Definitely Doug 1/19/24: A Deep Dive into Data

1.19.2024
by Doug Rice
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Hotels, and indeed most of the travel and tourism industry, operate in an ever-changing and complex environment. While most other businesses deal primarily with local clients, hotels’ customers come from many different, usually distant markets, each of which can have its own economic factors, preference trends, and even distribution infrastructure. Travel is the one industry where severe weather on one side of the country can have an immediate and big impact on business thousands of miles away.

This week I will explore the many types of external data that hotels use. By external, I mean data that is not produced from their own systems, but rather that is acquired from third-party sources. These data sources can shed light on external factors that can affect a hotel’s performance. Some of the sources mentioned below may be ingested (or ingestible) into your business intelligence (BI) or revenue management (RM) system. Indeed, several providers of BI and RM systems offer one or more of these data sources as an optional or included add-on to their own products.

My objective is to provide a general-management level overview of all the different types of third-party data that might be useful to your hotel(s). You are probably already using some of them, and others may not be very useful because of the location or characteristics of your hotel(s). But there are probably a few that are both new to you and potentially useful. These data sources are not hard to find if you are looking, but are you? Are there new ones might want to consider? I will try to outline how hotels are using each type of data to help you assess this. I will also identify some of the key vendors offering each type.

Because of the large number of third-party data providers, it was impractical for me to interview them all. Most of what is presented here was gathered from website research and in some cases from prior knowledge. Website claims can of course be vague and sometimes misleading, and your specific needs will be unique. So please view my list as a starting point for vendor identification, not a guarantee that any given company will meet your requirements, nor that I have necessarily listed every company offering a particular type of data. Where possible, I have provided deep links to pages that describe the product in question in more detail.

While I believe that every company mentioned below produces data itself, they (and others I have not listed) may also remarket data obtained from partners. These data partnerships can often be opaque or even confidential. If a company not listed here offers a particular type of data, it is worth asking about the data provenance (or you can sometimes test it by comparing details to other sources). In many cases the data may be available at lower cost if you get it from the original producer rather than through a partner. However, integration with systems you already have may make the data more usable, so if your BI or RM or property management system provider can get you the same data, it may be worth doing it that way even if the cost is a bit higher.

This article may be useful to hotels, but also to some vendors who sell to hotels; they may want to explore whether some of these data sources could be incorporated into existing products to improve their value to your hotel customers.  

Basic Competitive Performance

Perhaps the best-known third-party source for competitive performance data, and one of the first data products to be sold to hotels, is STR’s STARreport, which compares a hotel’s recent historical occupancy, average daily rate (ADR), and Revenue per Available Room (RevPAR) to those of its defined competitive set (often called a compset). Because this data ties precisely to the hotel’s actual occupancy, ADR, and RevPAR, many hotel groups use it to measure the performance of general managers and other key executives.

While useful, historical data is not as actionable as forward-looking data; by the time you receive it, it is too late to do anything to improve those numbers. You can only adjust strategies going forward.

Other companies offer products that deliver competitive data from various forward-looking sources, primarily advance bookings. These can benchmark your sales and distribution efforts in much closer to real time, allowing you to see (for example) what share of future bookings you are getting vs. your compset. These allow you to react with pricing changes or promotions that can help rectify potential underperformance before it happens.

Several companies offer products with varying mixes of backward- and forward-looking competitive performance metrics on occupancy, ADR, and RevPAR, including Amadeus, Hotstats, Kalibri Labs, Lighthouse (formerly OTA Insight), and STR. A critical consideration is that while the backward-looking data sets generally do (or can) cover the hotel’s entire occupancy mix, the forward-looking ones are generally limited to select booking channels. In evaluating these, it is important to understand how the market coverage of different channels (brand website/mobile app, hotel direct, Online Travel Agencies/OTAs, Global Distribution Systems/GDSs, groups, wholesalers, etc.) compares to your own hotel’s, and how the differences will impact the usefulness of the resulting numbers.

