from one channel to another, from portals to social networks, from the desktop to mobile, from specialized sites and blogs to dedicated apps.

“It is a behavior that is very reminiscent of television surfing, but it takes place between physical and digital channels,” said Filippo Renga, director of the Digital Innovation in Tourism Observatory of the School of Management of the Politecnico di Milano. “Tourists, and especially those who are more digitally oriented, pass from one channel to another frequently, using up to three different tools (online and offline) in the inspiration phase and up to four for research in the most extreme cases, with habits that change significantly, especially based on one’s reason for travel, but without significant differences between long or short holidays.”

Learning to collect and organize the huge amount of tracks that travelers leave online in a functional and coherent way (often with the help of an Artificial Intelligence system), is fundamental on several levels: in the next paragraph we will analyze five of the most relevant.

But first we want to identify the main positive effect of big data analysis, which is reflected in engagement, conversion and – finally – loyalty rates.

Knowing more about your audience of users allows you to divide it into coherent clusters, into increasingly specific segments to be targeted with actions that are as tailored as possible. It’s about being able to sell the right product or experience to the right people, at the right time, with the right price, through the right channel.

Here are now five ways where big data are valuable, and increasingly indispensable, to the Travel Industry.

 

1. Analyze competitors

At a preliminary level, operators in the tourism sector can analyze big data in order to gain a better understanding of competitors in the sector, their weaknesses and their best practices. To learn from what works, on the one hand, and to learn from the mistakes of competitors, on the other.

Data of this kind can be drawn from an endless variety of sources: platforms that collect the opinions of users and travelers, for example, or social networks.

 

2. Reputation management

Studying the ecosystem and competitors, of course, is fundamental. But even more important is managing your brand identity, and your reputation, accordingly.

This is one of the most complicated missions, in an incredibly dynamic scenario, in which it is increasingly difficult to control the image that you give of yourself, as a brand.

There are no longer – just to give an example – only trade magazines. Every day new blogs and new travel influencers are born. The platforms where travellers can share their experiences and evaluate hotels, restaurants, and activities are increasingly popular. And then there is a huge arena of social networks. All this has a huge influence on the choices of those who are looking for inspiration for their next trip or who are already preparing to book.

Consider this data, which is very interesting because they concern millennials (a segment from which it is easier to deduce future trends): 79% of young people between the age of 18 and 24 watch videos and photos published by friends on social media, taking them as a starting point and inspiration for choosing their next travel destinations. In addition, 44% of millennials are concerned enough to verify the legitimacy of the reviews they have read, before choosing (source).

If it is impossible to keep this shapeless mass under control, the analysis of big data can provide important support in making order, in focusing in on the most recurrent aspects (negative or positive) on which improvements can be made. It becomes an even more effective analysis if crossed with internally collected feedback.

We have dedicated this post to building strong brand identity in the sector.

 

3. Revenue management

As we mentioned above, it’s about selling the right product (or service) to the right person at the right time. This is the most concrete way to maximize results in terms of turnover and revenue. Even in this field, big data can come to our aid.

In particular, it is important to cross-check, again, data that we could define as “internal” (for example, for a hotel, the rate of room reservations in certain periods) with “external” data (local events in the same period, school holidays, national holidays, the availability of flights).

This is the best way to make predictive analysis of possible demand and would allow you to adjust your supply accordingly, for example by raising prices at times when you expect peak demand. This all helps to maximize profits.

 

4. Improve Customer Experience

In the tourism sector, there is no area more delicate and important than that of customer care. A company’s reputation and loyalty are almost entirely played out in this area. Just think of the reviews posted on platforms such as TripAdvisor or Booking: almost all of them focus on the type of treatment received because that’s what really makes the difference.

Analyzing big data (again, internal and external) is absolutely precious in this field too. There are many points of interaction with customers in the tourism industry. And it is from here that significant data can be collected, to understand what worked and what didn’t. So act accordingly for the future, from a data-driven perspective. All this, of course, should be done from an omnichannel perspective.

 

5. The real frontier: personalization

As we anticipated above, the final boost for marketing and customer care in the tourism sector is personalization. Then go beyond big data, to consider the so-called “smart data” or “deep data,” referring to individuals, and their unique characteristics.

For example, Club Family Hotel, an important Italian hotel chain, has relied on the services of Doxee, creating a personalized email campaign using videos tailored to each individual recipient, based on different needs, characteristics, and past behavior. The results were striking: the click-through rate was 81% higher than in previous campaigns, and the conversion rate increased by 5%.

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