Guest-centric hotel marketing: Identifying the drivers of guest value.

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In a previous post, I discussed how hospitality marketers can gain a complete picture of their guests and understand guest behavior with analytics. In this post, I will explore what you can do once you have a complete picture of your guests.

Today’s operating environment presents a set of challenges to hotel marketers. The availability of data from loyalty programs, combined with increasingly diverse on-property offerings, provides the opportunity to know your guests at a deeper level. It is not enough to know who your high-rate paying guests are, since your best guests may be spreading their spending across all the revenue-generating outlets at your property. These guests expect you to know who they are and what they like. They do not want to be blanketed with irrelevant offers, but will respond when you personalize interactions. Historical information gives a limited picture of guest value, but when augmented with predictive analytics, can provide a powerful tool to predict behavior. If you know what your guests are likely to do before they do it, you can take steps to encourage or discourage behaviors. All of these challenges are opportunities to “surprise and delight” your guests, while increasing the economic value of your guest base.

Careful analysis of your guest’s behavior can uncover the main drivers of guest value. Your most valuable guests will dictate the elements of your offering that drive their spending. Is it the monthly restaurant events, the spa offerings or, in the case of a casino, a complimentary room offer? Each of these elements drives purchase behavior, but not all of them may encourage a guest to spend more, and spend more profitably. As these drivers are identified, your operation can adjust to make them more accessible and/or more profitable. Should you have a restaurant event next month? Should you reserve some tables at the high-end steakhouse during peak dining hours for your most valuable patrons? Should you extend the spa or fitness center’s operating hours? Do you need more package options? Are there enough rooms of a certain type? Once the value drivers are established, forecasting will help predict the impact on revenue and profitability far into the future, in plenty of time to take corrective action.

Luxury hotel room

Luxury elements in guest rooms could be one of the drivers of guest value.

Using predictive analytics you can identify the elements of your service that drive guest value and track these over time. Spa promotions, golf offers, food and beverage specials or luxury elements in hotel rooms could all be drivers of guest value. Once the drivers are identified, you can project how they will affect profitability. If responses to offers are not tracking as expected, you can send an additional offer. If luxury elements in the rooms cause additional housekeeping effort, you can invest in tools to reduce these expenses. In addition to looking historically at these drivers, you can forecast how the drivers will affect future revenues and profitability. Having forward looking insight into the business allows you to proactively monitor these impacts using powerful predictive analytics, and take corrective actions before your business is affected.

Once you identify your most valuable guests, understand their activities and behaviors and identify the drivers of value, marketing automation tools such as SAS® Marketing Automation can help you create targeted promotions designed with your guests in mind. Using analytics with marketing automation, you are now able to send the right offer to the right guest at the right time. Automation reduces the labor involved with creating and executing a promotion, and personalization ensures that your guests receive the right offer for them. Marketing budgets are reduced at the same time that responses increase. Why send out an offer to your entire database when you only need a specific number of responses? In addition, guest satisfaction increases because you are not blanketing your guests with junk mail, and the offers they do receive are still available when they call to redeem them. The answers to what your guests want are sitting in your data, and predictive analytics is the key to finding these insights.

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About Author

Natalie Osborn

Senior Industry Consultant, Hospitality & Travel Global Practice

Natalie Osborn is the senior industry consultant for SAS Institute’s Hospitality and Travel practice, and an 18+ year veteran of hospitality and hospitality technology solutions development, specializing in revenue management. Prior to joining SAS, Natalie was the director, product marketing for Minneapolis-based IDeaS Revenue Solutions, where she worked from 2000 to 2011.

3 Comments

  1. Ahmed Rabea on

    Thank you for sharing these great insights.

    Without doubts predictive marketing is essential tool to break through to valued prospects, especially bearing in mind the fierce competition and the increase of technology usage. However, the accuracy of predictive marketing may be arguable in delivering the desired results. It is useful to monitor the guests’ tendency to change behavior and preferences. It might be suggested that people change behavior and preferences in this information age more frequent than before which might lead to the inefficiency of simple predictive marketing tools.

    • Natalie Osborn
      Natalie Osborn on

      Ahmed - you are right, a "one and done" approach to predictive modeling will not yield good results in the long term. The casino marketplace is constantly changing and casino marketing approaches need to continually evolve to be truly effective.

    • When it comes to venue marketing, or more precisely a hotel marketing it is far better to monitor, measure and iterate than not doing this. So, good point Ahmed but, still it's better to build knowledge about behavioral aspects of your guests based on a solid framework because this two aspects:

      1. You might find universal triggers that influence a perfect guest experience
      2. You might find a long term based behavioral patterns

      I think this is strategic decision for venue managers.

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