One of the key trends of 2016 will be the growth in data-driven product development and a new start up is carving a niche in this space, writes Andrew Hennigan
When Mathias Lundoe Nielsen made a very poor choice in an online hotel booking for a romantic getaway to Thailand he identified a potential need that was not being served very well. Though he had chosen the hotel carefully it turned out to be popular with families with small children who were very loud. His idea of a romantic break was quickly shattered.
By examining consumer data he was able to transform this concept into reality, creating an online booking platform called Nustay that avoids competing head-on with global players by strongly focusing on a geographical niche to grow the business. By concentrating on specific markets and locations and delivering better-matched guests and hotels in those markets, Nustay is able to compete with much larger companies.
What Nustay does is match guest profiles very closely with the hotels’ preferred client types. On the surface it looks like an exclusive members-only OTA, but instead of giving the same search results to everyone it generates unique offers for each client, all thanks to big data. Nustay works in a way like a travel club but every deal is made on-demand based on a combination of the user profile, the user inputs and the hotels inputs and profile. Because of this it is impossible to replicate an offer; each offer is unique and expires after two hours. For hotels, the advantage is that Nustay is integrated directly into the hotels own systems, for users it means savings of up to 86%.
Deep data, dynamic pricing
This sounds similar to what other companies are doing already, but where Nustay differs is in the deeper level of data used in the matching process. The company has access to more data from customer’s social network accounts and also more data from hotels. This hotel data is part of Nustay’s secret sauce, and helps to decide if they are suitable for romantic getaways, family trips, business travel and so on. Hotels fill in an application explaining which kind of guests they are best at serving and this is reviewed and approved by the company before being used in the matching process.
Since the pricing process is ultimately controlled by user-set parameters the company avoids any risk of discriminatory pricing
“Because of this approach both our user pricing and our whole catalogue of inventory at our hotels are opaque. You don’t know what we have before you match with it and actually see the price,” explains Nielsen. “Because we are integrated with all different hotels directly, we work with highly dynamic pricing. The prices are being determined in the instant you search based on your profile, your behaviour and everything else. We have about 400 parameters which are being used for this.”
Since the pricing process is ultimately controlled by user-set parameters the company avoids any risk of discriminatory pricing.
Nustay currently works with about 2,000 hotels, including well-known groups like Jumeirah. These hotels provide detailed data to enhance the matching process. Both independent hotels and groups like Jumeirah opt to work with Nustay because it delivers guests that are better suited to their hotels. The company also has official partnerships with Facebook, Linkedin, Twitter, Instagram and Google+ so that they have access to more user information when they attach their social profiles to their Nustay account. The more information a user provides the better will be the match that the site makes using this data.
To benefit from these deals all a user has to do is create an account, connect their social media, insert some manual preferences and then search. Consumers are often reluctant to connect their social media but Nustay has found that surprisingly 87% of users connect using Facebook; this connection no doubt allows a more effective match and more satisfying experience. The user also adds information about the specific trip – is it for business, leisure, shopping or whatever? At this point Nustay knows enough about them, their interests and user patterns to propose a deal that will be valued by both sides.
“We also have data from hotels that nobody else has,” says Nielsen. “Hotels have filled out a form saying what their dream guests are like. The closer we get to that the better the match score. So our value proposition is much higher than any other booking site because we deliver quality. Data is the key to delivering a good user experience.”
This extreme optimisation will not replace the classic OTA model entirely but signposts the way to a new business approach for niche markets
But this approach is not going to replace mainstream OTAs, at least not now. “This is a niche business,” says Nielsen. “We only do this for four and five-star hotels and in selected destinations. We have chosen London, for example, because we identified with data that people we want to target in Scandinavia often travel to London.”
Hotels, destinations and the unusual opaque deal interface are all chosen and designed in response to consumer data, so Nustay is both the fruit of a data-driven design approach and is also entirely based on crunching that big data in real-time to deliver unique deals. This extreme optimisation will not replace the classic OTA model entirely but signposts the way to a new business approach for niche markets, where data-driven solutions can optimise the customer experience and profitability.
Mathias Lundoe Nielsen will be speaking about the creation and workings of Nustay in the Data Driven Product Development session at the Smart Travel Data Summit 2016, November 23-24, at the Mövenpick Hotel, Amsterdam
November 2016, Amsterdam