How Hotelmize creates value for clients with the data network effect

4 min

At Hotelmize, we are proud to deliver value to our clients with data-driven solutions. Our mission is to allow for a better business environment in the hotel booking industry by increasing profitability and ensuring the existence and growth of the industry’s key players. How do we achieve this? It all starts with the data. 

What is the data network effect?

Let’s define this term: a data network effect occurs when a product’s value grows as a result of more usage via the accretion of data (NFX). You may be familiar with the traditional concept of network effects in economics, in which the value of a product or service increases as the user base increases. Data network effects take this phenomenon and apply it to data: a product’s value increases by leveraging the incremental data generated by additional users. 

The amazing thing about the data network effect is that as long as that product gets more usage, this increased usage creates incremental value for everyone in the network.

A good example of a company using data network effects to its benefit is Waze. As the number of Waze users grows and the volume of user-generated data increases, the information that the app provides will be more accurate. Waze users will get more value out of the app as they save valuable time on the roads, which then encourages even more users to get on board, creating a flywheel effect.

When we understand data network effects, it’s no surprise that today’s most successful products and services are all powered by data. Think Uber, Amazon, Facebook, and more – they all use data to deliver relevant products based on the learnings they gain from user data.

Data network effects have such a strong impact on the quality and results of the product that consumers and enterprises can achieve groundbreaking results. In our case, as a travel company, our data-driven results quash the misconception that the hotel booking industry must survive with very low margins.

Hotelmize leverages data to create value

Over the past five years, Hotelmize has gathered billions of hotel rate data points. We utilize this data to improve our price predictions, which then makes our post-booking price optimization solution extremely efficient and effective. We only rebook a reservation once to capture its full potential.

2 out of 3 Hotelmize founders have vast experience in the financial industry and therefore we have a financial approach towards hotel bookings as a financial asset.

When thinking about our post-booking optimization tool, we can see clearly how the data network effect brings actual value to our client base. On average, reservation prices change more than 18 times before the check-in date. As we gather more data, our sophisticated analytical tools can better understand this behavior and generate more profitable results.

Another example of how we leverage data is our proprietary Room Mapping technology. This technology improves continuously as it gathers more data from more sources. 

By analyzing massive amounts of data from our network, our algorithm can increase its accuracy rates. Today, our algorithm can independently match new room types and attributes it has never seen before to more than twenty different categories. The algorithm makes educated decisions that help us to outperform similar solutions and deliver outstanding value for our clients.

This Room Matching technology we’ve developed is responsible for nearly 50% of the profit we create, and there is no second to it in the market. 

Data is a crucial part of any AI-powered startup, including Hotelmize. However, collecting, analyzing, and using the data is not as easy as it sounds – nor does adding “AI” to your company mission means you use the data wisely. 

To gain a deep understanding of the story the data tells, companies must build complex models based on a wide variety of data points. It’s prudent to gather and store as much data as possible because you never know what you will need in the future. As trends, technology, and customer demands change, you can adapt your models to suit your needs.

Companies that use AI must also streamline the collection of data and analytical processes to make their operations scaleable. Many tasks and processes should be automated, while human analysts focus on finding key insights to shape your product or service. With more automation, you can grow faster, more efficiently, and deliver more value.

We are dedicated to using the data network effect and cutting-edge technology to bring value to our Hotelmize clients. With these tools, we can work toward a more profitable and sustainable future for the hotel booking industry.