Analytical Maturity in the Dutch Travel Industry

To be able to make decisions for all business processes based on maths and analytics, analytical maturity is critical. Creating value from data has almost become a requirement to gaining a competitive advantage, yet many firms in the Dutch travel industry still struggle to do so. Most have access to large amounts of online and offline data, but are they integrating this data, are they extracting enough value from it, and are they managing it strategically? We highlight the importance of data and analytics, report the results of our study to determine the level of analytical maturity in the Dutch travel industry, analyse emerging trends and extract several lessons for the future.

“It is important for organizations to focus on ‘Data Usability’, meaning building and managing datasets in such a way that they support high-quality actionable insights.”

Arno Witte, Head of Data Science at Objective Partners

The Importance of Data and Analytics

There are large amounts of data available to organisations in the travel industry. Think of search behaviour, bookings and reservations, online travel itineraries, loyalty programmes and GPS data. This data can help understand preferences and major drivers of consumer decisions, as well as online and offline booking behaviour. It can help identify travel patterns, improve customer service and booking processes, present the consumer with personalized offers, develop a responsive marketing strategy, and index and analyse real-time prices in the market to build a dynamic, effective pricing strategy. Before making decisions based on the data, however, it has to be collected, structured, transformed and analysed correctly.

The Study

We carried out interviews with six large organizations in the Dutch travel industry to explore the extent to which they are making data-driven decisions and their levels of analytical maturity. We also used the study to set up an industry benchmark, according to which each company can evaluate their performance. We developed a measure of analytical maturity defined along four dimensions: Strategy, Organization, Data and Technology. We asked three questions for each dimension, to be answered on a scale of 1 “totally disagree” to 5 “totally agree”.

The Strategy dimension measures the extent to which organizations have defined clear business objectives and KPIs to steer on, and the extent to which they have integrated their marketing strategy across media channels. It is important to have analysts in place who can use predictive modelling techniques on which to base strategies and decisions, which is reflected in the Organization dimension. Whether the right data is being collected and the quality of this data is evaluated in the Data dimension. The last dimension, Technology, assesses whether the data is integrated in a central data warehouse and the extent to which statistical models are incorporated in tools used to analyse the data and to make predictions related to media campaigns and budgeting decisions.

Results

Figure 1 below shows the five levels of data maturity. Organizations in the travel industry score an average of 3.4 points. By our scale, an average score of 3 indicates companies are aspiring towards data-driven decision making. In general, this indicates the data is consolidated and organizations are beginning to create a centralized database. They have analysts coordinated in key target areas defined by selective business objectives and KPIs, and are beginning to analyse insights. They are also starting to carry out predictive analysis.

Levels of analytical maturity

Figure 1: Levels of Analytical Maturity

On average, the six organizations score relatively evenly in all dimensions, as can be seen in Figure 2 below. This suggests organisations are aware of the fact that achieving analytical maturity requires effort across multiple dimensions and are generally taking this into account for a balanced approach to analytics.

With an average score of 3.6, the industry scores its highest score in the Strategy dimension.  This suggests the six organisations are moving towards aligned business objectives and KPIs, centred on clearly defined, key domains. In general, we have observed a growing trend in the use of well-defined KPIs to measure the impact of decisions among organizations in the Netherlands. KPIs help impose focus and allow organisations to learn from the information they have gathered.

Industry average per dimension

Figure 2: Industry Average per Dimension

The average score in the Organization dimension is 3.5. The score suggests organizations are moving towards a connected network of analysts, and are beginning to analyse foresights as well as insights. Having the right kind of knowledge enables organizations to improve their analytical capabilities, and to maximise this effect, data-driven decision-making should become an integral part of company culture. The six organizations score an average of 3.4 in the Data dimension. An important trend in digital marketing is the emergence of artificial intelligence (AI). This term encompasses a range of tools and processes that enable to collection, combination and analysis of large datasets. Working with AI can help automate certain processes, saving time and improving data quality by preventing human error. With an average score of 3.1, the organizations score lowest on technology. Over the past few years, we have observed a shift in demand from dashboards simply reporting insights to dashboards offering more sophisticated analyses, as well as predictions and forecasts. Having a tool in place for predictive analyses is more efficient than carrying out standalone analyses.

Trends in Analytical Maturity

Several trends emerged during our interviews. The travel industry is very competitive and price is a main driver. As mentioned above, data and analytics are important when setting a pricing strategy. Organizations in the Dutch travel industry are aiming at a more consistent pricing strategy across all channels, not just on their websites. To achieve this, the right API connections are needed. Organizations are also aware of the growing importance of a unified customer journey, and want to ensure a consistent, high-quality experience along every touchpoint of the journey. This, and a consistent pricing strategy, are vital to keep up with consumers generating data, searching and purchasing on the move using multiple devices.

Lessons to take into the future 

Our research indicates an understanding of and an interest in the development of analytics among organizations in the Dutch travel industry. At a time when travel organizations find consumers want to travel more often and are willing to spend more, there is room to increase budgets for data and analytics. The industry has not reached its full potential, especially in the data and technology dimensions. We have identified several opportunities that can help gain a competitive advantage:

  • A well-structured DMP is critical. We began by stressing the importance of building and managing high-quality datasets to construct actionable insights with good reason: it forms the foundation for any valuable insights or predictive modelling. DMPs should be enriched with second- and especially third-party data.
  • Working under common business objectives or KPIs. In order to maximise the value extracted from data, all marketing and commerce activities should work towards a shared goal defined by KPIs, whose performance can be measured and evaluated unambiguously.
  • Integration across departments. Following the previous point, technology should be adapted to support integrated marketing and pricing strategies. Avoid data silos and create a flexible, API-based approach to integrate all systems.
  • Implement tools for predictive modelling. Rather than sporadically carrying out standalone predictive analyses, consider a tool that continuously collects data and runs analyses. This not only helps support decisions real-time, but will ensure all departments are acting on the same results.

 

“Predictive analytics is no longer just a trend. Organizations need to start applying analytics to their everyday processes now in order to maintain a competitive edge.”

Sven Meijer, CCO at Objective Partners

 

Sven Meijer

Sven Meijer

Lead Business Development