To the average hotelier, for whom technology companies have promised the moon over these past few years, the concept of “big data” must often feel like an impenetrable buzzword.
NB: This is an article from IDeaS
With everything from smartphone apps to door locks to checking in on guest activity, operators have long had more data than they could ever hope to sort through efficiently, and the big data conversation in hospitality has been overwhelmed with noise or misdirected by the wrong information.
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Our new focus as revenue managers is to expand our data pool to include other departments across hospitality, provide more relevant data points, and use visualization tools to make it all understandable-and actionable.
Today’s revenue managers understand the forces that impact our industry better than any other moment in history, but this isn’t necessarily thanks to the volume of data they are working with. For one, data is much easier to gather today than in the past due to more consistent buy-in from hotel leaders and trust from travelers. In other cases, our improved ability to parse data for actionable insights has helped dial back the noise and focus on what’s necessary to grow our businesses intelligently.
Ultimately, the quality of the data set and the speed at which it can be gathered matter most. These factors are at the heart of an important and necessary change: a redesigned tech stack that foregoes a siloed operations style in favor of one that brings departments together. Hotels must embrace this concept to understand the key performance indications impacting their business today and how they must evolve tomorrow.
It’s time to prioritize the authentic data sets capable of moving the needle regarding demand and revenue. The key lies in the scope–and speed–big data provides.
Recent history has proven that the more granular and recent the insights, the more beneficial they are to hotel revenue strategies. Historically, revenue management technology has been adept at tracking historical demand levels and identifying what drove this activity, where it was generated, and how it impacted your business. What it couldn’t do was allow data scientists to drill into the root causes of this data, to take an exploratory journey to examine data from multiple perspectives. Most importantly, these insights often came a day late or longer.
These systems relied heavily on historical data to make accurate predictions. Hotels had access to ultra-reliable forecasts but could not react to quick changes in market dynamics. Decision-making wasn’t taking place in real time.
Recent events have done away with the reliability of historical data in a vacuum. Revenue management today is much faster-paced. Hotels using advanced revenue management technology can quickly adjust rates hundreds or even thousands of times each day based on more frequent trends and booking behavior updates. Increased competition and the adoption of revenue management tools have made the industry’s most consistent and highest-earning hotels more agile as they untethered themselves from past historical expectations. Hospitality leaders are writing a new history for their hotels, one backed up by data science and viewed through the lens of revenue management.
Automation is at the core of this evolution. Revenue management professionals once oversaw individual hotel departments, but today, they are expected to manage multiple properties and sometimes entire portfolios. This level of accountability is only possible through advanced automation supported by machine learning.
Hoteliers have long been resistant to automation, and often, their reluctance makes sense from a practical standpoint. Most hoteliers joined the industry to provide the best possible guest experience, interact with travelers, and deliver hospitality. Any perceived excessive use of technology seemed counter to the hospitality industry’s service mindset but this is not the case, especially in revenue management. The prominence of readily available automation tools has proven that machines are more effective than any human at understanding data and extrapolating patterns from within, which is for our industry’s benefit.
Achieving the degree of speed and accuracy advanced revenue management systems are now capable of is no small feat. It requires more information than individual hotel departments can collect on their own. This is where big data enters the equation, and it has been the most significant barrier to achieving total revenue optimization in hospitality–until recently.
Dependence on Other Systems
One of the core truths about hospitality is that it takes a village to achieve anything worth bragging about. When hotels operate at capacity, it’s crucial for the front desk, housekeepers, maintenance workers, IT, marketing, and more to be in complete alignment. Operations break down when the front desk fails to provide adequate information on guest needs to housekeeping, or maintenance doesn’t communicate completed work orders promptly. Individual departments rely on each other for support, awareness, and action.
A hotel’s data environment is similar to the former in many ways. Revenue management systems can cast a wide net of information on guest booking data. Still, these systems typically look at a narrow view of the market in the bigger picture of overall hotel operations. They are only seeing their corner of the revenue snapshot.
Big data plays a significant role in expanding operators’ awareness of the global marketplace and how to shape a revenue strategy in their favor. With the right tech stack, every aspect of hotel operations can be shared among departments to optimize their value through automation and machine learning. The reality of big data analytics is that they are too immense and shift too quickly for individuals to parse manually. They must be automatically fed between departments and then automatically examined based on specific needs to develop their findings.
Creating such a tech ecosystem often requires rethinking your technology strategy from the ground up. The information must be shared between departments in an accessible manner because these departments depend on one another for success. Revenue management can benefit sales and catering, and vice versa, in ways that revolutionize a hotel’s earning potential and even reshape how a hotel operates. It can optimize purchasing, rethink a hotel’s products and services, and proactively identify a property’s most valuable customers at the right moment to secure a booking.
Belief in Data
Until recently, data as a discipline was still relatively unproven among hotel operators. Revenue management technology’s adoption across hotels is growing but remains just a fraction of the total hotels in operation. However, this trend is now beginning to change on the back of revenue management’s success during a recovering economy. Despite significant competitive differentiation and the opportunity to fully understand demand drivers, revenue management’s most important selling point was the advantages provided throughout the pandemic. Big data is finally being leveraged to help operators spend more time with guests while making their jobs more valuable.
Because hotels are creating new historical data to compare to past business cycles, revenue managers have been turning to big data analytics to help them see beyond traditional sources of information. When departmental barriers are brought down, unlikely allies can be made, such as mutually beneficial relationships between digital marketing and revenue management. Revenue management examines transactions to understand who is booking what and when, while connections to digital marketing can be leveraged to include insight into who is behind that demand.
Technologists have made strides in simplifying the booking process for travelers, so why not flip the script and help hotels find the right guests? When operators understand more about who is booking with them in real-time, their profile, and what type of demand they command, hotels can go beyond offering optimized rates to these travelers. Over time, the hotel can take action to attract more of that profile of guests based on their booking preferences.
This level of granularity creates an avenue for a more detailed analysis of your guest’s demand. Tools fueled by big data processing allow for prescriptive analytics and can provide insight that you can then use to encourage bookings from your ideal, most profitable customers. Simply put, it gives hotels greater agency over who stays with them, when, and at what rate.
Tapping into big data to look beyond the present–and beyond the guestroom–will be the key to the future of profitability. Hotels must apply revenue management principles to understand and manage costs, push ancillary revenue, optimize distribution spending, and keep track of guest preferences and expectations. Revenue management can provide invaluable insight into optimizing each of these departments or needs, but it needs keys to the data to do so.
The most significant barrier to achieving these capabilities across hospitality is today’s tech ecosystem. When hotels begin merging data between departments, they can build a picture of their most reliable and desired guests and channels. This allows hotels the competitive knowledge to prioritize these channels, proactively targeting or closing specific channels to create a more holistic view of revenue management.
Knowledge is power, and it is also the gateway to total revenue management.
Reprinted from the Hotel Business Review with permission from www.HotelExecutive.com.