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.
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