Vox Populi: Wisdom of the Crowd (of Group Hotels)
By Michael Hudson Senior Vice President Hotel Analytics Division, Groups 360 | September 21, 2014
As a hotel professional, think about the one thing that frustrates you the most about the meetings and convention industry. Visualize that pet peeve, the aspect of the business that irks you the most. Got it? There is a solution to your frustration, an answer that may not seem obvious at first. The solution is an ox. Keep reading, and I'll explain why.
The reality of today's meeting and convention environment is that, on average, groups switch between 3-5 Brands and rotate between 4-7 geographic destinations over the course of several years' worth of events. This pervasive lack of brand and market loyalty leaves gaps in Hotels' knowledge of contract performance and means that no one hotel or brand has a complete view of total revenue potential at the individual group level.
Another difficult truth is that 75% of Groups do not meet their contracted rooms pickup. A majority of the time, hotels do not have transparency and shared visibility to make effective strategic business decisions. Think about that for a second, 75% of groups do not meet their obligations. Would you tolerate a car that would only start reliably just 25% of the time?
With the mass consolidation of meeting planners utilizing four main providers for the RFP process, coupled with the proliferation of widely distributed leads via automated platforms, hotels are making rapid decisions with less information more than ever before.
So how does an ox solve the problem? The answer finds its roots in a study conducted over 100 years ago by mathematician Sir Francis Galton; Vox Populi: the Wisdom of Crowds. Galton found that if you independently ask enough people the exact same question, the collective of the answers was typically more accurate than even subject matter experts. This principle originated from a contest that Galton conducted to test his hypothesis. He constructed an experiment where nearly 800 people paid an entrance fee to guess the butchered weight of a full-grown ox with the winner getting to keep the ox meat. The entrance fee was meant to limit the contest to the serious minded participants and weed-out those who might provide outlier type responses (no internet surveys!).
After running a statistical analysis of all the guesses, Galton determined that the average of all the entrants' guesses was extremely close to the actual weight of the butchered ox. This average was off by only 1-pound-for an ox that weighed 1,198 lbs (amazingly, that is less than a tenth of a percent off of the actual value). As it turns out, the average of the collective guesses not only beat the actual winner of the contest but also was superior to the guesses made by livestock experts (read industry experts) who participated.
The Hotel Business Review articles are free to read on a weekly basis, but you must purchase a subscription to access
our library archives. We have more than 5000 best practice articles on hotel management and operations, so our
knowledge bank is an excellent investment! Subscribe today and access the articles in our archives.