The 5 most important variables in the hotel PMS

31 May 2022
Hotels need data to make better decisions. The data needs to have high quality to ensure that the hotel makes the right decision. Information collection is vital to have enough data to make correct decisions. Therefore, it is critically important to set up the variables in the hotel PMS correctly and build a structure that is easy to analyze.
The hotel PMS has many data fields for several variables. The best way is to build a structure with many levels so that hotels can quickly analyze the information on a high level and a detailed level. The reward for managing data is that it is easy to interpret, making it easier to understand the business and take the right actions.

Why are variables important?

The main reason to collect data is to understand the guests better. The more a hotel understands about reasons, needs, and behavior of the guest and customer, the better a hotel can provide a remarkable guest experience, sell more to each guest and find more guests. The data stored in the hotel PMS will help hotels increase customer lifetime value (CLV), save on customer acquisition costs (CAC), and reach a healthy profit. Incorrectly structured and low-quality data will make it difficult for hotels to manage revenue and expenses.
 
The purpose of collecting data is to create building blocks for market segments. Hotels can build market segments based on several variables, so hotels can design better guest experiences for specific target groups and more easily attract specific segments to stay in the hotel.
 

Data quality management

Hotels collect massive amounts of data that can be analyzed and used to drive revenue growth. High-quality data will lead to better decisions and faster success. There are five dimensions of data quality, and hotels need to pay attention to them to maximize their use of data.
 
Accuracy means, for example, that the hotel spelled the guest's name correctly, coded the reservation with the right segment, all the reservation data is correct, and recorded the guest spending on the valid transaction code.
Completeness is that the hotel has all detailed information about the guest, reservation, and transactions. High completeness means that there is no missing information.
Consistency means that data stored in different systems or locations is the same. For example, the hotel PMS and CRM's guest information is the same.
Redundancy/uniqueness means that the data is stored in one place and only once. No duplicates.
Age addresses that data should be fresh and current with values that are up to date

Analysis

Always start with the big picture when analyzing a hotel business. Therefore, a good start is to sort by size to ensure attention to the variables that can significantly impact revenue and profits. Then, drill down, if needed, to get detailed insights to secure the right decision.

The 5 most important variables

To make the analysis easier, build a simple structure for each variable. Ideally, the hotel PMS can accommodate at least a two-level design with a code and a code category. An advanced hotel PMS has several levels and provides a better data structure and more informative reports.
 
There is no universal naming convention for available fields in the hotel PMS. What is a market, segment, source, channel, type, etc.? These variables mean different things in different hotel PMS.

Travel reason

One variable should be entirely devoted to the travel reason. A prevalent starting point is the two travel reasons, business, and leisure. Under these headlines, there are many different reasons, such as corporate business travel, MICE, a relaxing weekend, family holiday, etc. The travel reasons will differ between a full-service city hotel and a resort hotel, so each hotel attracts guests based on different travel reasons. The World Travel Association defines three travel reasons: recreation and holidays, visiting family and friends, and business.

Distribution channel

Another essential variable to track is the distribution channel. The reason is to manage the Customer Acquisition Cost (CAC). Here a good starting point is direct and indirect channels, then if the reservation is online or offline, and finally, the individual channel. The structure will enable hotels to grasp distribution and costs fully.

Rate code

Hotels have a vast number of rate codes, and the large number motivates the grouping of rate codes into categories. The starting point is public rates and contracted rates. Then, there are subcategories under each category and the actual rate code on the lowest level.

Feeder markets

Feeder markets are unique for each hotel. The traditional way is to use countries or states to understand where the guest comes from and comply and report to official statistics. A better way would be to group countries or regions into larger entities and break down countries and regions into smaller areas. The hotel can then target potential guests living in specific cities or local communities.

Transaction code

Finally, the hotel needs to know what the guest buys. The standard setup is to add transaction codes for each revenue source. One reason is to comply with VAT and sales tax rules. Another reason is to map the transaction to the correct account in the accounting system. There is a balance between detailed transaction codes for each product and service and product and service categories.

Other variables

The hotel PMS collects many other variables automatically, such as the length of stay, booking window, booking date, stay dates, etc. Hotels can also use these variables to design market segments to attract guests for specific periods.