Market Demand

Many external data providers offer information to help hotels assess market demand. There is usually no competitive benchmarking here; rather, they monitor factors that future business for a market (such as a metropolitan area) as a whole. Some of these provide very short-term signals, others can be used a year or more in advance. The objective is to incorporate the information as early as possible, adjusting rates up when high demand is indicated and down in weaker periods. Not surprisingly, many RM systems ingest some of this data to help with optimization of rates and booking controls.

Some of the main categories of market demand data used by hotels include:

  • Future booking volume for relevant markets (often geographic, but sometimes based on other segmentation). Amadeus, HBenchmark, Lighthouse, and Travelport all offer products covering future bookings for various markets and segments.

  • Future events in local markets. These can include sporting events, concerts, festivals, conventions, and specialty events such as air shows or bike rallies. While most hotels already track the larger events in their market, those in big metropolitan markets can benefit from a data provider that keeps the list up to date. There is a constant flow of new events, cancellations, postponements, and factors like whether local sports teams are likely to make it into playoff rounds can lead to “potential” events that are not yet confirmed. Being the first in your competitive market to know that a major event has been scheduled or rescheduled gives you a jump start on adjusting your rates before your competition. Data providers that track future events include HBenchmark, Hotellistat, Lighthouse, and PredictHQ.

  • Destination searches. Particularly for leisure destinations, you can get a lot of advance warning of shifts in demand by monitoring the number of consumer web searches made for a destination, both in absolute terms and relative to other destinations. You can get this information directly (at least for Google searches) from Google Analytics, but Amadeus, Lighthouse, and RateGain’s Adara World Holiday Report offer data that goes much deeper into different areas.

  • Alternative accommodation demand. Short-term or vacation rental data is available from AirDNA, Amadeus, and Lighthouse. Since these options compete directly with hotels for many travelers (especially in leisure markets), understanding their trends and how they compare to those for traditional hotels can provide important insights.

  • Other destination demand metrics. The Hotels Network provides detailed insight around travel demand and visitor behavior for destinations from analysis of booking data from thousands of hotels. HQ revenue (formerly HQ Plus) also provides area and city demand data, as does Inntopia’s DestiMetrics product, which also monitors key economic indicators, pacing, and rate trends. HBenchmark measures future bookings and cancellation rates by factors such as channel, market, and nationality. Arrivalist provides destination data that shows where visitors come from, when they arrive, and how long they stay, which can help you focus on the most promising markets.

  • Weather data. There are numerous sources for weather data depending on your need and location, and some revenue management and analytics systems already tap into them. Hotels that have a high dependence on weather, such as beach and ski resorts, can use historical weather data in analytics to understand how local weather affects demand, and then use weather forecasts to fine-tune pricing or staffing levels. Airport hotels can also use short-term weather forecasts to get early warning of potential travel disruptions that may result in high demand.  Common weather data providers include the AccuWeather, NOAA’s Climate Prediction Center, the U.S. National Weather Service, The Weather Channel, and Weather Underground. All of these cover the U.S. and some cover certain other countries as well, but each country and world region have other providers that may have more complete regional offerings.

  • Air travel data. Amadeus provides data on air schedules, air searches, air bookings, and air traffic. Particularly for isolated destinations such as islands, these metrics can provide valuable insights into future hotel demand over various time windows, including short or long-term shifts in geographic and market mix. ForwardKeys and Travelport also provide air booking data.

Market Rate Intelligence

Many hotels subscribe to services that provide competitive rate data. This is one of the earliest data products in the market, first introduced 30 years ago by the predecessor company to TravelClick (now part of Amadeus). The better services provide day-by-day coverage for multiple rates (not just the Best Available Rate or BAR), open/close status, stay restrictions, and geographic and channel variations. Today Amadeus is joined by D-EDGE, eRevMax, Fornova, Hotel Cloud, Hotel Price Reporter, HotelNetSolutions, Hotelsoft, HQ Revenue, Lighthouse, Next Gen Opti, Paraty Hotel, RateGain, and SiteMinder.

