Marriott bets on predictive analytics for brand growth

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Know it or not, your digital footprint is wide and far, and companies are taking advantage of that data to predict your next move. It's enough to make the most implacable unsettled, but companies are mining this valuable information just the same. Marriott International, for one. 

Today's non-REIT hotel C-corps are strikingly different than what they were just a decade or less ago. Light on owned assets, hotel companies, in their current form, are brand houses that rely on other people's money for growth. That means the ability to expand and multiply is paramount; it's what feeds these companies' stock price day in and day out. In order to succor that expansion, hotel companies are turning more and more to technology to make that happen. Which brings us back to Marriott.

The Bethesda, Md.-based hotel operator and franchisor is a powerhouse. With its acquisition of Starwood Hotels & Resorts, it now commands 30 brands and has more than 6,000 properties in 122 countries and territories, encompassing more than 1.2 million rooms. According to Lodging Econometrics, Marriott is forecasted to open 351 hotels/43,587 rooms in 2018, 31 percent of all U.S. hotels expected to open. Lodging Econometrics also reports that Marriott has the largest franchise pipeline in the U.S. with 1,410 projects/180,647 rooms. 

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And it wants to keep it that way. In order to do so, Marriott is in a constant race to cultivate new customers, retain legacy ones and sign and open new hotels, in new markets. Part of that job falls to Eric Jacobs, who is the chief development officer for Marriott International – U.S. and Canada. Jacobs is responsible for franchise and managed growth for Marriott’s select brands, which include Courtyard, Sheraton Four Points, SpringHill Suites, Fairfield Inn and Suites, AC by Marriott, Aloft, Moxy, Residence Inn, Element by Westin, and TownePlace Suites. 

That's a lot of brands and there is only so much dirt. "We have to be smarter about how we place our brands," Jacobs told me during the Americas Lodging Investment Summit. "What is the business case? Part of branding is making sure we deliver the right product [for our guests] that is best for our investor."

Data Dive

To help make that happen, Marriott enlisted Buxton, a customer analytics company based in Fort Worth, Texas, which calls its work "the systematic examination of a company's customer information to identify, attract and retain the most profitable customers." That is to say, they possess copious amounts of data on people and use it to predict future behaviors. 

There is no lack of available data: household profile, including number of kids; type of jobs held by family members; their salaries; where and how they spend their money and even the type of jeans they buy: "Levi's or Gap," Jacobs said. 

Buxton manages more than 300 unique data sets and has access to data from an astonishingly high 116 million households, Jack Hall, Buxton's VP of strategic accounts, told me. The company's work is grounded in aiding brands identify who their customer is, where they live and work and what's their overall value to the brand. Marriott, for instance, can then take that information and use it to identify probable pockets for future development. 

"By looking at the number of times someone travels—for business or leisure—where they live and what they travel for, we can understand, by brand, where the unmet demand is for additional hotels and help identify where that demand is nationally, by market and region," Hall said. "What type of hotel, then, are you going to build in South Dakota around an oil field versus the type of hotel you are going to build at the beach in Destin, [Fla.]."

The level and granularity of data is what makes consumer analytics a veritable gold mine of information. Companies like Buxton monitor and collect data patterns, but then it's up to their clients to turn the data into action because, as Buxton SVP Bill Stinneford pointed out, "Data in and of itself is worthless; it's what you do with it."

It's the nitty-gritty data that makes the data collection all that more impressive. Consider your smartphone. As Stinneford explained, "Every phone emits a unique ping every couple of seconds, so we can see trip origination—where the pings came from."

That opens up a range of possibilities. "When a guests leaves an urban hotel, we can track how far away they go," Stinneford continued. (Buxton can even track when a phone goes dormant, assuming its owner is home and in bed for the night.)

Buxton's data can also be used to track competitor brands and hotels. "We can geofence a specific hotel's parking lot and see where those pings go after a stay," Stinneford said.  

One group is a willing participant to this data dump, Jacobs said: millennials. "They give it away freely."  

How, then, does the data become actionable? As Jacobs described it, if they identify a yogi or someone into health, "we know they will resonate with an Element or Westin, so we target them," he said. Westin and Element, both prior Starwood creations, are casted as health- and wellness-conscious brands. 

Tribal Travelers

To further predict development trends, Jacobs refers to six types of travelers or tribes: Simplicity Searchers, those who value ease and transparency travel over everything else; Cultural Purists, those who use travel as an opportunity to immerse themselves in an unfamiliar culture; Social Capital Seekers, those who understand that to be well-travelled is an enviable personal quality, and their choices are shaped by their desire to take maximal social reward from their travel; Reward Hunters, those linked to the growing trend of wellness and who often seek extraordinary and indulgent or luxurious must-have experiences; Obligation Meeters, those who have their travel choices restricted by the need to meet some bounded objective; and Ethical Travelers, those who allow their conscience, in some shape or form, to be their guide when organizing and undertaking their travel. 

Jacobs said Marriott aligns its brands to those "traveling tribes," which enables "us to see where are they traveling, where they shop, where they eat, how far they live from an airport." 

"Any hotel brand out there wants to maximize its footprint," Hall said. "What are the total markets of opportunities?"

With 30 brands, Jacobs said that one of his biggest tasks now is dealing with impact issues and territorial disputes, so-called AOPs, or areas of protection. Before the Starwood acquisition, there was no issue with, say, a Westin next to a Marriott, a Courtyard next to a Four Points. "We have to drive thoughtful development," Jacobs said.

Hotels have come a long way since their advent, when they were solely seen as places to lay your head. Today, hotels possess multiple revenue streams outside of rooms, from restaurants and bars to meeting rooms and spas. Tapping into that potential is something Buxton is also helping Marriott do. Stinneford compared hotels to healthcare, since the latter has become more and more consumer focused, with retail-like stores popping up. "How can I create a meaningful relationship with them not just when they are sick patients, but when they are healthy?" Stinneford asked. 

Hotels have the potential to market to and cultivate consumers beyond those staying with them; those who live in the local community, what Stinneford refers to as "people in the trade area." "How do I use consumer analytics to understand who the best potential patrons are?" he said. "How do I market to them and create concepts that are pleasing both to guests and people in that area? Like healthcare, how do I create additional revenue streams?"

Marriott is all ears.