{468x60.media}
Mr. van Meerendonk

Revenue Management

Big Data for Big Pay-Off

Put Your Data to Work Optimizing Channel Performance

By Paul van Meerendonk, Director of Advisory Services, IDeaS Revenue Solutions

Big data has been a starting player on the strategic revenue roster for years. In fact, years before big data exploded into something like a phenomenon, hotels were increasingly incorporating industry data into their revenue technologies and strategies. The opportunities afforded through the effective use of big data have grown to such an extent that today's flourishing hotels must increasingly leverage larger amounts of available data to seize their most lucrative revenue opportunities.

But while big data might be heralded as the core of intelligent decision-making, using it effectively can prove to be daunting task for many hotels - especially for those looking to use industry data to develop new revenue management strategies, such as an increasingly essential need for hotels to strengthen their channel performance capabilities. Channel performance refers to the management of channels or sources of business to achieve optimal revenue and maximum profitability for a hotel. However, when it comes to using industry data and revenue technology for sustainable channel execution, management and results, hotels need to not only prioritize the right types of data, but use it effectively to track and manage their costs and thoroughly understand their guests.

Prioritizing the Right Data

As hotels explore different types of data for their revenue management strategy, they need to take into account the degree of uncertainty the data brings since a high degree of uncertainty can create a risk for substandard revenue decisions and strategies. This is why identifying the right types of smart data is a critical first step for every hotel.

At the highest level, analytical revenue management technology is traditionally comprised from a combination of four data set types, with each set contributing to very distinctive outputs. To better understand the importance of each data set type - and how each one helps drive revenue results for hotels - the following is a brief breakdown of the four types of data sets: descriptive data, diagnostic data, predictive data and prescriptive data.

Hotels have been using descriptive data in their basic hotel technology to achieve their business goals for many decades. Descriptive analytics utilize data similar to standard hotel reporting, and large volumes of this data are used to give hotels a view of what happened in the past. These descriptive analytics allow hoteliers to make informed decisions about the future based on data that details what has already happened. Descriptive data falls into a category classified as "hindsight," which is data that provides hotels with the ability to interpret their historical performance.

Hotel technology also uses diagnostic data to measure hotel performance relative to its market by aggregating historical data to understand why an outcome occurred. Diagnostic analytics look at historical data from multiple sources, aggregating it to make assumptions for the market as a whole. These types of analytics can also be used by hotels to help benchmark their property performance against their competition, as commonly illustrated through the likes of STR reporting. Similar to descriptive data, diagnostic data also falls within the hindsight category since it uses performance data that helps hotels understand the reasons behind their past performance.

The majority of today's revenue management solutions utilize predictive data, which provides hotels with well-informed occupancy and revenue forecasts. These forecasts are typically used to help hotels establish their ideal pricing and inventory control strategies. As hotels gain insights into future outcomes, they can accurately manage price and inventory to achieve an ideal mix of business. However, as predictive analytics are derived from forecast models based on historical records, there can be challenges forecasting time frames with brand new market conditions or events. Predictive data falls into the "foresight" category, as its data forecasts future outcomes to identify revenue opportunities for a hotel.

In more recent years, prescriptive data has stepped into an integral analytical role for today's hotels. Prescriptive analytics not only leverage historical data points, but future data that allow hotels to go beyond conventional hotel forecasting practices. Through the use of advanced market intelligence, prescriptive analytics are able to understand optimal outcomes and the strategic decisions needed to achieve them.

Today's advanced revenue management solutions provide these analytics - and they give hotels deeper levels of insight into market positioning, channel profitability and guest personas. When this data is combined with powerful revenue strategy controls, it delivers highly accurate pricing and inventory control decisions by room type and multiple lengths of stays. It also allows for more insightful marketing campaigns and promotions that can be monitored in real-time to maximize direct business and profitability.

Prescriptive analytics move hotels beyond foresight into the "insight" area of analytical capabilities. Market intelligence data provides hotels with deeper views of their data to maximize the most amount of revenue possible, while the automation of today's technology continuously optimizes decisions and outputs, leaving hotels with little room for human errors and missed rate opportunities.

