This article investigates and describes the concept of using Big Data in Hospitality industry. It examines the importance of Big Data management as a source of economic value and incremental factor for improving quality of services and guests experience, as currently there is a lack in dedicated researches.
В статье исследован и описан концепт использования Больших данных в индустрии гостеприимства, а также проанализирована важность использования больших массивов данных как источника экономической ценности и фактора улучшающего качество услуг.
Big Data, Internet of Things, Hospitality industry, Smart technologies, 5G Technologies.
Большие данные, Интернет вещей, индустрия гостеприимства, Smart технологии, 5G технологии.
Big Data is indeed a new phenomenon in the Internet industry and unlike traditional Internet environment it generates more data leveraging from sensors and devices connected to each other, and it is strongly dependent from the users’ behavior. It gives an opportunity to manage manual processes in more efficient and intelligent way and to reduce costs (e.g. energy savings). At the same time, IoT connects devices and users to create unique environment, while traditional Internet was only a way to connect people. Customization of the technologies fragmented the Internet industry and made it available for other sectors rather than only for PC and smartphones.
Big data will create new businesses that people could not even imagine before. IoT, analytics, crypto technologies and cloud services - all together create new digital economy with new rules that requires regulation and new approaches to online security. While currently Big Data mostly adopted in segments like smartphones and wearables, household appliances, smart cities, automobile and industrial, this research will be focused on the hospitality industry.
Implementation of 5G networks and low-cost Wi-Fi connected sensors and devices will drive the industry. In addition, focus on software development will lead to the occurrence of big data storage and analytics segments.
It is possible to identify several value propositions of Big Data: traditional revenue generation, productivity, cost savings and data analytics. Thus implementation of the IoT can improve productivity and reduce costs such as capital expenditures, operational expenditures and labor cost. All those aspects will be discussed in more details further in this research paper. Implementation of IoT devices and development of Big Data can make life easier for hotel guests by, for example, automatic turn on heat on preferable level before coming to the room.
Increased number of sensors allows hotels to collect huge amount of data about users’ behavior. However, this data must be processed and analyzed, and companies can benefit from this data in many ways. Big data requires huge processing power, which is only possible through big data centers like ones that Amazon, IBM or Microsoft offer to the clients. Another way data can be used is targeting advertisement. Google analytics allows tour operators to see detailed information about web-site visitors and to show relevant advertisements to the potential tourists who can be interested in their products. By using Google analytics, companies can increase conversion ratio of the marketing campaigns and reduce the cost per user compare to the traditional ways to promote and sell products. Another way to generate revenue from data collection is selling anonymous data bases from different devices that can be useful for marketing and promotion purposes .
This research combines qualitative and quantitate approaches for data analysis. As a part of quantitative analysis secondary data regarding economic market outlook and financial KPIs were collected from different statistical resources like Statista and Eurostat and then was analyzed. Qualitative data analytics is provided in form of content analysis of reports and researches conducted by different consulting companies like Deloitte and PWC.
To date, it appears that not many dedicated researches on Big Data application in Hospitality have been done. In addition, there are not enough studies and literature concerning this topic. Most of existing reports cover Big Data application or IoT industry in general or focus on B2B segment of the market.
IoT platforms have already changed most of the industries, and hospitality is not an exception. Online platforms are now valued more than traditional hospitality providers. Thus in 2016 AirBnB had a twice more value than Hilton Worldwide before acquisition with Starwood, even though AirBnB had no significant assets on its balance sheet and hired only 1% of Hilton’s staff. In addition, AirBnB properties did not require any working capital for maintenance and reconstructions. This is a good example of how online digitalized entities can outperform traditional companies. However, this transformation of the business even more complex with implementation of IoT technologies with all the hardware and software to be implemented. Hospitality is the only industry that do not produce any hardware for the IoT environment, but can fully use potential of the technologies to improve its business operations .
In 2017 Marriot International in cooperation with Samsung and Legrand started to develop hotel room of the future where every aspect of guests’ stay is controlled by smart IoT devices. IoT Guestroom Lab project was performed in company’s headquarter aimed to explore potential of Smart Home devices to increase quality of the services and improve financial efficiency. Marriot expects to develop the system of personalized experience of the hotel stay based on the guests’ preferences. The idea was to create a home for the people even when they are far away from home.
Thus, Marriot expects to implement voice assistants as a concierge services that can set up an alarm and remind about transfers and meetings, as well as order food from hotel restaurant or book tickets for the events. In addition, they can benefit from already existing apps to order a taxi or to know traffic situation to the airport. In addition, Smart thermostats as part of IoT environment can heat the room and start the shower at preferred temperature of the guest based on the information from his online profile available in Marriott app.
