How Is Data Analytics Used in Tourism?

February 7, 2022
How Is Data Analytics Used in Tourism?

Collating user demographics with more in-depth data analytics can supply the tourism industry with a far broader range of benefits. Analytics can inform funding decisions, tailor business development, and direct marketing campaigns based on in-depth user preferences.

Analytics involves far more than just data gathered from hotels and surveys; psychographic data captures information on transactions, device data, lifestyles, preferences, and the best marketing channels to reach your customers on. This detailed data helps to categorise and identify households with the same or similar characteristics for more tailored marketing strategies. Organised data also benefits the tourism companies, destination marketing organisations, and the destination city itself; as we will explore within this article.

5 Ways Data Analytics Can Improve Tourism

Data can be used in numerous ways, and its scalability means it can provide insights into almost anything, from a single business problem to the entire industry. Here are five of the key ways that Data Analytics is boosting the tourism industry.

1. Revenue Management

Financial optimisation can be assisted and informed by data analytics. Functions such as predicting demand, improving pricing availability, and optimising your inventory, are all informed decisions through the application of data analytics.

Incorporating data analytics into revenue management allows you to understand where your business is succeeding and where improvements can be made, thus, analytics is fast becoming a must-have business tool. The insights provided cannot be replicated by anything else with such speed, efficiency and organisation, so it is a key tool to utilise when competing with other businesses.

Multiple studies have shown the benefit of using Data Analytics in revenue management; one of which was shared by Kevin Hof, a Data Scientist at RoomPriceGenie. The study shows nine hotels experiencing a 22% average increase in revenue, alongside an average 4% increase in Average Daily Rate after implementing pricing optimisation.

2. Identify Top Origin Markets

Knowing which sources are successful in directing customers towards you is invaluable. It allows you to understand seasonal market fluctuations and increase marketing in areas of untapped markets – particularly in areas with similar consumer profiles to your key visitors.

Data analytics can pinpoint the markets that are most likely to yield results, so that you can concentrate your media buying there; saving money while attracting new customers. Specific groups can be targeted to reach more of your potential customers, and the effectiveness of these campaigns can be measured.

The efficiency and quality of services also improves through applying analytics; customers are responded to more quickly; their experience is analysed and improved, and personalised offers can be tailored to them and their needs. In addition to this, your decision-making process can be highly informed through the number-driven data of analytics, resulting in a more efficient company operation.

3. Route Optimisation

Admission volumes are commonly available, however, it is also valuable to find out which combination of tourist attractions your customers tend to visit. This helps in both market targeting and preparing promotional offers.

Red map pins for route optimisation

Conducting destination analysis through mobile data can build a more concise picture of your customer base and the places they like to visit. The tourists’ interests also help to inform route optimisation as this combined information can be used to create multi-destination packages that not only appeal to your customers but encourage longer visits too.

The above data can be calculated along with geographical, route and traffic information to plot the quickest tour route for maximum efficiency, providing a seamless experience for your visitors.

4. Predictive Analytics and Pricing Analysis

Predictive analytics use techniques such as data mining, predictive modelling and machine learning to predict future events through an analysis of current and historical data. This allows pricing analytics to enter the picture and inform financial decision-making.

Data analytics uses metrics and additional tools to collect and compare information on price points from a variety of sources. This allows you to analyse the profitability of price points, understand how pricing activities affect the business overall, and optimise your business pricing strategy to ensure maximum revenue.

Revenue can be further increased through using recommendation engines to upsell and cross-sell. This is taken into consideration in predictive analytics to ensure your marketing campaigns are targeted towards the groups most likely to convert.

Sentiment across social media networks can be analysed, providing valuable feedback for your service and establishing your online reputation. This can flag sentiment as positive, negative or neutral and allow you to quickly respond to customers who have had a less than desirable experience.

Many well-known companies are currently using predictive analytics, whether to guide their business or as a part of their service; these include Qantas, and Kayak.

5. Automated Robots and Chat-Bots

Working in the tourism sector means dealing with customers across multiple time zones, and as such they should be able to access the information they need at a time convenient to them. The easiest way to ensure 24/7 access to this is through using an automated chat bot throughout the hours that customer service is not available.

The data generated from the usage of chat-bots can indicate what information needs to be clarified based on the frequency of questions being asked. This information can improve your marketing channels, communications and customer service.

Robots can also assist to provide a speedier service, such as when checking in to an airport, paying at the supermarket or using the traditional ATM. These technologies were particularly useful in the COVID-19 pandemic, and the trend is set to continue.

Benefits of Using Data Analytics in Tourism

The tourism industry can greatly benefit from making better use of the data analytics and opportunities now available. In doing so, better business decisions can be made that are based solely on facts, figures and analysis. The tourism marketing programmes can also improve through taking these steps, thereby bringing increased revenue to the city in question.

Modern analytics-led approaches are able to leverage new alternative datasets to depict your visitor profile, pinpoint the best areas to focus marketing efforts on, optimise your pricing structure and compete more effectively within the market.

To try out what data analytics can do for your tourism business; simply post your project on Pangaea X’s freelancer platform.

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