Pegasus Systems is leveraging its vast hotel and travel transaction data to create an industrywide data-mining service that hotels can use for market research and database marketing campaigns.
Pegasus, Dallas, has formed Pegasus IQ to develop new data services and is finalizing partnerships and alliances to create a transaction-based data warehouse, which will let hoteliers act on the same customer information airlines have used for years.
“The airlines have been way ahead of the hotel industry in knowing where the traffic is and where it's coming from,'' said Pegasus CEO John Davis III. “An airline can tell you the traffic from Dallas to Atlanta is up 6 percent. Hoteliers want to know where are they staying once they get off the airplane. We can tell them from the transactions which areas of town are growing faster than the others. That information has never existed before.''
Pegasus data is collected from its transaction-processing system, THISCO, which last year processed 17.5 million hotel reservations from 25,000 hotels and its travel agent commission collection and distribution unit, HCC, which handles 1.8 million reservations a month. Pegasus also collects data from its online reservation site TravelWeb, www.travelweb.com.
In June, Pegasus made a minority investment in the customer relationship marketing startup Customer Analytics Inc., San Jose, CA, which will provide consulting and aid in the development of the data warehouse. In July, it acquired Driving Revenue, a Rockville, MD, hotel database marketing and consulting firm that services more than 200 hotels and chains, and chose Red Brick Systems, Los Gatos, CA, to build the data warehouse.
Driving Revenue gives Pegasus IQ an immediate data-mining revenue stream on the individual hotel level and a starting point to build industrywide decision support tools. The company aims to present examples of real, transaction-based reports to the hotel industry by the end of September. Once tools are available, it will negotiate with hotel chains, some of which already have developed databases, to participate in the data warehouse.
Thomas O'Toole, vice president of marketing for Hyatt Hotels, Chicago, will follow the progress of Pegasus IQ closely.
“The concept has a wealth of potential in allowing us to measure and target marketing messages in ways that aren't available today,'' O'Toole said. “One of our biggest challenges is measuring the effect of promotions. To identify performance based on transaction histories, Pegasus IQ offers some interesting applications.''
Pegasus IQ plans to provide market reports and benchmarking data that will show a hotel how it compares to its competitors in various areas or sales channels and measure its share of such demographics as frequent travelers. O'Toole said such data would be exceptionally valuable.
Pegasus has been involved in the delivery of data since 1989, when it created the switching interface that allowed reservations from individual hotels and travel agents to be converted into formats usable by global distribution systems, emulating airline systems like SABRE. In 1994, it launched TravelWeb, the first online travel reservations system, and now delivers consumer booking data as well.
“This is information we've always had, we just never converted it into a form that was usable or easily distributed,'' Davis said. “We've just never had the expertise or resources to take a huge pile of information and convert it into an asset.''
For all its promise, Davis admits that an industrywide data warehouse is an ambitious concept that could take years to create.