Partner blog entry: Personalized guest communications. Where are hotel groups going wrong?

Personalization sells: fact. And it sells particularly well in the hospitality sector. According to McKinsey & Company, brands that use individualized marketing tactics such as personalized emails can generally expect a 40% increase in revenues1. But when you look at the hotel industry specifically, the figure is even higher at 76 %².

Nadja Weindl

Jan 20, 2023 ·

Personalized guest communications. Where are hotel groups going wrong?

Personalization sells: fact. And it sells particularly well in the hospitality sector. According to McKinsey & Company, brands that use individualized marketing tactics such as personalized emails can generally expect a 40% increase in revenues1. But when you look at the hotel industry specifically, the figure is even higher at 76 %².

This is clearly an opportunity not to be missed. But why are hotels so poor at personalizing their guest communications, an art that leading OTAs have long since mastered? In this article, dailypoint examines the top four reasons why hotels are falling short in this area, before considering what needs to change for the future.

Putting the wrong system(s) at the heart of the IT stack

Traditionally, the PMS has been at the center of the hotel tech stack. As we have explored in previous blogs and White Papers, this is not the best approach. The PMS is an essential part of the IT solution, but problems arise when hotels make it the main source of guest data for marketing communications. Why? The clue is in the name – it's a Property Management System, not a Guest Management System!

The information collected and stored by the PMS naturally revolves around front-office capabilities such as reservations, room rates, billing etc. Customer data from other valuable sources such as F&B, POS, CRM, RMS and IBE systems may not be integrated. This leads to missed opportunities for creating detailed guest profiles and, as a result, personalized marketing messages that really hit the spot.

Using poor quality, unenriched data for marketing communications

As noted above, a traditional hotel IT stack can be fraught with integration issues. There is no single, central repository for customer information, with the result that multiple versions of each guest's profile are created. It becomes difficult or impossible to manage these effectively, leading to outdated, uncleansed information being used for marketing purposes.

Furthermore, this fragmented information cannot easily be enriched using Artificial Intelligence (AI) and machine learning. This precludes the creation of deep and accurate guest insights around personal interests, likes and dislikes etc, which are essential for providing truly personalized communications. For example, if a guest is a frequent spa user, this information will naturally be stored in the hotel's spa software. But if the data is not centralized, it cannot be used to create individualized messages that target the guest's habits and preferences.

Segmenting guests into groups and email lists

It is no longer enough just to market to guests according to one or two preferences of which the hotel chain is aware. For example, being sorted into an email list with 2,000 other guests who also used the hotel's fine dining restaurant twice in the last year is unlikely to impress. What today's consumers are looking for is a genuine, one-to-one experience.

We have already seen that personalization sells. But it also really matters. The McKinsey & Company study cited above shows that 71% of consumers say they expect personalized communications and 76% are frustrated when they do not get these1. What is more, they will vote with their feet; Twilio segment's '2021 State of Personalization Report' revealed that 45% of consumers will take their business elsewhere if a brand does not offer a personalized experience3.

Sending irrelevant marketing communications

This naturally links to the last point as, unless communications are unique to each guest, there will probably be irrelevancies within each message. Whilst some of these may not matter too much, sending information and offers about services or facilities that a guest actively dislikes will not get good results.

To return to the above example, the guest who has used the hotel's fine dining experience twice in the last year may well be interested in a special offer or voucher for the restaurant. They would probably not want to know about a 50% deal for the 'All you can eat' budget buffet!

Priority of messaging is also key

What if the above guest has used the hotel's golf course six times or the spa and leisure center even more? Prioritizing the fine dining preference (if this is even a real preference after two visits) would be the wrong approach and the hotel would potentially miss out on both sales and customer satisfaction opportunities.

How much better would it be to create a 100% personalized email that starts with an offer from the hotel spa, followed by the latest tee times and prices, and ending with a fine dining voucher to encourage a third visit? Other information can certainly be included in the email, some of which can be generic or even irrelevant. But the personalized messages must come first, and in priority order, so these are seen even if the guest only skimm-reads the email.

So, what needs to change?

Put simply, hotels need to adopt a new process for creating and managing guest profiles so these can be used effectively to produce personalized marketing communications that work.

This process can be summarized as follows:

Data – collect guest data from all systems in the IT stack through effective open API-enabled integrations.

Information – centralize this data to produce a single, clean and accurate version of each guest's profile.

Knowledge – use AI and machine learning to create deep insights around the detailed profile information.

Action – deploy a specialized marketing solution to produce unique communications for each guest, targeting their preferences, habits and behaviors in priority order. This may sound like a tall order! However, with leading technology products, this – and much more – becomes possible.

Sources

¹ McKinsey & Company. "The value of getting personalization right—or wrong—is multiplying." November 2021.

² Cendyn & Apaleo. "10 reasons why the guest profile no longer lives in the PMS". January 2020.

³ Twilio segment. 2021 State of Personalization Report. 2021.

About dailypoint™ - Software made by Toedt, Dr. Selk & Coll. GmbH dailypoint™ is the leading Data Management and CRM platform for demanding individual hotels and hotel groups. dailypoint™ collects data from all relevant sources such as PMS, POS, website, newsletter or WiFi and automatically creates a central and consolidated guest profile. In 350 steps, the data is processed and enriched by means of artificial intelligence (AI) to create a guest profile like never before.

The cloud-based SAAS solution consists of 16 modules and is complemented by the dailypoint™ Marketplace with almost 200 solution partners. dailypoint™ not only offers measurable marketing, but also covers the entire customer journey and thus supports all departments within a hotel. The integrated Privacy Dashboard is also the central element for the technical implementation of the GDPR.

dailypoint™ is headquartered in Munich, Germany and is sold and supported worldwide directly or through its distribution partners D-EDGE and XNProtel. www.dailypoint.com

About Dr. Michael Toedt Dr. Michael Toedt is one of the most renowned experts in the field of Big Data and CRM. His professional life to date can be divided into two areas: First, his goal was to take over his parents' hotel business. After two specialist training courses and experience in the star gastronomy sector, he studied business administration with a focus on the hotel industry. In 2000, he started his second career in the field of CRM at the Schörghuber Group of Companies, and in 2005 founded Toedt, Dr. Selk & Coll. GmbH. Since then TS&C, today known as dailypoint, has made a name for itself as a software company and think tank for data-driven management. Michael Toedt wrote the CRM guide of the Austrian Hotel Association and in 2015 the book "Big Data" was published, which has since become a standard work. He wrote his doctorate in 2016 on the influence of communication on sales figures in the luxury hotel industry.