“Why?”
If you’ve spent enough time around young children you’ve likely heard this refrain repeated an almost incredible number of times.
While the constant struggle to explain things like why a tile floor is shiny or why chocolate tastes great is enough to wear out even the most patient of parents, there’s power in that little one’s approach.
Asking, “Why?” isn’t just a blunt instrument used by kids to unintentionally drive their parents up a wall with their well-meaning curiosity. It’s how we all began to investigate the world around us and develop an understanding of what’s what. And while hospitality professionals have built up enough know-how to drastically cut back on the need to ask why for most subjects, tapping into that childlike curiosity when working with data and developing strategic plans is actually an important skill to refine—and tools like IDeaS Optix for G3 RMS can help facilitate.
Using “why?” to improve your strategies
Strategy has a lot of definitions, but when boiled down it ultimately is an exercise in problem solving. As a consultant, one of my favorite options for digging deeper into solving client problems is to use the “5 Why’s” technique. This approach was originally popularized by the founder of Toyota, Taiichi Ohno, who stated, “By repeating why five times, the nature of the problem as well as its solution becomes clear.”
Let’s walk through an example from a client I’ve recently worked with. We looked at their data using Optix and applied this “Why?”-based technique to better understand what opportunities there were to refine their revenue strategy and implement effective changes.
The first why was their initial observation: Why is revenue per available room (RevPAR) not as high as we anticipated and not conforming to market growth expectations? While both occupancy and average daily rate (ADR) were strong, we noticed in the Optix dashboards that ADR growth was softer overall.
The second why, naturally, was: Why is ADR growth softer? For this question, the default starting point is to look at market segmentation performance. This step usually already starts to unearth a lot of insights, but as we drilled down and examined through various lenses like day of week, length of stay, channel and so on we discovered that the weekday ADR growth was slower than weekends. When we looked at channel performance, we also discovered that ADR for channels online travel agency (OTA) and Brand website had a slower growth than other channels.
The beauty of Optix is that once you’ve identified two potential culprit channels, you have the ability to take a closer look at each—leading to our next “why?”.
The third why in this example was: Why are these channels’ ADR pacing softer than other channels? The answer to this was found by exploring performance by room type. We considered the following:
- The state of each channels’ mix of rooms versus suites
- Standard rooms versus premium rooms
- Comparing the room types booked against the room types where guests actually stayed
Optix provides a helpful report that shows the booked and stayed occupancy percentage by room type as well as ADR. With this report, we discovered that some premium room types had sub optimal booked occupancy while ADR was really high—leading us directly to our next question.
The fourth why was the investigative: Why are some premium room types not being booked? To answer this, we needed to bring in the operations (front office, reservations, housekeeping) teams and present our initial findings. They explained that they found some of the property’s lake view rooms hard to sell as guests were skeptical of the value at that price point. A cross-reference with Google Analytics data also found that conversion and click-through rates for these types of rooms were lower that others.
With that data-based confirmation, we were able to zero in with questions that get to the root of the issue.
The fifth why directly lead us to making concrete changes: Why can’t people see the value of these rooms? The property in question had a total of 125 rooms and had 15 room types. We found that when a guest searched for availability, they were often overwhelmed by choice and the differences between room types were not clear. What was clear was that the property could benefit from an exercise in room type simplification. With the help of the operations team, we were able to consolidate room types, bringing the initial 15 down to eight.
Once implemented, this change led to an immediate uplift in conversion on the direct website and OTA sites.
The result? In the first six months, ADR of premium room types grew 18 percent greater than the standard room types. The brand website saw an uplift of 200 percent in conversion, and as a result, a 14 percent change in mix of business toward the direct channel.
Getting to the root of it
As you can see from this example, revenue intelligence tools like IDeaS Optix, when paired with an investigative approach, can drive substantial—and profitable—improvements to your revenue strategy. By continuing to dig deeper into the data, we were able move from being aware of a potential problem all the way down to identifying and implementing tactical and strategic changes to improve for the better.
That’s the power of “Why?”—and perhaps why you should nurture the insatiably curious toddler version of yourself.
IDeaS Optix is a powerful tool for hospitality revenue managers looking to develop strategic solutions. To learn more, visit the IDeaS Optix product page.
