Smart Hotel Management - using data to increase profit
Data is the resource of the 21st century, also in the Hotel business. Read in this article how Hoteliers can turn data into longterm profit. I highlight three trends that impact how hotels are managed profitably today and in the future. To deal with the increasing complexity of today productively, hotels can leverage data to take better business decisions and release resources for more creativity.
TRENDS IN HOSPITALITY
- Travel demand has boomed over the last decades, leading to an unprecedented growth in new hotels being built. Existing hotels are under pressure, as new brands with attractive design and marketing concepts enter the market. At the time as hotel supply is increasing, risks of an economic cooldown become more apparent. Hotels need to prepare for times of tougher competition especially on low demand days.
- GenY and GenZ are and increasingly important target group, already now accounting for more than 50% of the world’s travelers. They have different booking behavior and service/product needs. They book increasingly online, dominantly via OTAs. As a result distribution cost has grown faster than revenue in last 20 years and will continue in future (leading to pressure on profit contribution). Hotels have to develop plan and define actions to reduce OTA exposure.
- Digitalization and globally connected markets are changing the market environment in the travel industry. For hoteliers an increasingly complex environment that is more difficult to manage effectively, e.g handling distribution has become very complex because of the amount channels that need to be managed. As complexity increases, more and more factors need to be taken into consideration to take right actions at the right time.
IMPACT FOR HOTELS
These trends have an impact on hotels and their profitability. Profit margins are being squeezed by increasing variable cost (OTA commissions) and less pricing power (higher room competition). While margins are being squeezed from the cost and the revenue side, hotels further struggle to manage the increasing complexity of their day-to-day commercial operations.
While many hotels struggle to effectively address the market trends stated above, it is a huge opportunity for those hotels who are adopting faster than others. Winners in this trend will be those hotels who:
- Plan ahead and optimize toward Total Profit across all revenue streams
- Maximize revenue in channels with highest profit contribution, to reduce OTA exposure.
- Use data for better decision making: take the right actions in the right time.
DATA TO PROFITS
In short, the way hotels are managed has to change, from an intuition-based and tactical management style to a more strategic and data-driven way of working. Hoteliers already use a wide range of IT systems, but oftentimes do not use the data. However data is a huge resource, and when systematically collected and analyzed, it can be transformed into actionable insights. The hoteliers competence to use this resource for better and easier decision making will continue to be crucial to sustain longterm profitability.
Similar to a software-based system in airplanes and in cars that assist pilots to navigate and steer the vehicle, software can be of tremendous help for hoteliers to navigate through changing market environments. Smart data-based assistance systems can analyze large amounts of data and only show to the hotelier what is needed to act upon. This way hoteliers can take effective decisions at any time, while keeping their mind free and receptive for the big and creative ideas.
SOLUTION FOR INDEPENDENTS
Chains and big brands have understood the power of data. They are leveraging technology in order to transition towards data-driven hotel management. Independent and boutique hotels have fallen behind, because they often lack the needed financial resources or access to talent.
We want to contribute to a world with local, creative and genuine hotel concepts. Thus we have developed a powerful tool for independent and boutique hotels, that makes it easy to take (data-driven) actions that lead to higher profits.
About Demand Calendar
We help independent and boutique hotels to achieve or sustain a strong financial performance as a base for long term success. This way we contribute to a world with local, creative and genuine hotel concepts that touch hand inspire people.
We use a software-based Profit Optimization Assistant (POA) based on automated data collection and analysis for profit-optimized action recommendation. A holistic system covering all revenue streams in the hotel, to optimize towards the TOTAL PROFIT. One tool for the whole commercial team, facilitating profit-optimized business decisions across commercial departments.