Big data is a term that has been used by analysts in this industry and many others. But what is big data, and how can it be used to help hotels raise revenues? Fulvio Giannetti, CEO/head of data science at Italy-based Lybra, connected with Hotel Business to discuss big data and the software his company has created to leverage it.
What is big data? Big data is a relatively new concept in tourism but also presents a new opportunity. Overlooking the mere academic definition of 5Vs (volume, velocity, variety, veracity and value), it is a huge amount of data that can be structured (i.e., they follow a tabular logic such as Excel) or unstructured, and can have a different nature (email, images, texts, searches). The development of this new technological trend was made possible with the spread of cloud systems. The interconnection of systems, combined with the infinite ability to store data at low prices, has opened the door to the democratization of big data, previously exclusive to only a few.
However, creating a big data management platform is an onerous operation both from the point of view of costs and skills; in tourism, there are few companies able to carry out this type of project.
How do hotels use big data in revenue management? Big data remains a generic term, widely used especially in marketing but often with blurred outlines. If in the world of tourism the fields of application of big data can be very extensive. In the field of revenue management, it finds its ideal place in the analysis of demand.
The classic definition of revenue management is to sell at the right price at the right time to the right customer.
The evolution of analysis techniques has always revolved around these concepts. We often hear about the elasticity of demand to understand how much a customer is willing to pay for a hotel room; however, this figure has always been difficult to obtain.
The simplest attempt was to analyze the hotel history, the PMS data, to study customer purchase patterns in the past, considering them also valid in subsequent years. The revenue management literature is full of case studies based on this analysis model that presents weaknesses that we can analyze simply by taking up the definition of revenue management.
What are the differences between small and big data? In revenue management, small data coincides with internal hotel data, those extracted from the PMS (reservations or variables associated with them), while the term big data usually refers to external data and market data (competitors’ prices, reputation, demand data, etc.). This distinction is not formally correct, as not all external data fully falls into the category of big data.
Please tell our readers about Lybra EYE. In Lybra EYE, we have created a project that we had in mind from the first day we developed Lybra.
The hotel industry is very fragmented, which made us think it was the perfect market for this type of product. In reality, as in other industries, distribution is in the hands of a few players. An unstoppable phenomenon, which the spread of online has accelerated, creating entities capable of controlling the supply chain directly or indirectly. Hotels are trying to reverse this by investing in technology and training.
A potentially negative element is the “data divide.” Compared to OTAs, hotels have a narrower view of the demand for incoming tourists. Lybra EYE [which is currently only available in Italy]represents the overcoming of this limit. By combining data from more than 30,000 hotels, we can provide our hotel customers with a view from above, as well as a series of essential information, in terms of revenue management—above all, the ability to understand in real-time who you are looking for and at what price. From this point of view, Lybra EYE is a leap into the future—a small revolution that was conceptually impossible until a few years ago.
When will Lybra EYE be available in other countries such as the U.S.? Very soon. At the moment, we have launched Lybra Advisor, a solution that combines flight searches and other relevant data points in one dashboard, at an accessible price, suitable for any hotel size and category.
Is your company working on anything else at the moment? Of course. The world of technology does not foresee moments of pause because there is always a new feature to be implemented or an optimization to be done. In our case, we are very focused on experimenting with new features/new approaches.
About 20% of our development hours are focused on innovation. Many features are developed and put in the drawer, others do not pass the tests, others become reality for our customers. We are like an F1, in that we develop new components, test them and, if they bring real benefit, we keep them; otherwise, we start over. Like an F1, technology and innovation imply considerable investments and in this, we are supported by [parent company]Zucchetti Group which, in addition to being one of the largest groups in Europe in providing software to companies, pushes and supports us to improve our solutions day after day.