Leverage Your Data: Not All Guests Have The Same Value!
Data is a game changer for making informed decisions and increasing return on investments. Surprisingly, many hotels lack proper data analysis to assess the value of their decisions, and instead rely on hit-or-miss tactics. This blind decision-making often leads to disappointing results, especially for financially struggling hotels, which may find themselves in a worse position due to the wastage of valuable resources. It is also problematic for successful hotels which can fail to reach their full potential by not exploiting data. To avoid these situations, there is no need to immediately delve into every aspect of data analysis. For hoteliers, the main purpose of data should be to identify high-value guests and drive them to book. High-value guests are those who are most likely to book, spend more on better rooms, extras and longer stays. These guests are particularly valuable because they yield the most benefits throughout their relationship with the hotel, known as their lifetime value. Therefore, by identifying and targeting them, you can achieve a superior performance with less efforts. But there are data analysis mistakes that might cause you to miss out on your high-value guests and focus your efforts on lower-value ones:
1. Choosing not to segment your guests
The key starting point to discovering your high-value guests is to actively search for them in your data. Sometimes hotels miss this opportunity by not taking the initiative to segment their guests, as ranking them according to the value they generate can seem disconnected from the service dimension a hotel reflects. But another way of looking at it is that it will allow an hotel to increase its revenue, and therefore have more capacity to invest in serving guests better and delighting them with extraordinary experiences. This is important because if you do not take a strategic approach to the guests you focus on, you will struggle to push your hotel to its full potential, both in terms of revenue and guest experience. Therefore, start breaking the taboo by analyzing your data and segmenting your guests according to the value they create.
2. Neglecting data quality
It is often tempting to start analyzing data as soon as it is collected. However, data analysis is only as good as the data itself, and the quality of your data is crucial to obtaining accurate information. To avoid drawing the wrong conclusions, here are a few things you can do to ensure that your data is reliable. First of all, when you are looking for your high-value guests, you cannot only rely on internal data, such as previous and future bookings, often you need to have a broader perspective by collecting external data, such as information from your competitors or market trends. In this case, you should always ensure that the data comes from reliable sources. To this end, favor official sources such as government websites, academic institutions, official press bodies or reliable data platforms like Statista, which will maximize the quality of the data you collect. Another good practice is to always clean up your data before analyzing it which can be done by rectifying duplicates or missing data points. Only by maintaining rigorous standards and continually confirming data quality will have the ability to accurately identify your high-value guests and avoid making erroneous conclusions.
3. Relying solely on intuition
As you start analyzing your data and segmenting your guests to find the most valuable ones, you will find yourself surrounded by numerous findings. In such situation, you might be tempted to rely solely on your intuition to decide which opportunities to pursue. However, as Marcy Farrell, editor at Harvard Business Publishing, explains, placing too much trust in your intuition can lead to biases, thus wrong decisions. This is why it is wise to prioritize analytical thinking to distinguish between real opportunities and false ones. For instance, even if you notice that a specific type of guest generated higher revenue on a couple of occasions, it does not necessarily indicate that value lies there. Occasionally, it can be a valuable opportunity, but often, it is just an anomaly issued from the specific behavior of a few guests. Instead, a safer and more analytical approach involves identifying recurring patterns. If you observe over a large number of instances that a particular type of guest frequently stays and, on average, spends more than others, then you can increase your confidence in having identified a valuable opportunity. In simpler terms, do not focus on individual cases; focus on what happens regularly.
In summary, given the widespread availability of data, it would be a missed opportunity not to use it to enhance your hotel's performance. An actionable approach to using it is to search for your high-value guests. To avoid missing out on them remember to avoid the following mistakes: choosing not to segment your guests, neglecting data quality, and relying solely on intuition. Once accurately identified, establish a strategy to allocate resources toward attracting those valuable guests, and they will boost your performance with minimal efforts.
