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Value Proposition of Digital Transformation
The use of Big Data today is widespread in all markets, including tourism, retail, banking, telecommunications, fitness, online commerce, and other sectors. The tourism and hospitality industry can greatly benefit from the correct use of Big Data and gain a competitive advantage by improving the quality of service through the collection and analysis of data from consumer profiles, transactions, and surveys (What is Big Data, 2022). As a rule, hotel owners have access to a large amount of data that they leave unattended. Notably, Big Data is collected throughout the service delivery process and can be very diverse.
According to Porters General Strategies, companies gain a competitive advantage if they find the right way to create unique value in their organization. In particular, Porter advises choosing between cost leadership, differentiation, and niche market strategies (Value disciplines, 2018). The collection of customer data for the subsequent personalization of services is consistent with the differentiation strategy. The use of Big Data Analytics, therefore, is a convenient tool for the unobtrusive collection of customer data, with the obligatory condition of informed consent.
Today many customers show disbelief when offered to share personal data, which is the main problem for the implementation of the Big Data Analytics digital transformational strategy. The presented strategy allows solving the problem of confidentiality through the informed consent of customers when filling out the appropriate forms during registration. Equally important, the use of proven licensed digital IT systems for data storage and analysis ensures the security and anonymity of data, fostering trust between Galaxy hotels and customers. Equally important, the Parity system used by Galaxy is a proven data acquisition technology that provides fast and high-quality data synchronization and integration.
This means that, in addition to the technology for collecting, storing, and processing data, the Parity system offers models for statistical analysis and predicting customer behavior. Equally important, statistical models allow managing the managerial understanding of preferences and form optimal proposals. In particular, a special system of discounts, special offers, and bonuses can be developed for each category of customers. These ways of differentiation allow for better managing customer relationships and providing better service.
Preference analysis improves room occupancy planning, which is especially important given the seasonal nature of the business. For example, older couples without children prefer to stay in hotels for longer periods and choose the velvet season from late August to mid-October (Talón-Ballestero et al., 2018). At the same time, students and young people without children often choose shorter stays, preferring vacations in April, May, and during the New Year holidays. Couples with children tend to choose peak seasons and have special needs for children.
Interestingly, given the expansion potential of the hotel business, statistical models based on the analysis of Big Data allowed the Galaxy hotel chain to apply a differentiation strategy to the process of expanding and acquiring new hotels. Based on the analysis of demand for services and preferences in the geography of hotels, Galaxy was able to focus on its target audience and expand opportunities by more precisely matching the characteristics of demand. Therefore, Big Data Analytics satisfies the needs of tactical and strategic planning and can be used to analyze the market and the role of Galaxy in the market.
Notably, in line with Porters Common Strategies, Galaxy can also take advantage of a niche market as an alternative to differentiation. For example, as part of a strategic expansion, Galaxy can focus on niches in which it currently has the highest demand and those niches that could help expand and strengthen the brand. Through the use of the digital models for the Big Data Analysis, the Galaxy will be able to more accurately meet the requirements of niche markets.
References
Talón-Ballestero, P., González-Serrano, L., Soguero-Ruiz, C., Muñoz-Romero, S., & Rojo-Álvarez, J. L. (2018). Using big data from customer relationship management information systems to determine the client profile in the hotel sector. Tourism Management, 68, 187-197. doi.org/10.1016/j.tourman.2018.03.017
Value disciplines: Customer intimacy, product leadership, and operational excellence. (2018). B2U.
What is Big Data and how is it impacting the hotel industry? (2022). Hotel Tech Report.
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