Advanced analytics in hospitality

Here is an excerpt from an article written by Dilip Bhattacharjee, Jules Seeley, and Nathan Seitzman the McKinsey Quarterly‘s editors, published by McKinsey & Company. To read the complete article, check out others, learn more about the firm, and sign up for email alerts, please click here.

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Digital technologies are creating value and rearranging roles in the travel industry. Here’s how industry leaders are profiting from the change.

Over the past 20 years, advances in digital technologies have driven numerous innovations and disruptions in the travel industry. These technologies and the companies that offer them have rearranged the industry, leaving some players behind—travel agents, for example—while introducing more complexity into the value chain between travelers and destinations.

More recently, mobile technologies have taken center stage as consumer behavior shifts with astonishing speed toward researching and booking travel through smartphones. Since October 2015, US consumers who book travel online have consistently spent more time engaging with travel content on their mobile devices than on their desktops, according to an Expedia Media Solutions/comScore study.

Creating opportunity from data: How the hospitality sector can use artificial intelligence

Digital technologies produce a tremendous amount of data for travel companies. For example, Aviation Week recently reported that Pratt & Whitney’s geared turbo-fan engine contains 5,000 sensors that collectively generate up to 10 gigabytes of data per second. This means a single engine could produce more than 400 terabytes of data during one 12-hour flight, and the aerospace industry alone might soon generate more data than the entire consumer Internet.

Many travel companies are still in the early stages of developing the advanced analytics capabilities necessary to capture the full potential of this data. One of the biggest opportunities under the analytics umbrella is artificial intelligence (AI), which carries important potential benefits for every sector of the travel and transportation industry.

As rapid progress continues in AI-enabling technologies like machine learning, natural language processing, and video recognition, we expect that artificial intelligence capabilities will soon reach the point where many travel companies are able to generate significant value by applying artificial intelligence at scale to their day-to-day operations. Some hospitality companies have already begun to deploy artificial intelligence in pilot projects. This experimentation and rapid prototyping are likely to continue as new techniques and technologies mature.

While it is still unclear how AI-related technologies and advanced analytics will change the hospitality sector, a number of distinct opportunities are starting to emerge.

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Here is a direct link to the complete article.

Dilip Bhattacharjee is a partner in McKinsey’s Chicago office, Jules Seeley is a senior partner in the Boston office, and Nathan Seitzman is a consultant in the Dallas office.


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