Tuesday, June 26, 2012

Are You Offended Or Pleased That Your Computer Preference Impacts Hotel Offers?

What Hotel Are You Staying In Tonight??
The Wall Street Journal reported today that Orbitz is tailoring their hotel offers to consumers in part based on the type of computer they use. Extensive data mining has determined that Mac owners (which still comprises just a little under ten percent of all PC users) are far more likely to select higher end hotel properties than Windows users. In fact, the story indicates that Mac owners are prone to spend up to 30% more!

As a Tech Consultant who has spent over half my career integrating technology solutions with retail marketing endeavors, I found this revelation profoundly interesting. I am also involved with a family managed, independent hotel, property which would be considered a "value" focused destination at this point in time.
A larger and larger percentage of  the hotel's bookings have increasingly been driven through direct web site reservations and third party reservations from various consolidators such as Orbitz over the past decade.

Given my various business and professional interests, I find myself considering the revelation of Orbitz latest algorithmic tweak intensely interesting on several levels..... It is important to understand Mac users are not being targeted to pay more, rather the data suggests Mac users are 40%  more likely to view and ultimately book higher value (four and five star properties) than Windows users. To use an old carny phrase, "You gotta give'm what they want!" The 40% increase in booking rates is a staggering statistic; you don't need an upper level degree in probability to understand that this differential is statistically significant. From Orbitz vantage,  providing the kind of hotel someone is more likely looking for early in the search process only improves the odds of a conversion (i.e. actual booking) and ultimately a satisfied customer. (This is true for the PC user as well who might see more value driven properties on their initial search page. I suppose someone like me who straddles Windows and Macs, value hotels and higher end hotel chains from time to time, may be well served to book business trips on my Dell and luxury vacations on my Mac!)

Orbitz, like its brethren in the travel industry and beyond, captures an incredible amount of data,

Company CEO Barney Harford discussed the company’s customer data mining further in a May guest post on USA Today’s Travel site.

“We're trying to capture more information about travel planning behavior than any other company in the world,” he wrote. “To give you a sense of how much data we're talking about, last year we processed approximately 750 terabytes of log file information about user sessions. Just one terabyte can store the information in 285 million pages of text.”
(The emphasis added above is mine. The nearby quote was obtained from Digital Life Today. You can click here to see the full article.) This is a mind boggling amount of data. That 750 terabytes represents just one year of data. The very act of collecting, organizing, and analyzing this amount of information would have been practically impossible for all but a few government agencies ten years ago. Today a private company such as Orbitz can and does collect and sift through this data to improve its profitability and by extension one assumes its customer experience.

Privacy advocates no doubt cringe at this revelation, but the fact of the matter is life in contemporary America (as well as other parts of the world) is built on a feedback loop. Your actions, be it the purchase of a box of new cereal at your local grocery store or the decision to stay at an Intercontenental Hotel  or Homewood Suite instead of a Holiday Inn which may be right down the road, says something about yourself, your needs at the moment, and your economic "power." These decisions are in turn fed back to the "sausage machine" we all recall from early algebra class, only to provide marketers the opportunity to provide you a more focused future message (be it a coupon for a competitive box of cereal or a refined reward program for one of those hotels several of which may actually be owned by the same parent company!).

We all want "free" services, entertainment, and goods (when possible). Most of what we consume for free, especially via the internet, is ad driven. Google, Orbitz and countless others, strive to collect data on you so that they can "feed you" more targeted advertisements and offers which you in turn are more likely to "want" and act upon. This blog has ads included which candidly generate a pathetically small amount of revenue for my company, but with each additional post and viewing, the hope is these ads provide greater relevance and in turn value to you, my reader. Perhaps someday, other types of ads on blogs such as this will be served up based on Mac vs. Windows or tablet versus desktop. After all, if I am reading a blog on an iPad perhaps I am a different ad demographic than when I am sitting behind my desk at my home office..... As I reflected briefly in an earlier post, iPhone users are known to consume vastly larger quantities of data than Android users. Wouldn't it be interesting if Orbitz or some other company concludes that iPhone users are more likely to rent more expensive cars or Android users are more avid coffee drinkers and market accordingly..... One cannot get caught up in cause versus effect.....

And what about the hotel owner? Our family hotel may not make the first page of a Mac user looking for a stay in downtown Cincinnati using Orbitz's current algorithm. Could this "hurt" my hotel's occupancy rate and overall profitability? Possibly, especially if there is validity to the observation beyond hotel reservations. In other words, if Mac users as a class of customer are more willing to purchase higher end goods in general (and the aggregate household income figures suggest Mac buyers have more discretionary cash than Windows owners), that may mean a Mac toting guest at the hotel may buy a more expensive meal, drinks with call liquor rather than well, or use valet parking rather than self-serve. In other words, losing a Mac owner's reservation may be "more costly" than a Windows owner when looking at total spending habits in which case reducing the mix of Mac versus Windows owners for my hotel could be "bad" even if we get the exact same number of total reservations from Orbitz under the "old" and "new" algorithm. (I have no empirical data to suggest the above hypothesis is true, or false, I only mention this as an interesting framework with which to consider the bigger picture of  more highly tuned, targeted, online marketing efforts.)

All of us with TIVOS, the (in)famously touted Dish Hopper and other devices realize how compelling it can be to skip commercials entirely and focus exclusively on content. This is anathma to marketers and advertisers who have built empires on that magic trade off of content for ads. The online world has the power to keep this balance of quality, low cost, content and services paid for by ad revenue in part because the ads themselves can potentially be more relevant to you and the the marketer.... As a technologist focused on marketing trends for myself and my customers, I find Orbitz ability to provide a more targeted experience to its users based on observational facts (including device type) compelling. As a hotelier, I suppose I worry a little that these types of refinements may make it more challenging down the proverbial road for some to experience a property which might actually be a very good "fit" but not fall squarely in a traditional category.... But there is no denying the world is moving to try and minimize the number of clicks between you and fulfilling your perceived "need" of the moment......

So the next time you click on one of those ads on a page like this, remember it helps pay for the content you enjoy. You may also ask yourself if that ad was put there for some reason you might not immediately suspect....Maybe we should explore the spending habits based on browsers.... Do you think Firefox users are more likely to eat at Italian restaurants than Internet Explorer aficianados? If you pull out your iPad at a Panera to check in with FourSquare, are you signaling the restaurant chain that you are more likely to order a  Smoothie than the Android customer checking in to Foursquare on their Zoom tablet? If so, perhaps the iPad owner will get an instant coupon for a new flavored Smoothie while the Zoom tablet owner sees a Moca Frappacino offer. And would this really be a bad thing??

How do you feel about this targeting of groups for marketing purposes? Share your thoughts in the comment section below.

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Earlier Posts Related  to Travel:

Lessons From The Road (Part 1); Let TripIt Be Your Guide....
Lessons From The Road.... Online Deals Are Not Always Such A Deal.....
Expedia And The Rental Car....
What Apps Are In Your Travel Folder?

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Companies: Orbitz

This commentary is not meant as an endorsement of any company or to provide financial advice.  If the author has any financial interest in any company mentioned at the time of this article’s posting, it will be explicitly noted. I welcome feedback and comments. 

1 comment:

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