Big Data - Are You Utilizing It, or Just Looking at Numbers?

By Mark Heymann Chairman & CEO, Unifocus | December 17, 2017

Managers today have an ever-growing inflow of data from a wide variety of sources, held in massive databases and available at their fingertips. These numbers can, when used wisely, transform the way they make decisions. But too often, managers do not know how to make the most of the data they get or are overwhelmed simply by the volume of what they have to look at. Too often, it becomes more about generating daily, weekly or monthly reports and looking at numbers than it is about understanding what those numbers are telling them.

One issue is the measure managers use to interpret the results they are reviewing. Many managers use an absolute comparison of team performance projections to actual results. Others base comparison on the average of other comparable operations or industry norms (which are, in essence, means). But while this approach may accurately demonstrate above-average performance, it invites mediocrity. Instead, when using averages, smart managers compare results to the 80th percentile, thereby benchmarking against the better performers in the industry. Additionally, comparison to projections can be fraught with problems as changes to market dynamics and fluctuations in volumes can render it inaccurate and create missed opportunities for business improvement.

Overall, the hotel industry does a good job gathering data and has a basic understanding of the value of comparative data. That said, historically it has been a standard practice for hotel companies to compare absolute performance of their hotels, taking all the data from all of their locations and ranking them from high to low. Using that approach, management of an individual hotel within the brand will generally seek to avoid ranking in the lowest 10 to 15 percent. A hotel with a higher ranking might appear more productive than another and its management satisfied that it is doing a great job. However, the results might look very different if, instead, actual performance was compared to optimal performance.

Here is a simple example of the downside of using absolute numbers: UniFocus once worked with a hotel within a group that rated profitability of the rooms operations from high to low. That particular hotel consistently ranked second to a property with a measurably higher average rate. If the data had been normalized for the rate difference, the hotel that rated second would have clearly been number one in performance and the top property would have fallen out of the top five.

Measuring Against Potential

In the world of hospitality, in which one's business volumes change every day, managers are still living by comparisons to their budget. This contrasts with industries like manufacturing, where the key objective is to produce a set amount every day that optimizes machine capacity. There are only a few areas of a hotel where the timing of customer demands do not impact production - laundry and housekeeping, in particular - and those areas do operate more like a manufacturing operation. The laundry operation assesses machine throughput using a pounds-per-hour measurement. With today's big tunnel washers and electronics, a hotel laundry might typically wash 150 pounds or more per hour versus the older standard of 85 or so per hour. It is easy to measure performance against machine capacities in this way. Likewise, housekeeping can be measured by number of rooms per day. In both cases production is not impacted by fluctuations in daily customer demand patterns.

Coming up in February 2018...

Social Media: Engagement is Key

There are currently 2.3 billion active users of social media networks and savvy hotel operators have incorporated social media into their marketing mix. There are a few Goliath channels on which one must have a presence (Facebook & Twitter) but there are also several newer upstart channels (Instagram, Snapchat &WeChat, for example) that merit consideration. With its 1.86 billion users, Facebook is a dominant platform where operators can drive brand awareness, facilitate bookings, offer incentives and collect sought-after reviews. Twitter's 284 million users generate 500 million tweets per day, and operators can use its platform for lead generation, building loyalty, and guest interaction. Instagram was originally a small photo-sharing site but it has blown up into a massive photo and video channel. The site can be used to post photos of the hotel property, as well as creating Instagram Stories - personal videos that disappear from the channel after 24 hours. In this regard, Instagram and Snapchat are now in direct competition. WeChat is a Chinese company whose aim is to be the App for Everything - instant messaging, social media, shopping and payment services - all in a single platform. In addition to these channels, blogging continues to be a popular method to establish leadership, enhance reputations, and engage with customers in a direct and personal way. The key to effective use of all social media is to find out where your customers are and then, to the fullest extent possible, engage with them on a personal level. This engagement is what creates a personal connection and sustains brand loyalty. The February Hotel Business Review will explore these issues and examine how some hotels are successfully integrating social media into their operations.