White Paper: Hotel Revenue Management. Why The Time Is Right For Business Intelligence

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1 White Paper: Hotel Revenue Management

2 Introduction Effective revenue management and price optimization are essential to any hotel operation, yet too many hoteliers are making crucial revenue management and sales decisions based on stagnant data, incorrect data, or no data at all. In fact, few realize the gold mine of performance data that exists within a property s own systems, and those who do often spend hours each day collecting that information manually a process that is inefficient, prone to errors, and leaves less time available to analyze the data that has been gathered. Business intelligence automates the process of extracting data from multiple sources, organizes and presents it in a way that allows decision-makers at the corporate and property level to quickly review and act on the insights revealed, enabling data-driven outcomes that positively impact the business. The Challenge: Untapped Insights Many hoteliers are unaware of the wealth of data available across their organization because they only see what s included in operational reports which are static and limited in scope -- generated from their property management system (PMS). Yet the hotel transaction data captured by the PMS yields a great deal of information with which managers can create forecasts and take action. And that s just the tip of the iceberg. Beyond the PMS, there are multiple, valuable sources of Industry Factors Growth by acquisition. A strong appetite for growth continues to spur acquisitions in the hotel industry. In 2014, hotel investors spent $18.5 billion acquiring properties, according to STR Analytics Hotel Transaction Almanac. As new properties and brands come on board, they bring with them information systems that are likely incompatible with others in the portfolio, creating a logistical challenge for those tasked with comparing performance across the business. Business intelligence solutions can pull data from disparate systems and generate accurate, standardized reports on a daily basis. Competition from OTAs. The proliferation of online travel agencies and other third-party booking sites have impacted distribution costs and weakened the connection between hotels and their guests who book online. Business intelligence tools provide the data hoteliers need to create strategies that reconnect them to their customers and encourage direct bookings. LetItRain.com Page 2 of 6

3 data to manage and mine from other systems within the hotel from revenue management, sales and catering, forecast and budget systems to rate shopping data. External sources, such as Smith Travel Research (STR), can and should also be tapped for competitive data. The absence of a centralized, automated process, however, often leaves the manual task of gathering and merging data from various systems to several full-time employees whose time could be better leveraged elsewhere. This inefficient, lengthy process tends to focus on highlevel data only, missing crucial details that would be available by drilling down and could be used to analyze historical and current performance as well as future projections. Compounding the problem are manually produced performance reports that are subject to errors and contain only a fraction of the relevant data captured by hotel systems. What s more, the data that these reports do include can be interpreted in various ways by different managers, leading to less-than-reliable results and conflicting recommendations. And, reports are often not presented in a format that enables quick review and action. Together, these issues point to the need for a single source of truth on which hoteliers can rely for actionable insights delivered swiftly, efficiently and accurately. The Solution: Business Intelligence Simply put, business intelligence is about getting the right information to the right people at the right time. Business intelligence software automates the time-consuming process of retrieving and analyzing data from multiple sources. It puts that valuable information at decision-makers fingertips in the form of easy-to-use dashboards and daily reports. Drill-down Business intelligence is a set of methodologies, processes, architecture, and technologies that transform raw data into meaningful and useful information used to enable more effective strategic, tactical, and operational insights and decision-making. Forrester Research LetItRain.com Page 3 of 6

4 capabilities make it possible to quickly pinpoint the issues affecting performance numbers and make better, timely decisions that drive revenue. On an enterprise level, business intelligence can compile data from disparate systems, host the data in one location increasingly in the cloud so that information from multiple properties can be viewed in a consistent manner. For all of its benefits, business intelligence technology has had to surmount negative connotations. Initially developed for large corporations, solutions have historically been costly to implement and support and the process of integrating systems time-consuming and complex. Today s cloud-based solutions, however, can be implemented quickly and easily using the existing cloud infrastructure, and are not cost-prohibitive. This is particularly true of subscription models, which require no capital expenditure. More widely embraced by industries from banking to retail, business intelligence continues to be underutilized in the hospitality industry. When it is implemented, it is mostly at the enterprise level, where it is valued by asset management, ownership and property management companies for its ability to provide detailed visibility into leading and lagging revenue-oriented data across their entire portfolio, regardless of brand or PMS. But business intelligence offers actionable insights for decision-makers at the hotel level, too, from the general manager to revenue, sales and marketing, food and beverage, front office, and reservations managers. Business Intelligence in Action For a practical application of business intelligence, consider that promotions are a standard sales strategy for hotels, yet they often run the risk of cannibalizing demand. Determining which promotions are increasing business and which are compromising it requires a very detailed analysis of how rates are performing a difficult and time-intensive task to undertake manually. A good business intelligence platform can drill down to the individual rate code level to make this analysis easy. It can also convert that data into insights that can help marketing managers make strategic decisions pulling a marketing campaign once an offer has met its goals, for instance, or introducing a new campaign to fill an anticipated gap in demand. LetItRain.com Page 4 of 6

5 What Makes a Good Business Intelligence Platform? Business intelligence platforms have changed. The advent of out-of-the-box solutions, based on highly flexible cloud-based technology, has put powerful insight within reach of any hotelier. So what should hoteliers look for in a business intelligence tool? Here are a few suggestions: Automated data collection. This should leverage all hotel performance data -- PMS, revenue management, sales and catering, budget and forecast, plus competitive data -- and combine it in a single actionable view to support data-driven decisions. Ease of integration. Cloud-based solutions designed specifically for the hospitality industry can be implemented in a timely and easy manner. Accurate, timely data. Solutions that refresh data daily facilitate accurate decisionmaking based on the most current information. Actionable performance insights. Intuitive dashboards and custom reports enable managers to easily identify business opportunities. Users can access data in multiple views to pinpoint the root cause of issues. And they can, for example, monitor negotiated accounts to confirm they deliver a level of business that warrants their special rates. Ease of use. Look for drill-down capabilities that facilitate viewing data by property, channel, market, segment, room type, and more. Solutions should also make it simple to export reports and data into Excel and other formats desired by the user. While many systems support data segmentation, the best solutions provide that ability all the way down to the rate code level. Hospitality focus. While most business intelligence solutions are focused on other industries, the best choices for hoteliers are solutions developed by former hotel executives with first-hand insights into issues specific to the hospitality industry. Additional reports. Business intelligence products should focus on constant improvement. Look for a solution that makes new reports available as they are developed for no additional cost. LetItRain.com Page 5 of 6

6 Summary The unprecedented amount of data that is available today, combined with the reliability of that data and its real-time nature, makes it possible for hotel management to respond to guest demand more quickly and strategically than ever before. But much of this data along with the valuable insights it yields -- goes unmined by the majority of hotels that still rely on timeintensive manual methods to extract and analyze it. Business intelligence solutions transform data gatherers into decision-makers, enabling better informed, timely outcomes that drive revenue. About Rainmaker Headquartered in Alpharetta, Georgia, Rainmaker is the premier provider of profit optimization and demand-cycle solutions to the hospitality and multifamily housing industries. Since its founding in 1998, the company has focused solely on delivering the highest revenue returns possible through the development and cultivation of a suite of products and consulting services designed to streamline operational efficiencies, enhance revenue optimization processes, improve lead performance and generate greater demand. Recognized as one of the top privately held companies in the United States, Rainmaker has been named to Inc s Fastest Growing Privately Held Companies for the last five years and was named to the Atlanta Business Chronicle s List of the 100 Fastest Growing Companies in Atlanta. To learn more about Rainmaker and its suite of profit and demand optimization solutions, please visit and follow Rainmaker on Facebook, LinkedIn and Twitter. LetItRain.com Page 6 of 6