In hotels, we love our numbers. We track occupancy, average daily rates, customer satisfaction scores, etc. And at the heart of many metrics lies the humble average. It’s simple, easy to understand, and gives us a quick snapshot of performance. Businesses use averages to gauge progress, set targets, and compare themselves to competitors.
NB: This is an article from Demand Calendar
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Averages can be dangerously deceptive. They paint an incomplete and sometimes misleading picture. This can hinder our ability to uncover real insights that drive better decisions. It’s time to address the elephant in the room – relying solely on averages in the hospitality industry just won’t cut it.
Let’s take a classic example. Imagine your hotel boasts an average occupancy rate of 70%. That might sound decent on paper. However, a closer look reveals you’re wholly booked every Saturday with 100% occupancy, while you have fewer guests on Fridays. The average obscures this critical information. You might be tempted to sit back, content with your “average” performance, completely missing the point that a huge opportunity (and problem) lies hidden within those numbers.
The Pitfalls of Relying on Averages
The problem with averages is that they can mask many underlying dynamics. Let’s explore why they create an illusion that can sometimes be far from reality:
- Masking Variability: Averages have a way of ironing out peaks and valleys. Like in our occupancy example, they hide the days you’re hitting full capacity and when rooms sit sadly empty. You miss out on celebrating the potential of those fantastic Saturdays and investigating the underlying causes of the bleak Fridays.
- False Trends: Looking at your average metrics over time might falsely indicate that things are steady. In reality, your hotel could fluctuate wildly. Say your monthly occupancy has averaged 60% for the last six months. This might hide the fact you’ve been on a roller coaster, going from 40% occupancy to 80% and back again.
- Missing Outliers: If a few specific days drastically outperform or underperform the rest, the average doesn’t spotlight them. What if this past New Year’s Eve, you had 95% occupancy while you usually struggled during that period? That’s a valuable outlier! Your average won’t scream at you to figure out why that day was different and how to replicate that success.
Averages have their place, but relying on them too heavily can close your eyes to the opportunities and issues that demand your attention. It’s time to dig deeper.
Getting Actionable Insights Beyond Averages
So, if averages give us an incomplete picture, where do we look to find actual insights we can act on? The answer lies in going more granular with your data analysis. Here’s how:
