By Peter Matthews of Nucleus
We have now entered what might be described as the ‘post-digital era’. With two digitally-literate generations and another growing up with devices in their hands, we can no longer marvel at the fact that technology is all around us.
We have learned, of course, that in business digital actual means data. As the IoT saturates our lives pretty much everything we do is tracked and measured. This means we can be observed and marketed to, individually and in real time.
Some might find this alarming. Is Alexa listening to your conversation about your next holiday and then dishing up an airline ad the next time you log-on to your laptop? What about Foursquare who is aiming to become a location-based ad powerhouse now that it has purchased Placed from Snap? Targeting ads to people based on their mobile phone location may be challenged by the rise of privacy laws, but they claim the business model is sound because it is based on people opting to share their location. Facial recognition, linked to location, is likely to be more controversial.
Without doubt our digital footprint now extends into the real world and pervades every area of our lives.
In this post-digital world privacy has become a luxury. Most BigTech companies have based their business models on monetising our data to sell to advertisers, or to sell stuff to us directly. Only Apple seems to recognise that privacy is a differentiator and says it wants to build privacy into its eco-system. Smart thinking.
Last year GDPR established some key rules around consent and data security within the EU and subsequently fined Google and Facebook in landmark cases. Some in the US would welcome similar legislation but, as always, the law trails the innovators by decades. Furthermore, different views about digital privacy are now emerging in Europe, the US and China.
So what does this mean for the luxury travel sector?
Travel was one of the industries where digital disruptors struck first. OTAs, like Booking.com and Expedia, disintermediated offline travel agents and have occupied commanding positions in the industry for a decade or more. As avid users of big data, don’t expect them to hold back on using all the latest collection and targeting techniques.
Hotels, especially luxury hotels, tend to view OTAs as ‘frenemies’. Some resent paying big commissions for bookings they could – in some cases should – get direct, but appreciate their rooms being filled during shoulder periods. A few simply refuse to do business with them.
For luxury travel brands, service has always been key. So how can you use customer data to discreetly personalise service without it becoming invasive? Historically a ‘white glove’ service has been the key to success, but luxury hotels now need to take this a step further. Making personal friends with every guest is how a new ultra-luxury hotel client of ours in Geneva intends to achieve this.
With only 27 suites and a 3:1 staff-to-guest ratio that seems feasible, but guest preferences will still need to be recorded and stored securely, only making them available to staff at the appropriate time, usually at the point of service.
Once a hotel knows the, sometimes eccentric, pleasures of their guests, the big question is how does it keep that data secure, yet accessible at the point of service? I haven’t yet heard of a legendary 5-star hotel CRM database being hacked, but I’m sure it’s not going to be too long before that happens.
So it’s clear personal data can improve service, but if you take that thought to its logical conclusion, hotels of the future might be staffed by robots. Maybe that will turn out to be the case, certainly for the more repetitive tasks, with every guest considered important enough to be personally greeted by a universally efficient GM, who never needs to sleep: Hello:Welcome.To.The.Hotel.Of.The.Future.
Of course, robots would recognise every guest and know how each one likes his bed made and cocktail mixed. Perhaps cyber devices – remember Google Glasses – could achieve the same for humans. Your personal data would flash up and alert the waitress that you are wheat or lactose intolerant, or only drink Château Margaux from magnums.
Think of your fussiest GM who carries a tape measure at all times to check if housekeeping has positioned the books on the presidential suite’s coffee table precisely 25cms from the table’s edge, or folded back the bedspread to the requisite position. Wouldn’t he prefer robots who were never off-sick and could be re-programmed to meet each guest’s individual preferences?
Driverless cars may be on the near horizon. How long before staffless luxury hotels…
But wait – surely this vision of the future is far too soul-less to be luxurious. After all the Millennial luxury explorer seeks authenticity and unique experiences above all else. Will the trend be to shy away from big hotel brands and search for one-off private apartments that offer local culture and a feel ‘at home’ away from home?
Ultimately targeting ‘spendability’ will become a new focus for marketers, because this data will categorise what individuals spend on different lifestyle choices from eating out, pubs, flights and hotels to car rental and travel insurance. With Open Banking launching in September, money management apps will widely have this data for the first time. For travel marketers this means that those customers spending most on travel will be easier to get to know, so expect lots of action in this area. As well as cries of concern from those who value privacy.
As Millennial spending power overtakes the previous generation and apps and websites get ever more effective at targeting customer preferences, travel brands need to decide where they stand on using personal data and privacy. And if privacy is a new valued dimension of luxury, what does that mean for existing luxury travel brands’ approach to digital marketing?
Travel and hotel brands will need to figure out how they will gain consent to use customer data to enhance the customer brand experience, or, alternatively, use privacy as a competitive differentiator. Whichever approach is taken, it will need to meet the needs and the emerging rules of the post-digital world.