As big data continues its reign as one of hospitality's most prevalent revenue management themes, it has become paramount hotels focus less on the 'big' narrative, and more on the application of 'smart' data. With large amounts of disparate data available today, hotels need to prioritize the data that provides them with meaningful insight and action. Leveraging forward-looking demand intelligence with historical and internal data sources will help create an analytical engine that provides a hotel with insightful strategies that deliver optimal revenue results and maximum profitability.

Organizing and Understanding Data

Organizing and understanding data is essential to effectively using it to help drive the decision-making process. This is also true when it comes to channel performance, in particular as it relates to channel costs.

To accurately track costs, it is critical that effective best practices and standards are structured around the proper use of business coding and data collection. This ensures the available data is both accurate and suitable for digging into new channel performance opportunities. As an example, source and channel fields within reservation systems are extremely vital to helping hotels understand where their business is coming from, so they may, in turn, track the costs of each reservation. Practices that ensure these field types are well-defined and reliably assigned to reservations allow hotel properties to successfully monitor and evaluate their channel metrics.

The other element that is critical in this process is identifying the true cost of each reservation. This may be a relatively simple exercise for an online travel agency reservation that carries a fixed charge, but the depth and breadth of charges related to a reservation are often more complex than that. Considerations must be made for all costs involved in a reservation - this may include such items as variable commissions, labor costs, sales spend, loyalty program charges and a plethora of others. Ensuring that these elements are understood, organized and tracked correctly is essential.

Once data is organized and understood, hotels can look to advanced revenue technology and services to close the revenue gaps on better channel performance. The availability of insightful channel reports and dashboards that revenue technology provides give hoteliers swathes of opportunities to analyze acquisition costs and channel revenues at deeper and more customized levels. As more hotels start tracking their channel costs more closely, they'll have the ability to monitor their production into the future, which allows them to make any necessary adjustments to their strategy before it is too late. This will result in more visibility into profit-focused key performance metrics, such as net RevPAR and net ADR, which support hotels in delivering a channel performance strategy that maximizes their bottom line.

Optimizing Performance Through Market Intelligence

When applying big data in practice, hotel revenue management strategies have historically focused more on its mathematical side by looking at traditional data sources (such as economic factors and historical results) to anticipate market demand. Hotels rely heavily on these data sources and their performance-based numbers to identify the basics of a profitable business strategy. However, exponentially more hotels are seeing untapped wells of opportunity to drill deeper into their data to extract and analyze behavior-based facets and thoroughly understand their guests.

Strategic revenue management is beginning to rely heavily on prescriptive analytics to build upon traditional forecasting practices and look beyond numbers to better understand how and why a particular outcome occurred. Across the industry, this shift in strategy is largely considered to be a fusion of both revenue management and marketing strategies. Combining these two functions allow hotels to identify the factors attracting and driving potential guests to book directly with the hotel, as well as helps determine the ideal price to bring in the most revenue at the lowest costs. The use of this market intelligence data supports hotels as they plan intelligently and make more profitable decisions for their organization.

Hotels typically have access to technology that tracks basic shopper activity on their website; however, it has been mostly limited to high-level booking data and lost business data for only their brand website. While this type of market intelligence data allows hotels to view searched date ranges, page activity, and room types or packages shoppers expressed interested in, online shoppers have still remained largely mysterious. This is where the availability of travel intent data - and its strategic implementation - has become critical for developing a hotel's revenue strategy.

Travel intent data uses search and booking data from third-party booking sites and OTAs to help quantify the demand a hotel can expect for future dates. This advanced and predictive demand intelligence provides hotels with human-focused insights that allow them to market strategically with specific ad placements and personalized offers that pull in more direct bookings. Taking the insights from travel intent data, and layering it into the traditional data sources used in forecasting, provides hotels with one of the most lucrative opportunities to predict which guests are most likely to book and deploy a tailored marketing strategy that targets them.

Big data won't be sitting on the revenue management sidelines any time soon, and hotels can continue to expect new and evolving technology that will help them make the best - and most profitable - use of it. When looking to uncover even more revenue opportunities, today's hoteliers are turning to the implementation of strong channel performance initiatives that further strengthen and execute their most powerful and profitable revenue strategy.

