Plotting the Course to Future Hotel Business Success with Predictive Analytics
Trying to predict the future may at first seem like something belonging to the realm of superstition and sci-fi movies, but for many industries including hospitality, it has now become a very real possibility. Within the field of business intelligence, the rise of predictive analytics has become increasingly essential for hoteliers trying to navigate the potential pitfalls of unpredictable markets in recent years while ensuring continued business growth. A specialization with a global market presence projected to grow to $10.95 billion in 2022, predictive analytics technology is in fact now recognized for its ability to provide a substantial ROI by eighty-six percent of corporate executives.
For many hoteliers, however, predictive analytics remains somewhat of a mystery over precisely what it entails and how its adoption can prove to be a benefit to the long-term success of their business.
What is Predictive Analytics?
As a sub-field of business intelligence, predictive analytics essentially makes projections by tapping into multiple data sources, one commonly being an organization’s historical data. What would take a human employee many hours or even days to accomplish, predictive analytics platforms equipped with machine-learning capabilities can comb through mass amounts of disparate data in seconds, identifying patterns and trends pointing to potential business outcomes.
Applicable to virtually any aspect of a hotel’s operation, predictive analytics uniquely allows organizations to assess a range of conditions and scenarios when planning business strategies in order to identify any opportunities or risks before taking a specific course of action. While nothing can ever predict the future with 100 percent certainty, predictive analytics with its analysis of valuable data sets from POS, PMS, accounting systems and more, can prove to be highly reliable for gauging anticipated business performance in order to maximize revenue and profit and minimize costs.
Use Case Examples for Hotels
With budgeting for hotel businesses frequently representing a risk of either overspending or not investing enough to meet guest service expectations, predictive analytics offers a crucial lifeline ensuring that expenditures always align with actual demand. With regards to inventory management, predictive analytics can analyze a wide array of both internal business performance indicators and external market factors, providing hoteliers with instant recommendations on optimal stock levels for the coming days, weeks and months.
A predictive analytics platform can, for example, compare month-over-month performance data to identify an increase in sales for a new restaurant menu item, while at the same time determining that a separate menu offering has seen a reduction in demand. This capability importantly allows hotels to shift their financial resources towards investing more in inventory necessary to ensure availability of the popular item, increasing revenues and guest satisfaction as a result. Just as vital to business profitability, the re-aligning of expenditures away from less in-demand F&B offerings also prevents revenue from being wasted on unused and perishable products.
With the combining of business performance and external sets of data, the potential for predictive analytics to drive up both hotel revenues and guest satisfaction reaches even further. For instance, such platforms can integrate sales data with external influences such as weather or time of year to determine that a hotel is expected to see an increase in bike rentals or tour guide requests. From sources such as social media or third-party websites, predictive analytics technology can also identify an upcoming business conference resulting in a growth in demand for meeting spaces and which necessitates a shift in hotel promotion strategy. Using the same example, predictive analytics can not only identify a pending influx in the number of potential business travelers, but can also assess current inventory levels for items such as stationary, breakfast items or bar drinks in order to ensure that stock levels are able to accommodate the rise in demand.
Key to achieving full guest satisfaction and maintaining a successful business is also the ability for hotels to identify and resolve any service inefficiencies. However, this can often be easier said than done when hoteliers recognize a dip in satisfaction scores but are left without knowing what can be done to successfully reverse the trend. Yet by using predictive analytics to review guest satisfaction data, hotel businesses can assess various potential responses to determine their viability in leading to an effective solution. One large hotel chain was notably able to use predictive analytics to increase guest satisfaction 10 percent by coming to the conclusion that it needed to reduce the turnover rates of front desk staff.
Meeting Modern Guest Demands for Predictive Personalization
Experience personalization has become a buzzword within the hospitality industry, but with 90 percent of travelers willing to share their data if more relevant experiences are offered, it’s certainly not a trend today’s hoteliers should overlook. Yet with guests more often than not visiting a hotel for the first and only time, determining what specific service offerings resonate with their unique preferences and expectations can seem like a futile attempt at guesswork.
However, with a predictive analytics platform that is universally used across a brand’s or hotel management company’s various locations, guesswork can be replaced with a detailed analysis of what counts as an enjoyable stay experience for each and every guest. Using data such as previous purchases made at a sister property, hoteliers can instantly make informed decisions as to whether a specific guest may be inclined to accept a room upgrade for an additional fee. Perhaps a guest who during a previous stay booked spa services, may not only be interested in receiving similar treatment during their current stay but might also be open to receiving details on available yoga classes. For guests with certain dietary needs, a database including information on previous restaurant menu selections can make all the difference in providing them with a tailored experience that leads to heightened satisfaction instead of potential frustration.
Staying a Step Ahead of the Competition
In today’s fast-paced hospitality industry, the window of time that hoteliers have to respond to business opportunities or risks is increasingly becoming smaller. With shifts in market conditions and guest expectations able to arise suddenly and at any moment, hotel businesses more than ever need to be able to make informed decisions quickly which are based on actionable intelligence. As more hoteliers come to recognize the tremendous value that predictive analytics can provide in guiding their business towards enhanced profitability and guest satisfaction, the ability to accurately predict future performance and trends is undoubtedly set to become a defining factor in running a competitive and successful business.