nSight for IDeaS: A Crystal Ball for Marketing & Revenue Management
A Crystal Ball for Marketing & Revenue Management
Owners and operators are dead set on obtaining more direct bookings for their hotels to maximize their profits. Revenue management and marketing, more than ever, must align in order to achieve what their owners are asking for. I recently had the opportunity to sit down with Clay Jackson, President for nSight Travel Intelligence, to discuss what travel intent data is and how hotels can utilize these insights to gain a competitive advantage and drive more direct bookings.
BM: There is quite a bit of buzz around market demand data in the revenue management industry, specifically forward-looking data. Can you tell us a little bit about the importance of this data, what nSight offers its clients and why it is so unique in the marketplace?
CJ: To understand the importance of “intent” data in the hotel industry, we need to talk about how it currently functions. The best tools use historical data as their foundation to make pricing and inventory recommendations.
Traditionally, the two most reliable pieces of information revenue managers use to manage future trends are price and inventory (which is broken into a variety of segments). In all cases, revenue managers know their inventory and pricing. However, while they don’t necessarily know their competitors’ remaining inventory, they do know their competitors’ pricing through rate shopping services. The relationship between what we know, what we don’t know and the assumptions we make drives decision-making in the hotel industry.
In the unknowns, revenue managers make educated guesses for the demand available by segment (unconstrained demand) coming into the market on a given day. They must then model the levels at which they (and, in turn, their competitors) will absorb that demand.
This brings us to “travel intent data,” which can actually begin to quantify demand for future dates. Every day millions of consumers from around the world conduct millions of searches and bookings for hotel rooms on thousands of internet sites. By capturing this data, and standardizing it in a way that makes sense, we are now able to better map the levels of unconstrained demand for a hotel, its competitive set and its destination for any future travel dates.
nSight uses search and booking data from third party booking sites and OTAs as “intent data.” In the transient customer’s purchase cycle, the OTAs and other third party channels are where the vast majority of transient customers search for the hotel they want to book.
In other words, while it may not be magic, it can be compared to that coveted crystal ball.
BM: It sounds like nSight travel intent data has the potential to solve the challenge hotels face with their revenue management strategy being disconnected from their marketing strategy. Do you foresee this type of data, incorporated into a revenue strategy, starting to bridge that gap?
CJ: Absolutely. The disjoint between revenue management and marketing is one of the fundamental challenges to revolutionizing how hotels operate and significantly improve performance. The reason that revenue management and marketing don’t “talk” is because they optimize to different outcomes. A revenue manager is focused on performance metrics that are arrival date based; however, marketing strategy is based on consumer purchase cycle (i.e. Cost Per Acquisition [CPA] or Return on Ad Spend [ROAS]).
If you reorient the process to both the arrival period and the audience, it becomes possible for revenue management and marketing to work together.
The nSight for IDeaS module is one of the first steps to helping the industry bridge this gap by showing the target audience by arrival period. As marketing becomes focused on optimizing campaigns to the arrival period, the gap will close. It will become more automated, more powerful and more accurate; however, the first step is asking the question, “When do we need a customer?”
BM: IDeaS and nSight have announced a partnership with the new nSight for IDeaS solution available exclusively to IDeaS clients. How does this new offering give IDeaS clients a competitive advantage over other hotels in their respective markets?
CJ: Intent data. The best industry tools and models rely on historical data and historical models or use limited “new” data from a hotel’s website. By incorporating data from the OTAs and other third party channels, a hotel can be better and smarter than the past. Revenue managers can start to look into the future and factor in how this year’s customer differs from last year’s.
The analogy of driving in the rear view mirror is particularly applicable to the hotel industry because of the variability that things like oil prices and currency exchange rates and the overall economy can have on travel demand. The rear view mirror is a great tool for driving down a straight road. If we know the road is straight, we can rely on the rear view mirror to keep us between the lines. However, when the road is curvy and the future is unknown and different than the past, then the rear view mirror is a poor indicator of where we are or where we need to be.
nSight for IDeaS incorporates a forward-looking view of demand in the market to fundamentally improve the best practices and tools of the hotel industry. Why would anyone only rely on the rear view mirror when they have the equivalent of a crystal ball?
Professionals who only look in the past are at a disadvantage to not only where the industry is today, but where it’s going tomorrow.
BM: We all know a big theme for hotels in 2016 was driving more direct bookings. What opportunities will the nSight for IDeaS solution create to achieve the goal of driving the most profitable business to hotels?
CJ: Senior executives at hotel companies support nSight because it’s a tool to help their organizations realize larger goals. One of the first goals is achieving RevPar growth in the next few years, and the second is helping hotels build upon early successes for rooms margin improvement through more direct bookings.
Regarding RevPar: These past six years have been a fantastic period of RevPar growth (maybe the best ever); but now we are in the later stages of the cycle with most brands forecasting 1-3% RevPar gains in 2017 and 2018. With supply increasing in many markets at a higher rate than revenue growth, the triggers to RevPar gains are the transient segment and overall rate growth. This is because transient is growing faster than group, and occupancy is flat to negative. Therefore, to hit 1-3% RevPAR numbers, hotels must win more transient business while growing overall rate. nSight helps revenue management and marketing teams overcome both of these challenges.
Next, the easiest way to improve rooms margins is through reducing direct costs associated with third party transient channels. nSight for IDeaS is a way to facilitate more direct bookings. As we know, OTAs are strong in the market because they can be a “one stop shop” for comparison shopping while staying top of mind with consumers through the investment of billions in advertising and marketing spend every year. They market better than most hotel brands, and also have parity agreements to advantage their pricing. As their parity power is slowly eroding, their marketing advantage is not.
So hotels must market smarter to achieve more direct bookings. By smarter, hotels need to do things differently. This is where nSight comes in. We make it easy for digital marketing teams to use our targeting recommendations in nearly every channel they manage – whether in Google AdWords, TripAdvisor display, social media or programmatic campaigns.
BM: nSight is a pioneer in the industry when it comes to consumer shopping behavior for hotels and destinations. What is some advice you can give to revenue management professionals that are looking to be pioneers within their own roles?
CJ: Walk before you run. And simple is better than fancy.
How often do we find ourselves inspired at a trade show by a series of great presentations, or a fantastic Ted Talk? But why is it so hard to translate that inspiration into innovation in our workplace?
There are many reasons, but chief among them is that leading change takes time – requiring a steadfast commitment to a long term vision. And a relentless focus on execution, which puts a premium on making something rather complex…simple.
That’s what we’ve tried to do at nSight. Our vision is to be the industry leader in aggregating new sources of data which signal the intent of travelers to book travel. To achieve that vision, we must make it easy for revenue management and marketing teams to use this new data in traditional systems and processes.
Pioneers prefer change to complacency because the benefits of their vision outweigh the status quo. But the only way pioneers help others begin to see the reality of that vision is by revealing it to them slowly. Simple and quick “wins” create momentum and are essential if you’re going to help your organization realize the benefits of fundamental change.
Interested in learning even more? Join Clay Jackson and I on March 2nd, 2017 for a live webinar on how to build a powerful revenue strategy with travel intent data analytics from nSight for IDeaS.