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Averages Are Meaningless: Why Hotels Needs More Than Simple Metrics

20 February 2024
In hotels, we love our numbers. We track occupancy, average daily rates, customer satisfaction scores, etc. And at the heart of many metrics lies the humble average. It's simple, easy to understand, and gives us a quick snapshot of performance. Businesses use averages to gauge progress, set targets, and compare themselves to competitors.
Averages can be dangerously deceptive. They paint an incomplete and sometimes misleading picture. This can hinder our ability to uncover real insights that drive better decisions. It's time to address the elephant in the room – relying solely on averages in the hospitality industry just won't cut it.
Let's take a classic example. Imagine your hotel boasts an average occupancy rate of 70%. That might sound decent on paper. However, a closer look reveals you're wholly booked every Saturday with 100% occupancy, while you have fewer guests on Fridays. The average obscures this critical information. You might be tempted to sit back, content with your "average" performance, completely missing the point that a huge opportunity (and problem) lies hidden within those numbers.

The Pitfalls of Relying on Averages

The problem with averages is that they can mask many underlying dynamics. Let's explore why they create an illusion that can sometimes be far from reality:
  • Masking Variability: Averages have a way of ironing out peaks and valleys. Like in our occupancy example, they hide the days you're hitting full capacity and when rooms sit sadly empty. You miss out on celebrating the potential of those fantastic Saturdays and investigating the underlying causes of the bleak Fridays.
  • False Trends: Looking at your average metrics over time might falsely indicate that things are steady. In reality, your hotel could fluctuate wildly. Say your monthly occupancy has averaged 60% for the last six months. This might hide the fact you've been on a roller coaster, going from 40% occupancy to 80% and back again.
  • Missing Outliers: If a few specific days drastically outperform or underperform the rest, the average doesn't spotlight them. What if this past New Year's Eve, you had 95% occupancy while you usually struggled during that period? That's a valuable outlier! Your average won't scream at you to figure out why that day was different and how to replicate that success.
Averages have their place, but relying on them too heavily can close your eyes to the opportunities and issues that demand your attention. It's time to dig deeper.

Getting Actionable Insights Beyond Averages

So, if averages give us an incomplete picture, where do we look to find actual insights we can act on? The answer lies in going more granular with your data analysis. Here's how:
  • Segmentation: Ditch the one-size-fits-all approach! Break down your data into meaningful segments. A few great ways to do this include:
    • Day of the Week: Like our occupancy example, this lets you pinpoint high-demand and low-demand days.
    • Time of Year (Seasonality): Discover the impact of peak seasons, holidays, and slow periods.
    • Room Types: Is there a preference for suites versus standard rooms? This affects inventory and pricing decisions.
    • Source of Booking: Did guests book directly through your website or a third-party platform? This informs marketing and commission strategies.
  • Distribution: Visualize how your data points are spread out. Instead of just the average, look at the range. Tools like histograms are excellent for this – they'll quickly show if your occupancy clusters around a specific number or is widely scattered.
  • Focusing on Extremes: Look at your best and worst days, weeks, or periods. Ask yourself:
    • What worked exceptionally well and led to that spike? Can you replicate it?
    • What's dragging down performance on low-performing days? What needs to be addressed?
By exploring your data through these lenses, patterns and actionable areas that a simple average would completely mask will emerge.

Real-World Applications

Moving beyond averages leads to more intelligent decision-making; it translates into better, more informed decisions that directly impact your bottom line. Here are some examples of how those insights work in practice:
  • Staffing: Knowing that Saturdays are your busiest day means you can avoid understaffing and being overwhelmed, or conversely, avoid overstaffing on quieter days. It helps ensure the correct number of skilled employees are on hand when you need them without wasting resources when demand is low.
  • Pricing: While a simple discount for low occupancy periods might seem tempting, you're right that it can be ineffective and can devalue your brand. Here's a more strategic approach:
    • High-Demand Periods: Target premium guests with high-demand prices while potentially bundling in value-added extras (upgraded room, complimentary breakfast, etc.) that further justify the higher rate.
    • Low-Demand Periods: Rather than slashing prices across the board, consider smaller, symbolic discounts paired with add-ons or experiences that attract guests without undermining your brand value. This helps you create a unique offering and potentially entice travelers from competitors.
  • Marketing: Target your campaigns strategically in terms of both timing and channel:
    • High-Demand: Focus marketing efforts on attracting guests willing to pay those premium prices. Highlight quality and memorable experiences to the right audience.
    • Low-Demand: Don't neglect marketing during slower periods! Craft promotional messages focusing on the carefully bundled added value. Consider niche targeting by segment – perhaps your specific area or hotel can cater well to weekend getaways, staycations, or business travelers even during off-peak times.
This comprehensive approach helps you maintain brand integrity, strategically boost occupancy, and maximize revenue potential.


Averages, while useful for a quick overview, are far from the best compass for navigating the complexities of the hospitality industry. Unquestioningly trusting them can lead to missed opportunities, misguided decisions, and a failure to uncover the proper drivers of your hotel's performance.
Granular data analysis, by contrast, is the key to unlocking actionable insights. By breaking things down into segments, exploring distributions, and paying close attention to the extremes, you can pinpoint areas of strength, address weaknesses, and position your hotel for success.
The call to action is clear: it's time for hoteliers to embrace a more sophisticated approach to data. To step beyond the realm of simple averages and dive into the granular details that can reveal hidden patterns and fuel more innovative strategies. Only then can the hospitality industry truly maximize its potential and optimize outcomes.