The Analytic Hospitality Executive

Implementing Data Analytics in Hotels and Casinos

Kelly A. McGuire

• Publisher: Wiley
• Year: 2016
• Print ISBN: 9781119129981
• eBook ISBN: 9781119224921
• Edition: 1
• Topic: Business
• Subtopic: Hospitality, Travel & Tourism Industry
• Index: Business

Targeted analytics to address the unique opportunities in hospitality and gaming

The Analytic Hospitality Executive helps decision makers understand big data and how it can drive value in the industry. Written by a leading business analytics expert who specializes in hospitality and travel, this book draws a direct link between big data and hospitality, and shows you how to incorporate analytics into your strategic management initiative. You'll learn which data types are critical, how to identify productive data sources, and how to integrate analytics into multiple business processes to create an overall analytic culture that turns information into insight. The discussion includes the tools and tips that help make it happen, and points you toward the specific places in your business that could benefit from advanced analytics. The hospitality and gaming industry has unique needs and opportunities, and this book's targeted guidance provides a roadmap to big data benefits.

Like most industries, the hospitality and gaming industry is experiencing a rapid increase in data volume, variety, and velocity. This book shows you how to corral this growing current, and channel it into productive avenues that drive better business.

• Understand big data and analytics
• Incorporate analytics into existing business processes
• Identify the most valuable data sources
• Create a strategic analytic culture that drives value

Although the industry is just beginning to recognize the value of big data, it's important to get up to speed quickly or risk losing out on benefits that could drive business to greater heights. The Analytic Hospitality Executive provides a targeted game plan from an expert on the inside, so you can start making your data work for you.

CHAPTER 1
Building a Strategic Analytic Culture in Hospitality and Gaming

I believe in intuitions and inspirations. . . . I sometimes feel that I am right. I do not know that I am.

—Albert Einstein

Hospitality executives struggle to find the balance between delivering a guest experience that fosters loyalty and repeat business, and delivering on their revenue and profit responsibilities to stakeholders, shareholders, or franchisees. If you invest too much in the guest experience, you could impact profits, but if you focus on too many cost-cutting measures to drive profits, you can negatively impact the guest experience.

Decisions made in one department of a hotel can have impacts across the organization. For example, without a good understanding of food cost, a marketing program providing restaurant discounts could affect profitability. Without understanding check-in and checkout patterns, a labor-savings initiative might create long lines at the front desk, impacting the guest experience. Today, your service mistakes are broadcast through social channels and review sites as they happen. The competition is no longer just the hotel next door, but it is also third-party distribution channels and alternative lodging providers like AirBnB, all waiting in the wings to win your guests from you. On top of all that, recent merger and acquisition activity is creating scale never before seen in this industry, and global economic conditions continue to be unstable.

When the stakes are this high, you need something to help shore up that balance between delivering an excellent guest experience and meeting profit obligations. Analytics can be that thing. Tarandeep Singh, Senior Director, Revenue Performance and Analytics, Asia, Middle East, and Africa says, “Analytics is like GPS—it helps you be on track, and even pings you when you go off.” Fostering a culture of fact-based decision making ensures that the organization can find the right direction, understand the trade-offs, hedge against risk, know the next best action, and stand the best chance to be competitive in an increasingly crowded marketplace.

Einstein reminds us in his quote at the beginning of this chapter that there is still room for intuition and inspiration in this vision. Your intuition can be backed up by the data, getting you closer to “knowing” you are right. Inspiration for the right action can come from what the numbers tell you. Intuition and inspiration are even more powerful when paired with curiosity and questioning. David Schmitt, former director of Interactive Marketing Operations and Analytics for IHG, says in his blog, “The questions from the business are our North Star, the guidance and direction that provide clarity to analytics efforts.”¹

The goal is to cultivate a culture of asking good questions and letting the data provide the answers. There are so many examples today of companies who have successfully, and sometimes famously, derived insight from their data assets through analytics, which helped to create a huge competitive advantage or some remarkable innovation. This could be you. Let’s talk about the characteristics of a strategic analytic culture first, and then I will tell you how this book can help you to build a strategic analytic culture in your own organization and set yourself up for success through analytics.

Strategic Analytic Culture

So, what does a strategic analytic culture (SAC) look like? Figure 1.1 outlines the interrelated components of a SAC.

Figure 1.1 Strategic Analytic Culture Framework

A strategic analytic culture starts and ends with executive management commitment. This level of support is required to make the necessary investments in people, process, and technology, as well as to ensure the alignment among departments that is critical to enterprise-level thinking.

The executive management team uses analytics to set business strategy. Rather than being guided by individual intuition or aspiration, the data and analytics offer a fact-based pathway toward the strategy, which is based on market conditions, customer characteristics, and the company’s operating circumstances.

The foundation of any analytics program is an organization-wide commitment to data management. Data management programs include:

• Data governance to provide data definitions and guidelines for storing and accessing information
• Data integration to ensure that data from disparate systems is matched and consolidated
• Data quality programs to ensure data is cleansed before being used in analytics
• Data storage infrastructure that facilitates access for analytics and reporting

An all-encompassing data management strategy facilitates enterprise use of analytics. Most organizations have isolated pockets of analytic capability, whether it be in revenue management, marketing, or finance. Enterprise use of analytics brings these siloed departments together, ensuring that decision making is not done in isolation.