As Director of Advisory Services for IDeaS Revenue Solutions, Paul van Meerendonk leads a global team of revenue management advisors focused on hotel revenue optimization projects. Mr. van Meerendonk is responsible for global development, management and operations of the Advisory Services team. He oversees the hiring, training and management of industry-leading consultants located in London, Beijing, Singapore and Atlanta. Mr. van Meerendonk also represents IDeaS on industry thought-leadership initiatives related to trends and best practices within revenue management, including authoring a number of white papers, conducting public speaking engagements, as well as leading key client webinars with an average audience of over 200 global representatives. Mr. van Meerendonk can be contacted at +44 (0) 118-82-8100 or Extended Bio...

HotelExecutive.com retains the copyright to the articles published in the Hotel Business Review. Articles cannot be republished without prior written consent by HotelExecutive.com.

Receive our daily newsletter with the latest breaking news and hotel management best practices.
Hotel Business Review on Facebook
RESOURCE CENTER - SEARCH ARCHIVES
General Search:

OCTOBER: Revenue Management: Technology and Big Data

Steve  Van

Do you have a catering assistant whose first question each morning is Did we sell out? or What was our occupancy and ADR last night? What about a front office associate who is so hungry to earn the perfect sell incentive that every time she works the 3:00 to 11:00 shift and the hotel has just a few rooms left to sell, you can count on the fact that you are going to end up with a perfect sell? If so, you may have just found your next revenue manager! READ MORE

Will Song

Airbnb is less than a decade old, but it has already begun to make waves in the travel industry. The online marketplace where individuals can list their apartments or rooms for guests to book has been able to secure a surprisingly stable foothold for itself. This has caused some hoteliers to worry that there’s a new competitor in the market with the potential to not only take away market share but drive prices down lower than ever. Let’s take a closer look at how Airbnb fits into the industry right now and then walk through the steps of the ways your hotel revenue management strategy can be adapted to the age of Airbnb. READ MORE

Brian Bolf

Revenue management tends to be one of the most challenging hospitality disciplines to define, particularly due to the constant evolution of technology. Advancements in data processing, information technology, and artificial intelligence provide our industry with expanded opportunities to reach, connect, and learn from our guests. Ultimately, the primary goals of revenue management remain constant as the ever-evolving hospitality industry matures. We must keep these fundamentals top of mind, while proactively planning for the tighter targets that lay ahead. That said, how can we embrace these innovations, operate under constricted parameters, and learn from the practices used today to achieve our same goals moving forward? READ MORE

Sanjay  Nagalia

Every year, it seems as though the hospitality industry faces more competition, new opportunities to leverage their data, and difficult organizational challenges to overcome to remain competitive in a hypercompetitive marketplace. The popularity of the sharing economy, dominating OTAs and a growing generation of often-puzzling consumers all give pause to hotels as they strategize for a more profitable future. Hotels have been feeling the heat from OTA competition for several years, causing many organizations to double down on their efforts to drive more direct bookings. Revamped loyalty programs, refined marketing campaigns and improvements to brand websites have all become primary focuses for hotel brands looking to turn the tables on their online competition. READ MORE

Coming Up In The November Online Hotel Business Review




{300x250.media}
Feature Focus
Architecture & Design: Authentic, Interactive and Immersive
If there is one dominant trend in the field of hotel architecture and design, it’s that travelers are demanding authentic, immersive and interactive experiences. This is especially true for Millennials but Baby Boomers are seeking out meaningful experiences as well. As a result, the development of immersive travel experiences - winery resorts, culinary resorts, resorts geared toward specific sports enthusiasts - will continue to expand. Another kind of immersive experience is an urban resort – one that provides all the elements you'd expect in a luxury resort, but urbanized. The urban resort hotel is designed as a staging area where the city itself provides all the amenities, and the hotel functions as a kind of sophisticated concierge service. Another trend is a re-thinking of the hotel lobby, which has evolved into an active social hub with flexible spaces for work and play, featuring cafe?s, bars, libraries, computer stations, game rooms, and more. The goal is to make this area as interactive as possible and to bring people together, making the space less of a traditional hotel lobby and more of a contemporary gathering place. This emphasis on the lobby has also had an associated effect on the size of hotel rooms – they are getting smaller. Since most activities are designed to take place in the lobby, there is less time spent in rooms which justifies their smaller design. Finally, the wellness and ecology movements are also having a major impact on design. The industry is actively adopting standards so that new structures are not only environmentally sustainable, but also promote optimum health and well- being for the travelers who will inhabit them. These are a few of the current trends in the fields of hotel architecture and design that will be examined in the November issue of the Hotel Business Review.