7 Steps to Driving Profit Using Guest Analytics
By Michele Walters Co-Founder, Origin World Labs | July 29, 2012
The hotel industry stands to reap huge returns from Guest Analytics. Guest Analytics, is the application of mathematical techniques to PMS and POS data in order to classify guests into behavioral groups that better predict their booking and spending patterns. For those already using it, this type of advanced segmentation is revealing insights that are exposing the true drivers of profits. The intelligence from guest analytics often debunks many long-held beliefs and renders irrelevant many of the metrics by which hotels have been measured for decades. The result is that forward looking hoteliers are starting to ask the right questions, make better decisions, and measure the things that really matter. More simply, Guest Analytics is the fuel that powers successful loyalty programs, marketing campaigns, experience management, and advanced revenue management.
Customer analytics has been used since the 80's by very large companies but today, thanks to the inexpensive cost of computing power and the abundance of data, it is becoming a tool than can be employed by even the smallest independent. To ensure success, you must adopt the mindset that Guest Analytics is a process rather than any specific result. The process is a loop that starts with learning from data which leads to taking actions that generate more valuable data, which leads to better decisions. When applied correctly, the following seven step cycle will lead to the main goal of any analytics initiative – higher profit from data.
Question everything you think you know. The hotel industry runs on guest classifications and performance measures inherited from a time when there was limited data and tracking the billing process was the priority. Guest analytics helps you measure your world using measures that matter. "Transient" and "Leisure" become less significant and labels based on guest's behavioral tendencies take the driver's seat. The dependence on Per Available Room (PAR) measures naturally diminish as you begin to measure your performance on Per Available Customer (PAC). This transformation will require hoteliers to accept having to re-learn the way they evaluate their business model and to discard time-honored, yet irrelevant performance indicators.
Your PMS and POS systems were designed to perform certain operational tasks efficiently and perhaps even offer you some traditional hotel reporting. These systems collect data to capture the "what" and never the "why". To get closer to the latter, you must extract data and shape it so that it serves a new purpose - behavioral analysis. This requires some investment in technology like a data warehouse, but more importantly, it demands that you first, reconsider the way your systems are organized and then more critically, identify the bottlenecks which are preventing you from collecting the data you will now need. This sounds easier said than done, as data quality initiatives often challenge not only individual habits but the operations of the business as a whole.