By Laura McNally, IDeaS Revenue Solutions account director
Data-driven decisions during a crisis
It’s easy in times of crisis and uncertainty to be led by our emotions, and to make decisions which we wouldn’t normally make. However, as we keep hearing from governments and organisations like the WHO, now is the time to listen to the science. Your best defence in uncertain times is level-headed, data-driven decisions.
Throughout history, the hospitality industry has weathered tough periods but continues to prove its resilience. Although we can’t press the restart button on 2020, we can launch into repair mode now. Don’t make decisions which you might regret later. Instead, take a long-term and strategic view of what is best for your business, not just for the next few months, but for the next several years. Be flexible and adjust your strategy as the situation evolves. Although cash flow is key during demand downturns, hoteliers should invest in future opportunities in their people, processes and technology to gain a competitive advantage in the good times to come.
There is light at the end of a tunnel – economist Roger Bootle of Capital Economics says the medium-term prospects for the hospitality industry are “extremely good” and has predicted a “V-shaped” economic recovery.
Having the right tools in your tech stack for all the data you need
Monitor the current demand situation and identify early signs of recovery – such as what segment the demand is coming from, what country and what channels. There is plenty of data to leverage here and identify what adjustments are needed to your marketing efforts and strategies. But remember, clean data is crucial! Take the time to ensure that any displaced business is reflected correctly in the future on books figures. Now, more than ever, having correct business practices with segmentation coding is going to be the key to identifying demand.
CRS & Distribution Systems data
Analyse the data to understand the volume and value of past, current, and future bookings and the nature of cancellations. Make sure that once you have determined your re-opening strategy, you are visible on all channels at the earliest opportunity.
Hotels with an automated revenue management system (RMS) are far better positioned to adapt and respond early to all possible outcomes and leverage their data to create a single source of truth. Your business needs competitive rate intelligence and precise demand forecasting, and the best way to prepare for future uncertainty is by being certain about your own business strategies under any condition. Ensure that the data sets you are using in your RMS are the right ones – is your competitor set going to be the same in the future? Who should you be benchmarking yourself against now? Remember that bad data can mean bad decisions.
There are many benchmarking solutions in the marketplace, many of whom have a wealth of data to help you understand how the market will recover. Make sure you are also looking at
forward-looking intelligence to understand what type of demand is coming into your market and not just your own hotel.
Many revenue managers are targeted on RevPAR performance, RGI and price positioning. However, the benchmark will change, at least in the recovery period. Ensure that revenue and finance are aligned on what the goals should be. We will no doubt see more of an emphasis on profitability metrics and strategies will need to be aligned to these.
Sales & Catering, M&E booking data
With many countries globally adopting social distancing rules, which includes maximum gathering sizes, it is unsurprising that hoteliers are very nervous about the recovery of this segment. Just like with rooms data that helps us understand the behaviours of these segments, clean data is crucial. Ensure that future business on the books is held on the correct dates, and if commitment is not possible then make use of non-deduct statuses so you have a true picture of business on the books. Closely monitor booking windows, not just by segment but by number of attendees. Understanding this behaviour will allow you to flex your events strategy on minimum acceptable numbers and revenue for different event spaces.
Reputation Management & Guest feedback data
Reputation can make or break a business, and this is even more true during this global crisis. If you already subscribe to a reputation management company, closely monitor your scores in relation to your competitor set to see where you can take advantage of marginal pricing gains.
Search Engine data
Google search data for hotels, and others, can provide initial insight into the demand for hotel stays, and sentiments around travelling. Understanding when customers are starting to search, even if they are not committing to stays, will help with forward planning for targeted campaigns.
The long-range, macroeconomic outlook is something to be optimistic about. The Brookings Institute predicts a rapid expansion of the middle class over the next 10-plus years. A growing middle class means more money spent in experience-related areas, like travel. This, in turn, will support a doubling of international air passengers by 2037, as estimated by the International Air Transport Association.
As COVID-19 continues to take its toll on the global hospitality and travel community, I urge hotels to maintain a rational, data-driven focus over your revenue management and business operations.