The power of forward-looking data

The most important forward-looking data for a hotel will always be its own. Knowing your business on the books enables sales and marketing and revenue managers to plan. Investors and stakeholders will assess a hotel’s financial health based on its business on the books since a robust pipeline of reservations indicates stability and growth potential.

In recent years, hoteliers have grappled with unpredictable booking patterns, and it is only now that lead times for corporate groups are starting to return to a typical length of 12 to 18 months.

With so many variables at play, filling rooms is not an exact science. Balancing demand segments and room rates is a never-ending dance. As Sir David Michels once said: “There is no time when you can say that a hotel is perfect. If it is 100 percent full, then the room rate should have been higher.”

Traditional benchmarking

Traditionally, hotels have benchmarked their performance against a competitive set of hotels. Historical data (occupancy, ADR, RevPAR) is used to assess the performance of GMs and executives. Now, third-party data providers are benchmarking forward data too.

STR’s Forward STAR service, for example, is reporting on 663 markets around the world, allowing hotels to benchmark their occupancy on the books, pickup and booking pace against a selected competitor set for the next 12 months. A similar service called Demand360+ from Amadeus includes short-term rental data too.

Such services are useful for understanding total demand in your market, however, benchmarking is not going to fill rooms. If your hotel is half full for November, it may stay that way unless you take action.

John Seaton, managing director International, Cendyn, commented: “There’s a hotel near where we live in Dorset, UK, and I go there very regularly with my wife. We’ve stayed there several times. We’re local, we’re regulars, but we never hear from them.”

“They must have my email, and my wife is on Facebook. During the winter in Dorset, tourism is pretty much non-existent, so when you talk about being half full in November, there is forward-looking data that can help a business be more successful and it’s guest data.”

21 per cent of UK hotels use customer relationship management (CRM) systems. Cheaper marketing and communication tools include email marketing platforms, spreadsheets for guest databases, social media, and segmented email lists, but judging from Seaton’s account, some hotels do not use these either.

Operational efficiency

Forward looking data can help with operational efficiency in terms of staff scheduling, purchasing, and maintenance.

5-Out, a forecasting software aimed at independent and QSR restaurants, claims that it can predict sales and cost of goods sold (COGS) up to 35 days in advance. Utilising advanced machine learning algorithms, it draws on historical data to forecast future trends. The analysis ingests both internal factors like historical sales data, reservations, and labour scheduling, and external influences such as weather, traffic, local events, and holidays.

COGS and labour forecasts are displayed on trend lines, so operators can monitor their actual and forecast performance from the same screen. The forecasts refresh every 15 minutes, providing a progress report in real time.

Shaz Khan, co-owner of Tono Pizzeria and Cheesesteaks in Minnesota, said: “We’re looking at maintaining a labour cost of just around 25% and so that’s an important metric for the industry and for our model which is counter service QSR and this helps us look at everything in one place. Whatever factor is affecting sales up or down, we are responding appropriately on the labour. With COGS we try and stay within 25 to 30 percent of gross revenue.”

Avery Ward of Little Italy, a pizza restaurant in Groveport, Ohio, added “My managers can look at the forecasts in the moment, for example, in the middle of a shift to see if we are ahead or behind on our labour. Do we need to make cuts this afternoon because we spent too much on labour at lunchtime? We can ask: ‘Hey, who wants to go home early?’ It’s definitely made our team’s schedules better because we are giving them more options.”

Large hotels and chains can collect data for preventive maintenance and deploy IoT sensors combined with enterprise software systems to monitor HVAC, elevators, lighting, kitchen equipment, washing machines and guest room appliances. Managers can predict when equipment is likely to fail and plan maintenance proactively.

Knowledge is power

Another application of forward-looking data is to inform product and services development. Kashif Yamin, SVP data and strategy, Alliants, said: “What we’re doing with some of our clients is pulling in vast amounts of data from social media platforms and mining out the key things that people are taking about within particular areas. One of the current trends is for deep medical-grade spa experiences so that can help a hotel design new products and services.”

James Bland, managing director of hotels & hospitality at market research company BVA BDRC, added: “Social media mining and forward-looking analysis of both real-life data sets and survey responses are pretty much standard services that we have been offering for years, with choice modelling proving increasingly popular. We’ve helped a couple of the largest global hotel groups determine the likely impact on selection, ADR and even GOP of changes in their product proposition by simulating the purchase scenario.” 

Returning to demand forecasting, there are big changes in who is travelling. UK data, which may well apply to other territories, shows a major jump in domestic trips taken by retirees, especially outside the peak months, while the number of breaks taken by pre-nesters and families has decreased. Cris Tarrant, chairman and founder of BDRC BVA, said that this divergence between young net borrowers and older net savers fuelled by high interest rates and the cost-of-living crisis, is expected to widen this year. It is one of the most significant statistical changes he has seen in more than 30 years of conducting consumer research, he added.