Mark Lomanno, partner and senior advisor for Kalabri Labs, in an interview in the blog The Analytic Hospitality Executive, said that the role of analytics is becoming increasingly centralized in hospitality. “Traditionally the role of analytics has been more in the financial metrics measurement category, to some degree in the operations category, and in the marketing category; however, in the future all those will come together,” Mark said. He predicted that over time, online hotel reviews and comments in social media will replace traditional guest satisfaction measures as the primary gauge of customer satisfaction, and that companies will be able to start predicting occupancy and rates by the quality and nature of the hotel’s consumer comments and reviews. “This will force operations and marketing to work very closely together to react very quickly to what the consumer is saying,” Mark said.

Mark’s prediction points to the need to break down silos, improve communication, and synchronize decision making. When the entire enterprise is aligned around analytics, it creates a culture of fact-based decision making. You’ve probably heard the saying “In God we trust, all others must bring data.”² Companies with a SAC back up all of their decisions with data and analytics, rather than instinct and internal influence. This doesn’t mean that you stifle creativity. It means that creative thought is supported by an analysis to back up conclusions or reinforce decision making. In fact, strategic use of analytics can help organizations become more creative and more agile when it uncovers insights that were not apparent on the surface.

Ted Teng, President and CEO at The Leading Hotels of the World provided this perspective in a video interview for SAS and the Cornell Center for Hospitality Research: “We are an industry of emotional decisions. We badly need analytics and good data for us to make the right decisions.” Ted explained that the hospitality market has completely changed and industry operators can no longer rely on how they did things 20 years ago. “There’s a lot of talk about big data out there. I am happy with just small data—some data—that allows us to make better decisions that are based on facts rather than based on our emotions.”

Where is your organization in this cycle? Are you getting stuck at executive commitment? Perhaps it’s been too difficult to build a data management infrastructure? Is analytic competency still residing in pockets across the organization? This book is designed to help you achieve the SAC vision from the ground up, or from the top down if you are fortunate enough to have that kind of power and influence!

Moving Ahead and Staying Ahead with Prescriptive Decision Making³

Most hospitality organizations today recognize the need for data-driven decision making, and they are making strides in that direction, or at least planning for it. In marketing, managers want to understand the customer better to improve targeting and value calculations. Operations knows that demand forecasting can support better staffing and ordering decisions, and finance recognizes that performance analysis drives opportunities for efficiencies and strategic growth. As organizations embrace data, analytics, and visualizations, they evolve from “gut-feel” reactive decision makers to more proactive, forward-looking decision makers.

I believe that hotels and casinos are at a turning point in data and analytics. Most hospitality companies have implemented some level of data management and business intelligence, or at least are on the path. Many hotels and casinos have made investments in predictive analytics solutions for revenue management or marketing. All organizations have at least some desire to provide access to the right information at the right time to the right resources to make the right decisions. If organizations successfully build out their data and analytic infrastructures, they will be part of the way there. If they are able to successfully leverage the analytic results across their organizations, they will get ahead and stay ahead.

Analytic solutions are simply decision support tools. They must be used by managers who have the experience to interpret the results and take the appropriate actions. Revenue management systems, for example, drive revenue because the revenue manager can interpret the price and availability recommendations and implement them as part of a broader pricing strategy. The jobs of the revenue management system and the revenue manager are not the same. A hotel cannot simply hook up the revenue management recommendations to the selling system and walk away. At the same time, a revenue manager can’t process the millions of pieces of information required to understand market opportunity by hand. However, a great revenue management system managed by a business-savvy revenue manager is a winning combination.

An executive from a large hotel brand told me that one of the driving factors for their business analytics investments is to get better information into the hands of their senior executives faster. “Imagine how much more effective smart and charismatic leaders would be in an investment negotiation or even an internal meeting if they had instant access to performance metrics, to support whatever questions they happen to get asked,” he told me. “We have great, highly experienced leadership, they are doing a good job today, but I’m sure they could drive much more revenue with better information at their fingertips the moment they need it.” It’s not that the information doesn’t exist, or that there aren’t standard sets of reports available. The difference is in the flexibility of the data structure and speed of access to the information. To be able to access information in the right format at t...

Table of contents

• Cover
• Series
• Title page
• Copyright
• Dedication
• Foreword
• Acknowledgments
• About the Author
• Chapter 1 Building a Strategic Analytic Culture in Hospitality and Gaming
• Chapter 2 Data Management for Hospitality and Gaming
• Chapter 3 Data Visualization
• Chapter 4 From Reactive to Proactive Decision Making: Advanced Analytics in Action
• Chapter 5 Analytics for Operations
• Chapter 6 Analytics for Marketing
• Chapter 7 Analytics for Sales
• Chapter 8 Analytics for Revenue Management
• Chapter 9 Analytics for Performance Analysis
• Chapter 10 Analytics for Gaming
• Chapter 11 Pulling It All Together: Building an Analytical Organization
• Appendix 1 Case Study from Infor: Analytics Opportunities in Operations
• Appendix 2 Case Study from IDeaS: Meetings and Events Revenue Management
• Appendix 3 Why Dynamic?
• Appendix 4 Chapter Questions
• References
• Index
• EULA