Rate parity metrics are a variation on this; they are sometimes combined into the same product. These provides real-time monitoring of external channels (including but not limited to OTAs) to identify situations where pricing is different from the hotel’s own pricing in unexpected ways. Some of these products also provide website widgets to show shoppers comparative prices across channels, to provide assurance that they will get the best rates. Hotels that offer guarantees that the best rate can be obtained by booking direct can make good use of this data to find rate discrepancies before customers do. Companies offering rate parity intelligence include Cendyn, D-EDGE, The Hotels Network, Hotel Price Reporter, HQ revenue, Lighthouse, RateGain, and SiteMinder.

Market Dynamics

Beyond forecasting demand, various data sources can help hotel marketers better understand their customer profile and how it changes seasonally or over time. These include:

  • Source markets for your destination (Amadeus, Lighthouse) can help with market positioning, special promotions, packages, and other programs.
  • Point of interest visitation data (Arrivalist) can help identify the need for local attraction and activity partners or for specialized packages.
  • Market rate category and channel trends (Kalibri Labs) can provide visibility into market shifts that may require the hotel to introduce new rates, reposition existing ones, or modify channel strategy.
  • Direct booking metrics (The Hotels Network, Kalibri Labs) enable hotels to understand how their own book-direct programs compare to the market or the competition.
  • Travel agency and corporate performance metrics (Kalibri Labs) enable your sales managers to understand which agencies should be top producing accounts and how your performance aligns with potential.
  • Dynamic compset identification (Lighthouse) can help ensure that you are using the right competitive set – the ones your customers see as competitive. Market dynamics are constantly changing and the compset you have been using for many years may be out of date.
  • Competitor participation in OTA promotions (Fornova) can, in conjunction with competitive performance data, help assess whether your hotel needs to add (or can drop) participation in specific promotions.

Other Performance Metrics

Moving beyond the common metrics of occupancy, ADR, and RevPAR, several companies offer insights into other comparative performance measures that are of interest to various constituencies within the hotel community.

  • Key Performance Indicator (KPI) comparison (Hotstats claims to benchmark more than 500 KPI
  • Competitive visibility in channels (Fornova)
  • Competitive wage rates (Actabl)

Sales Targeting Data

A few providers offer data that is useful for sales targeting.

  • Historical data on conferences, conventions, meetings, and events can help identify potential bookers of future meeting space for hotel and venue sales staff. (Knowland)

Conclusion

I would never recommend acquiring data just because it exists or even because it appears potentially useful. To derive business value, you will need to embed the data into your daily, weekly, and monthly business processes, and correlate it with internal and other market performance measures.

This requires careful thinking, an understanding of limitations in the data, and integration into dashboards, reports, and analytics tools that management will actually use. If you cannot answer the question of what tools you will integrate the data into, who will be reviewing results or alerts (and when and how), what decisions you will make based on it, and how those decisions will affect performance and profitability, then do your homework first.

Limitations often center around the way data is measured (is it consistent with your own hotel’s practices?) as well as how well it can compare your own business to others. Particularly for competitive comparisons, the hotels in your compset for one purpose (say, future bookings) might be quite different from those for another purpose (such as for profitability, where factors like restaurants, parking, mortgage rates, or even a unionized workforce can be important factors). You will not be able to eliminate limitations, but you may be able to minimize them by filtering the source data or compset definition, and you can ensure that those who are using the data understand why and when it might not measure exactly what you want.

As for integrating the data, the most common approach is to use business intelligence and revenue management tools to pull data from disparate sources, both internal and external, to massage it where needed, and to provide analytical capabilities, dashboards, recommendations, and reports to give hotel managers better insight into their performance and opportunities for improvement.

But there can be value in integrating data with other systems in many cases as well. If you are about to acquire external data (or are considering doing so), ask how each potential user (including both staff and customers using self-service) would use it; this may uncover the need or for additional integrations to more fully leverage the purchase. For example, if you are considering buying competitive rates, find out whether your reservation call center might be able to use it to help address rate-match requests, whether your revenue management system could use it, and whether your web booking needs to show competitive hotel rates to help close sales.

Having the right data enables better decision making and a more profitable business. But there are as many answers to the question of “which data should I buy” as there are hotels. The important question is what will work for your hotel and for your staff.

Douglas Rice
Email: douglas.rice@hosptech.net
LinkedIn: www.linkedin.com/in/ricedouglas

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