Smart Home technologies can facilitate cooperation between brands in hospitality and create completely new experience from mobile check-in and keys, to voice enabled chatbots. Currently integrated Smart Home system is in test by hotel chains to ensure safety and usability for the guests.
Hotel guests are now more sophisticated in their requirements and technology acceptance as a result they expect more from the hotels. Good news for the hotels is that Smart Home systems can be deployed in both new and existing facilities, and no major renovations are needed. Even though every facility has unique requirements, existing portfolio of Smart Home solutions enables full implementation of the Smart Hotel concept. International travelers will force hotels to change their environment, since they will not be willing to return to the old-fashioned traditional experience. In addition, big hotel chains will push small local facilities to implement new technologies to stay competitive in the market. All those changes will attract young generation of travelers, who sometimes see new technologies as a decisive factor for their choice .
In this case cost of the deployment is a major worry, especially for the small local hotels. However, those investments are long term investments, and hence budget for implementation can be allocated accordingly. Also cost of devices will decrease, and interoperability of systems may help to reduce the total cost of deployment.
With integration of smart speakers and voice assistants into daily routine, hotels might think about implementation of those devices into rooms ecosystem. Smart speaker can play music, stream video and create notifications. This is good alternative to the media centers in the rooms, since guests can synchronize their smartphones with Smart speakers and receive all kind of services hands free. This autonomy in entertainment is now more important for the guests, since they travel with more devices than ever and usually have access to their own library of films and music on their smartphones or tablets. Smart speakers can be also a personal concierge that know about all users’ preferences no matter in which hotel or even city he is right now. So further development of these solutions in hotel rooms is obvious, and vendors have already started to develop application for Amazon Alexa and Google home, even though data security issues remain valid .
Other possibilities for the Smart Room are door and windows sensors and motion detectors that prevent thefts and let the personal know about potential threats. In addition, this can help to improve internal communication, since staff can understand if the guest is in his room or if is possible for housekeeping to clean it. With Keeper software provided by Optii hotels are able analyses and optimize housekeeping process based on the information available about rooms and guests. Time required to clean same type of room can be different based on the travel purposes of the guests. Business travelers spend less time in their room rather than family vacation travelers, as a result time required for the cleaning can be different in times.
Also data collected during previous stays of the guest even in other hotels of the same chain can be used for analytical purposes and process optimization.
Software allows management to control housekeeping process remotely, to understand how their staff progresses over the schedule, and to be notified in case any defects are detected and additional attention is required. It is also possible to communicate to the housekeeping regarding guests’ preferences to create personalized experience. Moreover, Internet based communication through the app can reduce the cost of calls in between operating departments.
Smart keys will reduce time necessary for check-in and check-out, while Smart thermostats and sockets will control utility consumption and prevent threats. Another technology that can be applied in the rooms is Smart lightning. People has different preferences over the lights in the room and possibility to adjust and completely customize the lights for reading or for the sleep can significantly increase guests experience. For example, Finnish company Mount Kelvin provides lights solutions to the hotels, residential and office facilities. Deployed Smart lights can be connected to the smartphone, Smart TV in the room or controlled by the voice assistant and create personalized experience. Wireless connection reduces the price of initial deployment and maintenance cost. In addition, Mount Kalvin solution allows guests to control temperature in the room and even request for the clean or do not disturb options.
Implementation of technologies is now a necessity for the hospitality industry and hotel entities that will benefit from deployment of Smart Home technologies into daily business routines. Guests expect to receive more digital services from automated check-in to in-room services booked through smartphone, rather than phone call to the reception. However, some concerns over privacy and data collection remain open. It is not clear how guests can react on the collection of their personal data by sensors deployed in their rooms.
So far it seems that collection of Big data and implementation of IoT technologies may only benefit Hospitality industry, however business and operation risk of those changes are even higher then ever. Main concern over digitalization of hospitality is cyber security and data collection regulation.
Concept of cybersecurity raised from the changes in the way people use technologies. It is not a new phenomenon, but cloud technologies and mass consumption of the Internet connected devices forced regulators to raise the question of privacy security in the new environment. IoT threats are not different from those before, they transformed from areas such as industrial and information security. Governance of cyberspace is challenging due to its nature and cross-border presence. It is not clear who is authorized to make and enforce laws, especially in case of anonymity. National and regional sets of rules vary for different data types like critical infrastructure, proprietary information, personal data and telecom data. All in all, with the implementation of cybersecurity laws like GDPR in the EU, companies will have to invest in legal compliance and potentially face costly lawsuits after data breaches and hacker attacks.
