3 Reasons Predictive Analytics is Revolutionizing the Hospitality Industry
Predicting what a business needs, when it needs it, sounds like an impossible feat to most. But with the right tools and technology, the hospitality industry can now come very close. For instance, when leveraging the power of true predictive analytics, hospitality chains and individual locations can routinely receive forecasts enabling them to increase operational efficiency, better manage labor and onerous HR issues and appropriately track and benchmark inventory. Once integrated, the intuitive technology provides actionable insights to hotels and restaurants by collecting, processing, analyzing and interpreting large amounts of varied data to better understand the past, make the necessary adjustments to the present and predict the future.
Operations Management
When managing the operations of a hotel or restaurant, it’s often difficult to see the big picture – i.e. direct impact and results - of various policies and processes set in place. With information filtering in from various sectors of the business, in different formats, numbers can often be hard to interpret, making it difficult for supervisors to get the facts they need to drive better business outcome.
With the manual effort needed to compile and analyze data, many businesses take the easier route and operate in silos. Unfortunately, this tactic poses numerous barriers for owners. Predictive analytics can assist management in monitoring, tracking, analyzing and evaluating incoming and outgoing expenditures to take an accurate pulse of the business. For example, if hotels and restaurants were able to easily and effectively compare labor costs to hours worked, they could accurately allocate the right amount of people and time to a particular task, resulting in higher profit margins, satisfied employees and well-served guests.
Labor and HR Management
Equally as important as keeping supply stocked in the hospitality industry is recruiting and maintaining a well-trained and experienced staff. Once hired and trained, it’s imperative for restaurant and hotel managers to pay close attention to employees’ work hours, while adhering to the fluctuating labor needs of their business. When it comes to staffing and scheduling, it is important for hotel and restaurant owners to strike a balance between appropriately staffed shifts to meet demand and providing enough opportunities for employees to make the money they need. Modern technology allows for exactly this to happen.
Talent management is a never-ending task that demands constant attention and engagement. If employees become unsatisfied with their schedules and/or working conditions, they are more likely to quit. In fact, a 2019 TDn2K Report found that “the turnover rate for restaurant employees and managers has reached a record high” and “restaurant operators have continuously listed ‘finding enough qualified employees’ and ‘retaining them’ as two of the top challenges faced in the hospitality industry today.” The report also measured the average cost associated with terminating various employees in the restaurant industry. The report concluded that replacing an hourly-paid employee costs the company approximately $1,816, while replacing a restaurant manager costs $10,000 and replacing a general manager costs approximately $14,000.
In an effort to circumvent high employee turnover and labor shortages - while still complying with state and federal labor laws and regulations - hotel and restaurant owners should invest in analytics tools that can identify underutilized staff, flag gaps in scheduling and recommend actions to ensure the appropriate amount of staffing is assigned to meet the forecasted consumer demand. Employee collaboration tools are important too in today’s connected world, enabling direct communications between team members and management
Inventory Forecasting
In order to run a successful service-driven business, owners and managers need to be able to think ahead of the curve when it comes to inventory spend relative to consumer demand and waste management. Manual sales and order forecasting is almost always unreliable, error-prone and laborious - and can make a serious dent in profit margins. Integrating automatic tools that calculate factors such as sales history, weather, public holidays, local events and recent trends help businesses prepare for and meet future demand well. Furthermore, intelligent analytics, coupled with a manager’s local knowledge, means appropriate daily, weekly and monthly ordering for hotels and restaurants alike.
In conclusion, the hospitality industry needs to embrace the power of big data if it wants to make the shift from analyzing the past to forecasting the future. The transformation to predictive analytics could be the differentiating factor for many hotels and restaurants in a congested and competitive market. Overall, predictive analytics is the catalyst that empowers owners and operators to optimize profits, enhance guest satisfaction, improve employee engagement and scale profitably.
About the Author
Mike Shipley is director of Insights and Analytics at Fourth.