Ms. Stehle

Revenue Management

Maximizing Profitability Through Data Analytics

By Tina Stehle, Senior Vice President & General Manager, Agilysys Hospitality Solutions Group

Competing in the hospitality environment has never been more challenging. The number of vendors and products is overwhelming. Competitors are constantly looking for a marketing advantage. And hotels within your competitive set are likely to be utilizing business intelligence more than ever before.

In this environment, hotels that succeed must do more than merely 'keep up' with the competition. They must be able to identify guest trends, recognize problem areas and develop strategies that increase profitability. They also must be able to react to market changes quickly and efficiently.

Sounds good, but how do you make it happen? With 'data analytics,' which uses guest and operational information to predict future trends and stay a step ahead of the competition. Data analytics software solutions collect transactional data from multiple systems within the organization and consolidate it into a central location. This enables hoteliers to see the 'big picture' - what's going on in every area of the business - and use that information to predict guest behavior and maximize revenue potential.

With the increased availability of standardized data analytics software, hospitality venues can now join the ranks of such consumer-centric retail giants as Amazon, Costco and Wal-Mart in using this technology to make up-to-the-minute fact-based business decisions and improve market effectiveness.

What, exactly is data analytics?

When it comes to business intelligence, most hospitality organizations generate a variety of reports from various profit centers, such as finance, human resources and operations. These reports are then often combined into highly complex, handcrafted spreadsheets. The problem is these spreadsheets may contain errors and omissions, are often difficult to interpret and are not always accessible across the entire organization.

Hotels increasingly need global reports that consolidate data from disparate systems and vendors. They also need reports that offer more than simple statistics, such as average revenue per employee or average table turn by meal period. They need technology solutions that enable them to predict guest patterns and quickly adjust business practices to keep pace with changing conditions.

It may sound complicated, but you most likely already possess the transactional data you need within the various departments of your organization. You simply need a way to combine it into a single reporting source as well as a means of making it available in near real-time to as many end-users as possible, such as executive managers, food & beverage directors, regional managers, IT systems managers and business analysts.

The process by which data analytics collects and consolidates information is referred to as extraction, transformation and load, or ETL. Simply put, data is extracted at the source location, transformed into the format required and then loaded into a data warehouse.

Generally, analytics solutions implement one of the following two methods of ETL:

• Data replication with a two-step ETL into the data warehouse. With this method, data from each source system is continuously replicated into the data warehouse. ETL is performed multiple times within a pre-defined period to combine and scrub data as needed without affecting the performance of source systems.
• Distributed ETL directly into the data warehouse. With this method, data is extracted directly from the distributed source systems into the data warehouse. Analytics reporting is then available as quickly as the ETL of the source system takes place.

The obvious downsides of the data replication method include the cost of storage requirements - often for unneeded information - and the complexity of ongoing ETL processes. Because the distributed ETL method extracts and loads only the data required for reporting, it is a much more efficient process. Moreover, recent enhancements in server processing power and analytics software solutions make the distributed ETL method the preferred option in terms of both cost-effectiveness and real-time reporting.

Benefits of data analytics

The primary method for determining the value of any technology solution is Return On Investment (ROI), or how much value in either lower costs or increased profit is generated in excess of the cost of the solution. A data analytics solution provides a rapid ROI by reducing costly decisions based on incorrect or insufficient data, eliminating report distribution printing costs and enabling hotels to increase profitability through predictive analysis. A data analytics solution automates the creation of reports, ensures the accuracy of data and standardizes Key Performance Indicator (KPI) reports across the entire organization.

In addition, a data analytics solution takes a huge burden off the IT department, which often must prioritize requests for reports from various executives and managers. With the data in the hands of end users, each department can create its own custom reports without assistance. As a result, IT staff is more productive and able to focus on other tasks.

A data analytics solution also may uncover problems such as fraud and poor performance that otherwise might go unchecked.

Finally, the most significant value gained through the implementation of a data analytics solution is the ability to turn predictive analytics into data-based business decisions. You will move from decision-making based on single dimensional reporting and 'gut instinct' to decision-making based on comprehensive factual information.

Selecting a data analytics solution

The following criteria will help you select the right data analytics solution for your organization:

• The solution should provide a 'big picture' view. True analytics solutions incorporate data from all the systems used by various departments as well as data from different geographic locations, creating a comprehensive organization-wide view. A common model should be available for mapping similar data elements from different systems, such as payment types, product categorization and customer profile data.
• The solution should integrate easily into your IT framework. An analytics solution should integrate into your organization's existing IT infrastructure, enabling ETL of multiple data sources without lengthy and costly integration efforts. The analytics technology platform also should integrate with your security model for authentication and authorization.
• The solution should enable customization for displaying information. Although the analytics dashboard has become the most common method of displaying data, it may only meet the requirements of executive or site-level managers who want a daily overview of performance. Others within your organization - as well as strategists and business analysts - may prefer more sophisticated and detailed views.
• Your analytics solution should be able to support multiple role-based views into the data on a near real-time basis. In addition, the solution should be able to generate custom queries quickly and easily.

The bottom line for any hospitality organization is maximizing profitability and managing the guest experience more effectively. Data analytics enables hotels and other hospitality venues to do both by collecting and consolidating data from multiple sources and building reports that enable managers to make more informed business decisions and capitalize on revenue opportunities.

Tina Stehle is senior vice president & general manager of Agilysys Hospitality Solutions Group. Agilysys is a leading provider of innovative IT solutions to corporate and public-sector customers, with special expertise in select markets, including retail and hospitality. The company uses technology — including hardware, software and services — to help customers resolve their most complicated IT needs. Ms. Stehle joined Agilysys in 2004 through its acquisition of Inter-American Data, Inc. (IAD), where she served as vice president of software services. Ms. Stehle can be contacted at 800-262-3600 or tina.stehle@agilysys.com Extended Bio...

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