Companies don’t need to hire a large "big data" team to benefit from the latest academic knowledge of analytics.
Case in point: Leading Hotels of the World is a New York City-based sales, marketing, and distribution organization for more than 430 luxury properties in more than 80 countries.
Every year, hotel managers meet with Leading's regional director of business performance. Sometimes, they say something like this: “Hey, Leading, I pay fees to belong to your organization. But you're not generating enough revenue for me."
Leading's representatives tend to respond along the lines of: “Hey, it’s a two-way street. If you participated in more of our promotional efforts, you would be extracting much more revenue.”
Its executives know intuitively that their promotional efforts boost revenue for hotel members, says Hakan Ozakbas, director of analytics and reporting.
But the organization doesn’t operate any hotels, so it can’t force compliance with its roadshows, meetings, and conferences.
For instance, Leading can’t compel a member hotel to send its director of sales and marketing to its regional showcases, such as in Dubai, Sāo Paulo, and Singapore.
At those events, the brand promotes the properties to travel agents, destination marketing organizations, and affluent travelers.
Neither can Leading force hotels to cooperate with direct mail campaigns (such as for private sales) or with print and digital advertisements.
To boost collaboration, Ozakbas's team had an idea.
In 2012, the team created the idea of an "hotel engagement scorecard." The tool measures, on a scale from 1 to 100, how much a hotel participates in Leading's marketing, sales, and distribution efforts.
After CEO Ted Teng greenlit the concept, the question became how to test its value.
In late 2012 Teng asked a class at Cornell University School of Hotel Administration to build a model to measure how much incremental revenue hotels earned when they collaborated with Leading.
Teng is an alumnus of the School of Administration. He proposed the project through professor Mona Anita Olsen. She helped to get it approved and oversaw its execution.
The Cornell team pushed to expand the score to measure more than 15 attributes, and computed different weightings depending on the effect each one had on revenue for a subset of Leading's hotels.
Cornell used mathematical modeling and computers to crunch the data. The revenue data came from hotels or was estimated by Smith Travel Research (STR).
The academics found that high-scoring hotels reaped a significantly greater share of revenue than low-scoring ones. LHW aims to generate at least 20% of a member hotel’s revenue. But highly engaged hotels saw Leading contribute roughly half of revenue share.
Leading was pleased with the results. It found that the study helped to persuade hotels to engage more. By the end of 2014, the hotel engagement score system was implemented with all of Leading's member hotels. Says Ozakbas:
“The conversation with some hotels is transitioning to a new dynamic that's more factual.”
Pleased with the first study, Leading has gone back to Cornell.
Today, a class has presented at Leading's headquarters a fresh study, which measured how the quality of a hotel impacts guest satisfaction. The project is overseen by Lauren Helbig, associate manager, quality and performance.**CORRECTION: The original article named the wrong project manager. I've fixed it. My apologies.
What's in it for Cornell? The students say they like these type of projects, because the data is based on true situations and the conclusions have a real-world impact.
The lesson for the industry may be this: When it comes to using technology, travel companies may find that it isn't always necessary to hire a big data analytics team. Sometimes you can outsource the project, old-school.