It’s time for good news and bad news.
The good? Hoteliers now have access to more critical guest, operational and market data than ever before. The bad? It’s also easier than ever to suffer from “analysis paralysis” as revenue leaders turn to analytics to help them develop growth strategies.
It’s a common problem: Even though all industries are making significant strides in data collection, a Forrester report found that 74% of companies expressed a desire to be “data-driven,” but only 29% feel they are successful in connecting analytics to their strategies.* That’s a substantial difference in big data usage, but hoteliers can close this gap with a thoughtful approach to how they formulate strategic plans.
To start, there are some common mistakes to avoid when it comes to strategic planning. In a recent webinar, Joyce de Kruif, Senior Industry Consultant at IDeaS, shared some of her insights on the mistakes hoteliers often make.
Confusing aspirations and tactics with strategy
Data collection and enhanced analytics capabilities make it easier to track a wide range of key performance metrics. But sometimes this wealth of measurable, granular information can lead to metrics tunnel vision, where well-meaning leaders claim their strategy is a KPI-focused statement of “increase RevPAR by X%.”
While that statement is not a bad thing to keep in mind, it is simply a goal to measure the effectiveness of a strategy, not a strategy in itself. You may have a goal of “making more money,” but what are you doing to achieve that? This leads to another common problem in strategic plans: confusing tactics with strategy.
It’s very easy to make this mistake, as both tactics and strategies address how you’re going to solve a problem or achieve a goal. But a strategy should focus on overall positioning, and tactics are the tangible steps you’ll take to get there.
For example, an overall goal of increasing hotel revenue by 2% could be supported by a meetings and events performance improvement strategy, which is carried out tactically by using software tools to improve response times to requests for proposals, better assess group business opportunities, etc. Individual tactics can also be measured, but it is important to ensure that these tactical measurements do not conflict with the overall goal.
Losing the competitive focus
For hoteliers struggling with strategic planning, the result can often feel a lot like dusting off last year’s plan and saying, “Let’s do it again, but better.”
While sometimes better execution of the same strategy is a valid measure, it is important not to become complacent about the strategic approach. If you are doing strategic planning, look at the situation from a fresh perspective and ask yourself, “How does this give us a competitive advantage?”
Strategic planning efforts must take into account the competitive landscape. What are the threats? Are there opportunities for your property to differentiate itself? What can you realistically do to address or take advantage of them?
Don’t get us wrong, shoring up weaknesses by implementing revenue management tools and best practices is a great way to gain market share initially. But you’ll need to look outward if you want to continue to build on that success and stop being “on par” with your competition.
Failing to link strategy to data insights
It happens all the time. Well-intentioned strategic plans are drawn up, but they end up being forgotten because they are not based on data that relates to them and become irrelevant in a short time.
An insight is simply a learning that generates new value. If your strategy is not based on data-driven insights, it is very likely that it will not generate value for your organization or your guests. Of course, it takes some effort to identify those insights efficiently, but there are some approaches that can help:
• Use dashboards and reporting visualizations: Compiling data into easy-to-understand reports and visualizations helps you quickly spot really noticeable fluctuations in key metrics. With these elements, it’s easier to identify important (statistically significant), useful, and surprising (BUS) information that deserves further investigation.
• The “5 Whys” technique: Once you’ve identified the data points of interest, it’s time to take a deeper look at what’s causing them. Taiichi Ohno’s “5 Whys” approach, which involves asking “why”-based questions, is a simple way to get to the root cause and reveal areas of opportunity.
• Forward-thinking data analysis: It’s understandable that many revenue leaders spend time analyzing reports on past performance, but that doesn’t leave much room for formulating future hypotheses and opportunities. Spending time simply being curious and exploring correlations and trends can be fruitful.
The right tools for the job
Often, the biggest obstacle to developing data-driven strategies is time. Advanced automated revenue management systems significantly reduce the time spent on tedious tactical efforts and compiling reports. This helps revenue leaders find time to dig deeper into the valuable strategic insights that provide a true competitive advantage.
Could your hotel benefit from a revenue management solution? Check out our Ultimate Buyer’s Guide to learn about key benefits, considerations, and more.
*Brian Hopkins, Ted Schadler, James McCormick, “The Knowledge-Based Business,” Forrester
