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What Hotel Properties Should Know About Business Intelligence

September 7, 2018

NATIONAL REPORT—Business intelligence (BI) is a term some hoteliers may not be aware of; they may not even be cognizant of the type of data their properties acquire, but they should be. Even if they’re aware of the data, the next step is to leverage it to improve property operations for the better. It all begins with the data and the people behind it.  

“Properties rely on BI because it is accurate, timely, and reliable,” said Colin Findley, VP of business development at ProfitSword. “Spreadsheets are fraught with errors and are often subject to lapses in human judgment. Having real-time data helps operators make more timely decisions to positively impact the financial performance of their property and identify trends.”

There are three essential data types every property should consider on a day-to-day basis: revenues, expenses (this includes labor), and market metrics. “Knowing how each of these data items can be affected by the other is crucial,” he noted.

Properties of all sizes can monitor these main data types by designating dedicated experts to each one. “For example, the revenue manager should certainly be an expert on room revenue (and hopefully F&B revenues); the sales leader should be an expert on room nights, rates, and market conditions; and the control and department heads should be experts on expense and labor management,” Findley said. “Each of these experts/leaders should become mentors and teachers to the younger generation of managers to ensure they are prepared to lead as the industry changes.”

But, is it possible to have too much data? There are times when having too much data can be a problem. “We’ve had potential clients ask for volumes of data, but when we asked the client how they wanted to display or use the data, they had no clue,” he said. When a property is unsure of what it hopes to accomplish with the data it’s collecting, that’s a sign of data fatigue.

“For the most part, the volume of data it was collecting had little to do with its operation and would not impact its financial performance,” Findley explained. “Not only did the property have too much data, it wasted countless hours of productivity trying to figure out what to do with the data. Salespeople, for instance, were more worried about reports than they were about selling.”

Sherry Marek, co-founder, and VP at Datavision Technologies, a Pembroke Pines, FL-based BI company, disagreed with the idea of businesses limiting their access to data: “You can never have too much data. Information is the biggest currency we have today. Since it is impossible for the average person to consume data all at once, it is the job of the BI system to identify the areas that need attention rather than bombarding the user with data. As we get into machine learning and AI, a sophisticated BI system should be able to sift through reams of information and just present the information that is relevant to the task at hand; however, maybe properties amassing BI should look at it differently,” she said.

Marek continued, “You don’t need BI to run your property. You need BI to run your property better. A lot of properties look at BI just in the context of reporting… This completely misses the point. The purpose of a BI system is not just to automate the reports you create manually. A good BI system will help highlight the information that you didn’t know.”

BI provides executives and managers with actionable insights. “With a solid BI infrastructure, a property can take action to improve its bottom line by implementing changes based on these insights,” said Todd Kushner, FPG’s executive director of BI and improvement. “Properties look for trends and patterns that provide an indication or forecast of the future. Every aspect of the operation can use BI for analysis—from your HR department to recreation and activities.” These additional insights can assist hoteliers with making decisions about impacting the future of operations for the better.

“In my opinion, properties that are undervaluing BI are likely unaware of how much data is actually available,” he said. “For example, pattern recognition of guest behavior—this offers tremendous opportunity to enhance the guest experience. Also, flight times are widely underutilized; knowing the guest flies out at 4 p.m., you can offer late checkout, so the guest can take advantage of an extra shower and extended comfort prior to departing for the airport. These small touches will drastically improve loyalty and services by predicting your guest’s needs.”

While BI tools do provide hoteliers with faster data, better analytics, and enhanced visibility, they must also be monitored and leveraged to their fullest potential, Findley said. Data alone cannot overcome bad decisions made by property management.

“This is why it literally pays to not only have an effective BI platform, but also an effective team that knows precisely what the data reflects and how it should be implemented in order to provide the best outcome,” he said.

Successful properties leverage both BI platforms and competent team members. “Knowing the performance indicators, understanding trends, and being proactive when it comes to the changing business environment will help a hotel be more successful,” Findley said. “But the key factor is that the operators should never take their eye off the ball.” Financial forecasting is dependent on learning from the past, present, and future.

Financial forecasting

“The best indicator of future performance is past performance,” Findley said. “If room attendant labor has been running at $6 per occupied room for the last six months, there is no expectation that will drop dramatically in the next six months. When you see a trend developing but don’t update your forecast to reflect the trend, the phone call with the owner at the end of the month could be a tense one.”

The data available to properties today provides a starting point for the forecasting process. “Data from complementary systems such as sales and catering is then added to fine-tune the group side (blocked versus picked up, group pace, etc.),” Marek said. “Information from outside sources such as comp set, citywide events, and weather data could be added to further predict spikes and troughs.” For example, weather data is of particular interest to ski or golf resorts.

“During high demand and a good economy, in the past, owners were not overly concerned about an increase in overtime, or overspending in certain areas because they were still making money on the bottom line,” Findley said. “There was a saying: ‘Revenue hides all sins.’ This is no longer true. After the recession at the end of the decade, an emphasis was put on flowthrough and better expense management during peak times and not just during a down cycle. Letting the numbers get away from you can devalue the asset in the long run. The devil is in the details.”

“Today, we not only have access to more data than ever before but there are also new tools to organize this data and make an informed financial forecast,” Kushner said. “The better we become at understanding our properties’ tendencies and patterns of business, guests, and market conditions, the more accurate we become at forecasting our financial futures.” HB