Customer Loyalty Prediction for Hotel Industry Using Machine Learning Approach

Abstract

Today, machine learning is utilized in several industries, including tourism, hospitality, and the hotel industry. This project uses machine learning approaches such as classification to predict hotel customers’ loyalty and develop viable strategies for managing and structuring customer relationships. The research is conducted using the CRISP-DM technique, and the three chosen classification algorithms are random forest, logistic regression, and decision tree. This study investigated key characteristics of merchants’ customers’ behavior, interest, and preference using a real-world case study with a hotel booking dataset from the C3 Rewards and C3 Merchant systems. Following a comprehensive investigation of prospective preferences in the pre-processing phase, the best machine learning algorithms are identified and assessed for forecasting customer loyalty in the hotel business. The study's outcome was recorded and examined further before hotel operators utilized it as a reference. The chosen algorithms are developed utilizing Python programming language, and the analysis result is evaluated using the Confusion Matrix, specifically in terms of precision, recall, and F1-score. At the end of the experiment, the accuracy values generated by the logistic regression, decision tree, and random forest algorithms were 57.83%, 71.44%, and 69.91%, respectively. To overcome the limits of this study method, additional datasets or upgraded algorithms might be utilized better to understand each algorithm's benefits and limitations and achieve further advancement.