• Bg Careers

Are Hotels Using Big Data to Their Advantage?

by Jason Q. Freed, Managing Editor |

Big Data and predictive analytics are poised to make a major mark on hotel revenue management in 2017. Access to new, forward-looking data sets are expected to provide additional insight into market demand, and integrating customer data will allow hotels to better anticipate their guests’ needs and personalize every aspect of the guest stay, including a tailored rate.

But nearly every Revenue Strategy begins with a look at how your hotel fared in the past. Daily historical data provides a baseline for today’s success. STR has been providing hotels with weekly data sets on their performance, as well as how they rank versus their competitors, for more than 30 years.

Jan Freitag of STR discusses whether #hotels are using #BigData to their advantage Click To Tweet

As senior VP at STR, Jan Freitag has an inside look at the entire industry’s performance metrics, which affords him the ability to analyze myriad data sets and discuss major trends shaping the industry.

We chatted with Freitag by phone to learn more of his opinions on the future of Big Data in the hotel industry:

freitagHow do industry metrics look today?

I’m not a big believer in the “sky is falling” mentality. While we’re not in the heydays of 2014 or 2015, life is still pretty good.

We’re seeing year-to-date RevPAR up 3.3% and room rates up 3.1%. Even though occupancy growth is not so strong, we still have an all-time high occupancy and hotels are selling two-thirds of their rooms on average, which is really, really strong.

What’s a little bit harder to wrap our heads around is room rates. Given that occupancies are so high, we would’ve thought rates would follow. We’re in this prolonged muddling along.

For a hotel, how do you know if and when your market will be affected?

First of all, I would look at supply growth. In-market supply has a major effect on how hoteliers feel when it comes to pricing their rooms. If they look out their back window and see five cranes, then of course you are a little more cautious.

You also want to understand market-level GDP and what drives room demand in your certain area.

How is the availability of more data today affecting how hotels operate?

If you look at the data we produce, one could make the argument that hotels aren’t using the data to their advantage. We’re selling more rooms than ever, yet the room rates aren’t being driven as high as we expected. It takes a very sharp revenue manager and head of marketing to understand the data and price effectively.

With the increasing availability of competitor data, what are the key metrics to look at?

There is a whole host of data sets available. In addition to historical data, you want to look at TripAdvisor ratings, rate-scraping data, and data that show’s how you’re competing on certain OTA channels. All of that is important to getting a complete picture. You want to find a good, healthy medium where you look at past performance data and use that to ground future decisions.

Given rising operating costs and the importance on bottom line, is RevPAR still a common measurement of success? 

The short answer is “yes.” It is without a doubt the most available, easiest to communicate metric in the hotel space. Is that the number hoteliers should manage toward? No, you want to look at profit.

We publish the Host Almanac so you can compare profitability by chain scale, by region, even by competitive set. But from week to week that profitability data isn’t available, and I’m not sure it should be. But RevPAR Index at this point is understood from the CEO to the student.

RELATED ARTICLE

Predictive Analytics Is The Future Of Hotel Revenue Strategy

How can technology aid in the way performance metrics are shared, analyzed and used to shape future decisions?

I think every major hotel company is looking into some type of dashboard that combines STR data with other data sets, even things like housekeeping efficiencies, to create a one-stop shop.

STR released research in December that stated occupancy between 75%-85% for full-service hotels and between 71%-80% for limited service hotels will produce the highest profitability. Does this mean revenue managers should avoid selling out?

I am not a fan of the line that a good hotel is a full hotel. At some point you have diminishing returns – you have lines everywhere and you require more staffing. I believe the data there.

Of course during a citywide convention or a big rock concert, there are certainly events where you can sell more rooms than you have, and at that point you want to sell out. There are probably 10 nights a year where you can charge what you want.

But in your regular course of operations, if you can run at 78% occupancy or 75% occupancy at a higher rate, you should manage to the 75% at a higher rate.

Every hotelier should be able to make this chart with their own data — track occupancy against GOP for every day — and find their sweet spot.

RELATED ARTICLES: 

Jason Q. Freed, Managing Editor

Jason Q. Freed, Managing Editor

Managing Editor at Duetto
Jason joined Duetto as Managing Editor in June 2015 after reporting, writing and editing hotel industry news for a decade at both print and online publications. He’s passionate about content marketing and hotel technology, which leads to unique perspectives on hotel distribution and revenue management best practices.
Jason Q. Freed, Managing Editor
Email this to someoneShare on FacebookShare on Google+Tweet about this on TwitterShare on LinkedIn

Jason Q. Freed, Managing Editor

Jason joined Duetto as Managing Editor in June 2015 after reporting, writing and editing hotel industry news for a decade at both print and online publications. He’s passionate about content marketing and hotel technology, which leads to unique perspectives on hotel distribution and revenue management best practices.