The Analytics Tsunami: Are You Ready to Ride its Wave?

I speak a lot at industry events about the power of today’s sophisticated analytics. With many unique challenges facing the industry today – notably around an increasingly competitive distribution landscape – hotels are looking for the best ways to account and solve for the complexity in the market.

With new entrants (think: Airbnb and Google) and growing powerhouses (such as Expedia and posing a potential problem for hotel direct business, discussions have been shaping around how to tackle these mounting revenue management and distribution challenges. We’ve been seeing an emergence of important concepts like big data, machine learning and business intelligence landing at the forefront of many industry conversations, but they can all mean different things to different people. What they all have in common, however, is they are all components of today’s sophisticated analytics.

The analytics tsunami is here and it’s engulfing revenue management with no signs of stopping – nor should it. Analytics uses data mining, machine learning and statistics to churn out optimal pricing and inventory decisions for hotels. And with the sophistication and adoption of analytics growing tremendously, there’s a massive opportunity to evaluate your own analytical capabilities – both as part of an organization or as an individual – and map out how analytics can move you from being reactive to proactive and predictive in revenue management.

Analytics help you move beyond the normal revenue management processes into harnessing your data and forecasting capabilities to explore, predict and optimize your revenue results. Today’s analytics help you explore why patterns and trends are happening so you can predict whether you can anticipate similar or different results moving forward – and this is where analytics becomes really exciting. By determining why specific results are emerging – and if you can expect them to continue – you can then start to optimize them by taking action to get the best effects and deliver revenue performance.

There are many aspects of analytics that play a role in delivering optimal results: High performance forecasting capabilities provide a dynamic selection of hundreds of forecasting algorithms and models to give you the best possible results; granular data and decisions can be provided for multiple hotels by departments, segments, room types, day parts and rate codes; predictive analytical tools allow you to understand the impacts of changing your strategy; advanced pricing and inventory controls maximize revenue opportunities; and expanded data sources such as reputation, competitive performance, rate shopping and value of demand can be integrated into your decision outputs.

To take advantage of these approaches and ride the analytics wave, there are three key components to take into consideration:

  • Technology: Do you have a best-in-class infrastructure and the right tools available? The benefits of sophisticated analytical technology provide a solid foundation from which to build your performance strategy.
  • Processes: Optimal processes should not only look at taking advantage of the analytics outputs, but almost as importantly the inputs. To make analytics work effectively for your organization, the company culture needs to be geared towards a common goal of data integrity and effective implementation of analytical decisions.
  • People: Who is going to apply sophisticated analytics in your organization? Increasingly, the role of a data scientist is becoming an essential component of an effective revenue management strategy. In-house resources are becoming more common-place in the larger organizations. Cross-departmental data scientists can apply their skills where needed at the right times, while balancing the overhead costs to maintain a new industry role. External resources and third parties that can provide analytics as a service are also available. Dedicated support services for your analytical technology and processes will ensure you can perform at your maximum potential.

Accounting for these components will ensure you deliver the most optimal revenue results – helping you confidently ride the analytics tide and avoid drowning in today’s sea of big data and distribution.

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