Predictive Analytics: An Essential Weapon in Battle Against OTAs

It is largely assumed across the industry that recent brand consolidation—starting with Marriott-Starwood and followed closely by Accor-Fairmont—is partially a response to the new OTA duopoly and its rejuvenated pricing power.

With Priceline Group and Expedia owning just about every major online hotel distribution brand, the two are putting themselves in position to capture much more of your demand, rerouting it to you after tacking on a hefty commission. Fortunately, today’s economy remains in growth mode and guests are checking in at record paces, leading OTA commissions on a downward trend. But Priceline, Expedia—and now Google and TripAdvisor—are continuing to innovate and finding new and better ways to sell hotel rooms at a cost to you.

Consolidation might help on a broader scale as it pertains to the purchase power behind increased digital marketing efforts and negotiating more favorable distribution terms. But on the street corner, smart hotel leaders are using predictive analytics to level the playing field with OTAs and gain a significant advantage over their competitors when it comes to pricing to meet demand.

Specifically, today’s revenue managers—armed with several new sets of forward-looking data—are being challenged by the industry to use the technology and data at their disposal to more effectively manage distribution costs.

So what exactly is predictive analytics? According to a recent EyeforTravel and Duetto whitepaper, it’s taking the ‘Big Data’ we hear so much about, analyzing it and then using it to predict future business levels, customer behavior and demand.

“BI is the ability [to create] reports that basically show you a whole lot of data – you then interpret that data and decide on what action to take. Predictive analytics is the end result of what the action is supposed to be,” says Duetto Co-Founder Marco Benvenuti. “I can give you a report and show you trends about a destination or hotel and then leave you to your own devices. However, predictive analytics gives you the data and the answers, because you’ve built a predictive model that looks at the data and analyses it for you.”

And how can it help? In many ways. First, predictive analytics provide a much better understanding of true market demand. Over the past several years, more information about consumers has become available. Today, we’re learning about travelers who visited our websites, even began searching dates and locations, but left without booking. This provides a clearer picture of unconstrained demand—a more comprehensive look that goes beyond just those guests booking a room and into all of the potential shoppers as well. Including these new sets of data into your pricing algorithm will ensure you’re selling the right room at the right price to the right guest and on the right channel.

Predictive analytics also allows hoteliers to provide more personalized service and pricing. With fenced promotions built around customer behavior and multi-channel optimization, hotels can drive direct bookings and yield higher-cost channels up to compensate for acquisition costs.

These strategies will help you drive more direct bookings and decrease your dependence on costly channels.

Implementing predictive analytics into your revenue strategy is not easy. It often requires a change in pricing philosophy as well as buy-in from those who have a financial stake in your hotel and various in-house departments.

Revenue strategy is not marketing jargon, but rather a philosophical change that’s rooted in the need for new and more effective approaches to pricing hotel rooms for profit. The smartest hoteliers today are putting technically advanced people who understand predicative analytics into positions to make major impacts on the revenues and profitability of hotels.

To learn more, view the full whitepaper: “Bringing Predictive Analytics to the Hotel Industry.”

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Jason Q. Freed, Dir. of Marketing Communications

Jason, Dir. of Marketing Communications, joined Duetto in June 2015 after reporting, writing and editing hotel industry news for a decade at both print and online publications. He’s passionate about content marketing and hotel technology, which leads to unique perspectives on hotel distribution and revenue management best practices.

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