Using data to maximise occupancy Data analytics has long been the bedrock of good management in most industries including the hospitality industry, but we are entering an era of digital transformation with business intelligence in the hotel industry. When you think about the volume of data gathered in most accommodation businesses it has become impossible to manage this information manually or by simply using spreadsheets now. The list of available metrics is almost endless and it’s not just your own business that you should be looking at. Hotels operate in a highly competitive environment. So effective data analytics includes information on both your own performance and that of your competitors. So, what types of hotel industry business intelligence are going to help you to maximise occupancy and increase revenue? First of all, we need to understand how you actually calculate your hotel occupancy rate.
How do you calculate occupancy rate? Occupancy rate is the percentage of occupied rooms in your hotel at any given time and is one of the most simple but vital pieces of hotel business intelligence you have at your disposal. It is calculated by dividing the total number of rooms occupied, by the total number of rooms available and multiplying by 100 to give you a percentage. Analysing the occupancy rate by room type allows you to discover what room types outperform ResortNews | August 2022
the average daily rate (ADR) and revenue per available room (RevPAR). Let’s take a look at RevPAR in a bit more detail.
Revenue per available room (REVPAR)
Sylvia Johnston, Senior Executive, HiRUM Software Solutions
others and what room types you have the opportunity to fill.
Factors affecting hotel occupancy rates There are obviously many different factors that could affect your hotel occupancy rates but one of the crucial factors that many overlook and that can help set you apart is being able to understand not only your own data but that of your competitors too. If you keep a close eye on the following hotel industry business intelligence metrics and adjust accordingly you put yourself in the strongest position to be able to fill as many rooms as possible, as profitably as possible.
Pricing strategies Understanding revenue performance and the impact of pricing strategies can be time consuming and complex if you don’t have effective hotel business intelligence software to capture, analyse and simplify the data. Being able to accurately predict the demand for rooms means that you can price effectively. Intuitive pricing is also vital to ensure that your rooms are always listed at the best price, adjusting rates and closing out channels based on your performance.
This is considered by many in the accommodation industry to be one of the most important hotel business intelligence metrics. Understanding RevPar helps you to maximise the revenue generated per room. RevPAR is calculated by using the Average Daily Rate ($) and dividing this by the Occupancy (%) to understand how to effectively price available rooms. It’s even more valuable if you can compare RevPAR against competitors so that you can adjust your pricing in line with the market. However, consideration needs to be taken when working towards improving your RevPAR (attracting more guests/higher occupancy) as the goal should be to improve financial performance overall. So, you need to keep in mind that more guests often mean higher costs involved with accommodating them.
Distribution channel analysis Understanding which of your marketing distribution channels is delivering the most bookings
and which are under-performing can ensure that you focus your marketing budget effectively. You should also be paying close attention to the distribution cost of each channel e.g., commission and taxes.
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Business intelligence for the hotel industry:
It’s important to recognise that identifying where the greatest number of bookings are coming from and the most amount of revenue can often differ. Ensure that distribution channel analysis is built into your hotel business intelligence metrics so you can unlock insights into the revenue that is generated from specific sources and develop a greater understanding of how this impacts your bottom line.
Customer profiling and segmentation Digging into the data you hold about your guests can help you create a ‘target profile’ which, in turn, enables you to identify more of your most profitable customers. This can include looking at your business intelligence related to your visitor geo-location, demographic profile e.g., age, family status etc., the number of returning customers and preferred room types. Effective customer segmentation means you can create targeted marketing campaigns that avoid budget wastage.
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The revenue management business intelligence metrics that are really going to be vital in helping you achieve this include MANAGEMENT
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