There is no doubt that today we are invaded by KPIs, ratios and data that show the hotel performance, revealing our strategies. They are essential to be able to adjust the optimization, however, not always was that easy in Revenue Management. At the beginning of the 21st century, we focused on obtaining any data that could support our strategies. Revenue Management was developing in an environment with limited systems. We were looking for indicators that would help us to predict customer behaviour. We knew that anticipation was crucial to maximize revenue. It was necessary to obtain all the data that was available. It was not only enough to know when the reservation was made; we needed to know why, at what rate, what day of the week, and the detailed impact of the demand on the booking curve. Segmentation was developed, we even added codes within each segment that would allow us to cross the reserved rate with the booking channel. Little by little, while we managed data using Excel reports, RMS emerged, getting the current flood of data.
Do we make proper use of the data?
If in Revenue Management we say that the only constant is change, it is precisely because of the variations that we have in demand and its optimization. A key task is to be able to read between numbers and manage the messages that the data contains. It is key isolate days showing abnormal behaviour focusing on trends. We must not react impulsively because a specific ratio is bad in a very short period. From experience, we must first monitor these ratios to identify opportunities and see if the trends are consolidated. Sometimes we have a large collection of KPIs and ratios not normally used in our daily operation. For example, it is very good to have data on the average stay and RevPar by room type or even by market segment with variations, however this information is useless if we do not act accordingly afterwards.
Without a doubt, we navigate in an ocean of data, with infinite numbers, variations and sometimes contradictions. I say this because the same ratio is shown differently depending on how we look at it, in absolute values or percentage. Someone very optimistic can deduce that the result of a new campaign has increased 100% and be very satisfied with it. If we only keep this figure, we consider that it is the consequence of a successful campaign, however, if we analyze its absolute value, we went from selling 5 rooms to 10, transforming that 100% into only 5 additional rooms. It is true that we do not have ratios for everything, therefore we must always think globally. Perhaps the success of this campaign lies in an increase in visibility getting additional volume of reservations in other direct channels. Yes, the mere fact of obtaining the data is no longer enough, it is necessary to consider them within a global vision context and never in an isolated way.
Urgent, important, and necessary data
In the same way that we must manage and differentiate urgent tasks from important ones, not always being easy, personally I make the same differentiation. I consider “urgent data” to be those data that, as soon as they are obtained, generate an immediate action. For example, if we have 70% occupancy in the lowest category on a day where the indicators consider a potential sell out day, we must close the channels that give us lower performance as soon as possible and do it urgently in order to optimize the inventory.
On the other hand, I consider “important data” to be those indicators that do not require an immediate urgent reaction; however, we need them to establish the necessary strategy changes. These are key variables, for example, the booking curve, pick-up trend or other indicators that require action in the short term.
And, finally, I call “necessary data”, those KPIs and ratios, which, not being used on a day-to-day basis, measure the hotel’s performance over a considerable period. They mark the evolution of trends with long-term impact. For example, the nationality data of our clients or market niches that we cannot change from one day to the next, but that can be considered for a change in future strategy. These data are therefore necessary to carry out a future strategic plan, impacting our objectives.
However, in this post I will focus on the important data since they have more prominence in the actions of Revenue Management. Not attending to such a necessary immediate operation, they are the indicators that guide the hotel’s general strategy. From Revenue Management we must collect this relevant data, contrast it, validate it, and focus on those that directly impact the hotel’s financial results by proposing changes.
What important data should we consider?
- Pace reports: Data providing information about the performance vs. previous year or referenced period, showing trends and changes in the segmentation Mix. We must focus on the weakest segments, analyze the reason, and activate surgical actions to improve the segment figures, always avoiding general actions.
- Pricing: Positioning data compared to our competitors, verifying that our price is consistent with our product quality balance and ranking in the market. In general, we focus on the “Booking window” period where the pick-up is concentrated. It is also important to study the competitor price variations to understand their strategy. If we have an RMS with price recommendations, it is always good to share this data and analyze it based on the competition price changes.
- Forecast: Thoroughly review the BOB (Business On the Books) data, which indicates the real performance of the hotel. Based on these data and their variations with a previous period, we must update the forecast showing the current trend, but not without first establishing corrective measures. We look for the risks and opportunities to achieve our objectives. An accurate forecast contributes to the different departments organization, avoiding added costs and therefore has an important impact on the GOP optimization.
- Market Share: With this market data we analyze the Hotel performance compared to the competition. We must seek the ideal balance between occupancy and ADR to maximize RevPAR and verify the trend of the competitive group compared to the previous year, comparing it with our trend. The market trend is not always the same than the hotel trend.
- “Potential Sell Out days”: We focus on the data of future days that present occupancy peaks and are also potential sell out days. Anticipation setting restrictions will positively impact RevPAR, driving the most profitable demand to flow to the bottom of the booking funnel.
- Groups: We analyze the data we have on groups, requests, impact on Pace, checking the strategy in place considering possible changes in demand. Analyzing the contribution and displacement of each group is key to determinate if the group contributes to the hotel’s overall strategy.
- Total RM: Finally, we must review the F&B ratios looking for opportunities, at least “Capture Rate” and “Average Check” per restaurant. It is necessary to propose strategies or ideas that generate additional income, promotions, flexible dinner packages, etc. We have the consumption information of our customers, let’s use it to create actions that increase income.
It should be noted that, in the world of data, small independent hotels do not have systems that allow them to obtain additional information. However, it should be possible, at least, to have some relevant business indications, identifying high and low demand periods to implement certain actions.
Finally, I would like to conclude that there is no doubt that we have infinite data at our disposal. It is necessary to always consider them in a global context by analyzing trends. Verified data is always good, even if the figure is negative, because it allows us to take corrective measures for better optimization. It is clear that hotels that review this data and hold a weekly strategy meeting presenting it, modify their strategies more quickly, obtaining better results.