Paralysis From Over-Analysis
By Steve Van, President & CEO, Prism Hotels
We have all heard the old cliché that "less is more", and, while there is a grain of truth in the notion that simplicity and clarity are sometimes preferable to complexity, the reality is that, regardless of the circumstances, more information is almost always a better bet.
Today we are seeing the tension between these two ideas play out in the hotel industry, where revenue management has exploded with new approaches in recent years-almost all of it facilitated by an avalanche of previously ignored or unavailable data.
Consider just how sophisticated revenue management has become in the hotel industry. Today we have new tools and new technologies telling us who our customers are, when they book, how they book, who they are booking for, what price point they are booking, and where they are booking from.
Technology is enhancing the management of the 24-hour cycle of supply and demand that is the beating heart of our business. Automated systems gather, organize and dump data nightly to be made available for immediate forecast updating. Technology makes it possible for revenue optimizers to see immediate year-over-year variances from any angle and through any lens. We even have technology that provides us with what amounts to a window into the future, supplying detailed pace and booking activity to assist in predicting which pieces of business are integral to the bottom line.
The sum total of these technological and operational shifts constitutes a leap forward for our industry-all in a relatively short amount of time. In fact, most hotel professionals would readily acknowledge that we are still in the midst of this revenue management revolution: we are still learning how to leverage these tools, how to harness this new data gathering power, and how to optimize these resources to turn raw information into usable insights.
The big question (and perhaps the only question that matters when it comes to revenue management) is what now? We utilize technology to gather all of this data, so that we have all of this data. But what is next: what do we do with it in order to take full advantage of this new technological and informational capacity?
Because even with all of the information that technology and automation provides, the critical question is how the revenue optimizer actually knows the precise guest, price and time in order to optimize profits? When revenue management specialists are hired, are they given a crystal ball? Are they truly "Wizards of Optimization"? In many cases, the answer is an unequivocal no. The true difference maker is how all this intelligence from technology and automation is interpreted-and in return implemented-to improve the bottom line.
Bridging that "interpretation gap" and extracting drops of critical information out of a firehouse of data requires both a broad understanding of the challenges that revenue optimizers face, and a working knowledge of the specific practices and priorities that can help demonstrate that when it comes to the hotel industry, less is most definitely not more.
To understand why finding the right solution (or the right combination of solutions) can be such a challenge, even for some of the most experienced industry professionals, we first have to appreciate the many complexities and-in some cases-flat out misinformation that plagues this still-evolving industry specialty.
Pitching Inside - The range of possibilities is virtually endless when it comes to choosing the right technology to enhance the revenue optimization of a hotel. Anyone in this line of work knows all too well just how many sales calls, emails, and presentations from any and all types of systems vendors are received daily. Bold promises are made. Powerful features are touted and presented as potential game-changers. It can feel confusing, and even overwhelming, and knowing what to believe and what not to believe-and figuring out what the right system is for your property is a very real challenge.
System Failures and Incompatibility Blues - As part of their everyday operational reality, revenue optimizers frequently have to deal with multiple systems-whether they are from the brand, from third parties, or are specific to the reporting framework. It can be difficult to know how to prioritize and coordinate each of these. Further complicating matters is the fact that these systems rarely interface with each other seamlessly (particularly when dealing with systems and software from third parties). This structural and sometimes systemic incompatibility can stifle the automation functionality that has become such an integral part of the data gathering and analysis process. In the most dramatic examples, the resulting inefficiency and lack of integration can compromise or even negate some of the gains that the systems were designed to deliver.
Time and Money Crunches - It takes significant amounts of time and money to research and implement new technology. It takes time to find the right system that includes all of the features and performs all of the tasks that the revenue optimizer needs it to do-time required to not just evaluate and implement the new technology, but also to train on the system, and money to purchase and invest in the personnel required to make the most of that technological and operational horsepower.
Maintenance Requirements - Maintenance requirements are a necessary fact of life in this brave new world of revenue management technology-and another obligation that revenue optimizers have to fulfill. The job does not end once new systems are purchased and put in place, and not even once your team is fully trained: systems have to be carefully maintained and regularly updated. The old saying about "garbage in, garbage out" applies with all technology, and revenue management systems are no exception: even (and perhaps especially) the most powerful and effective cutting-edge systems need regular care and attention.
Tech Tips and an Optimized Bottom Line
So what are those specific steps and strategies? What should your priorities be as a revenue optimizer? And what are the accepted best practices that will improve your chances of utilizing this powerful new suite of technology tools to its full potential?
Aim: Hire - Hire right - At a time of great change within this segment of the industry, one thing remains constant: great talent is critically important. The best tech in the world is useless without the right people in place to use it and interpret its findings. Hotel decision makers should make it a priority to hire a revenue optimizer that can manage and own the data-not have the data own them. The best revenue optimizers share certain common traits, including leadership skills, great communication abilities, a detail-oriented mindset, the ability to respond quickly and take calculated risks, and the capacity to think like an owner at all times.
Purchasing Perspectives - Make it a point to get your revenue optimizers closely involved in the process of researching and purchasing any new systems. Ensure their buy-in from the beginning. Remember that they will be the ones using the system, and their comfort level with the tech is of the utmost importance. They will also be the ones who typically have the best insights in terms of what capabilities you should be looking for, and can help you make a more informed and strategic selection/purchasing decision.
Automation - Part of the efficiency equation, of course, is unlocking a level of automation that enables revenue optimizers to be more efficient-and allows sufficient time for analysis of that data that has been gathered. That technology and those automated systems must fit the needs of the revenue optimizer, however. Be sure to purchase technology that will assist them in automation and compilation tasks, freeing up their time to analyze, communicate and collaborate with the hotel team.
No Silos - Keep in mind that revenue optimizers cannot work in a silo: they are a part of the team, not a separate entity. To be effective, revenue optimizers must collaborate closely and seamlessly between all other departments in the building. It is their job to collect, own and analyze the data-but the next step is to be able to use that data and those conclusions in discussions with other departments. Doing so collaboratively and consistently will ensure that you are making the most profitable decisions.
Talk the Talk - Clear communication is vital. Take the analysis that the automation and technology provides and share it with the rest of the hotel. Remember that other departments do not typically have access to that information, and they can often use the analysis the revenue optimization team conducts to help make better decisions for their own departments (for example: scheduling based on the current, updated forecast).
Revenue optimizers today are inundated with the extraordinarily detailed and timely data that powerful new technologies provide. In the end, however, it is not the technology nor the automation of the data that is the real difference maker. What separates the good from the bad when it come to revenue optimization-and what ultimately translates into a healthier bottom line-is how well revenue optimizers are able to implement and share the knowledge that all of that data provides.
Steve Van, President & CEO of Prism Hotels, leads Prism to increase the value of clients' hotels. Founded in 1983 Prism works for special servicers, lenders and owners to rapidly reposition and turn around under-performing hotels. Mr. Van was the first franchisee for Omni Hotels and for Doubletree Club Hotels and serves on the Doubletree Owners Advisory Board. He is a member of CMSA, MBA and the State Bar of Texas. Past professional and civic involvement includes Young Presidents Organization, Director of the Texas Turnpike Authority, Assistant Attorney General of Texas and Director of the Atlantic Treaty Assembly (NATO’s US arm). Mr. Van can be contacted at 214-257-1011 or firstname.lastname@example.org Extended Bio...
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