Motivation of the hackers driven by economic and ideological reasons is the same as it was with traditional scam. However, Smart Home environment is a subject to cyber vulnerabilities. Thus, protocol UPnP that gains an access to IoT devices can be used by hackers to collect sensitive data of the users like credit cards information, to overload the devices to render them inoperable or to attack business with DDOS threats, blackouts or eavesdropping. Usually this becomes possible due to the usage of default passwords or lack of cyber security knowledge.
The risk of data breach and cyber extortion is coming from unsecured IoT devices that are used as a part of business process. This can lead to the catastrophic consequences and losses in shareholder value since hacker attacks are expected to grow in frequency. On the other hand, implementation of the new cyber environment in the companies can help to improve business and IT operation, and to reduce the cost.
In July 2018 Facebook failed to comply with Data Protection Act in the UK, and it was fined for the maximum penalty of £500 thousand for data breach, that allowed British political consulting company Cambridge Analytica to access personal data of 87 million users. According to FBI and the US Department of Justice, this data leak could help Cambridge Analytica to create psychographic profile of voters to influence their choice during US President elections .
Facebook was fined for the amount of revenue that was generated by the company every 5 minutes in Q4 2018 according to its financial statement. Unfortunately, for the authorities, they could not implement penalties introduced by GDPR since the breach was before implementation of the new law. In case of GDPR took place earlier, potential penalty for Facebook could be £1,4 billion or 4% of its global turnover .
Facebook case shows the importance of legal changes in scope of data protection and demonstrate how implementation of IoT technologies into hospitality can jeopardize entire industry. In potential data breach, Marriott International, Inc. can lose up to 830 million dollars, which would lead to the decrease of 30% of their operating income (based on the results in Annual Report 2018) .
Data protection is not the only concern about cybersecurity. Security risks appear as IoT devices become available for remote control, and in some cases they able to harm users. Security and privacy are usually considered as the same aspects; however, they relate to complete different approaches. Thus, data privacy relates to the issues concerning data sharing and data ownership, while security is about how devices are protected from unauthorized access and control. With the increase of devices and implementation of Smart Cities concepts, potential circumstances of massive hacker attacks are unpredictable. Another problem is that in attempt to decrease the cost of the device and its power consumption, manufacturers usually sacrifice additional protection measures that can prevent cyber-attacks.
Economic and social changes related to the development of IoT technologies stimulate companies to develop new business opportunities. In the world where technologies develop with enormous speed, adaptation to new realities and transition to the new form of business will play crucial role to the companies. Moving toward implementation Big Data systems, companies will benefit from new business models and revenue streams that previously were not available.
Data stream as a completely new value driver has changed the economy and communication of entities and customers. Although, there is still an argue on data ownerships and potential benefit for customers from data collection, digitalization of economy brings more economic value than it was possible before in the traditional economy.
Deloitte, 2017b. Study on emerging issues of data ownership, interoperability. [Электронный ресурс]. – Режим доступа: https://ec.europa.eu/digital-single-market/en/news/study-emerging-issues-data-ownership-interoperability-re-usability-and-access-data-and [Дата обращения 11.09.2018].
Marriott International, 2018. Annual Report 2018. [Электронный ресурс]. – Режим доступа: https://marriott.gcs-web.com [Дата обращения 11.03.2019].
PWC EU Services, 2017. Cross-Cutting Business Models for IoT. [Электронный ресурс]. – Режим доступа: https://ec.europa.eu/digital-single-market/en/news/cross-cutting-business-models-internet-things-iot [Дата обращения 15.09.2018].
Rosenberg, M. & Confessore, N., 2018. Justice Department and F.B.I. Are Investigating Cambridge Analytica. [Электронный ресурс]. – Режим доступа: https://www.nytimes.com/2018/05/15/us/cambridge-analytica-federal-investigation.html [Дата обращения 01.10.2019].
Statista, 2018b. Smart Home Report 2018. [Электронный ресурс]. – Режим доступа: https://www.statista.com/study/42112/smart-home-report/ [Дата обращения 23.09.2018].
МОЛОДЕЖЬ-НАУКЕ –X.Актуальные проблемы туризма, гостеприимства, общественного питания и технического сервиса: Материалы молодежной науч.-практ. конференции, г. Сочи, 18-19 апреля 2019 г. / отв. ред. к.т.н., доцент, Приходько Л.Н. – Сочи: РИЦ ФГБОУ ВО «СГУ