Why alternative hotel data is essential
 
Why alternative hotel data is essential
10 OCTOBER 2018 7:15 AM

Though competitive ADR, occupancy and RevPAR data reports do a good job of benchmarking performance against competitors, there are some drawbacks to the reports that hotel owners should think about.

Competitive average daily rate, occupancy and revenue per available room data reports haven’t changed much over the years, yet they remain essential to hotel owners, managers, franchisors, lenders and appraisers.

Even outside of the hotel industry, rarely does a report do such a good job of benchmarking operating performance against a basket of known competitors for non-public entities. I’m a fan. I’ll open with that.

But there are some drawbacks to these types of reports and hotel owners would be smart to begin thinking beyond them. Most basically, they do not report on causation. For example, why is a hotel doing better than another basket of hotels? Basic logic tells us that the answer is usually a combination of location, quality, market supply, marketing, branding, etc. But that’s often quite qualitative, and now that we’re living in a world with artificial intelligence, big data and relatively inexpensive computing power, there are new data and analytic options to consider.

For example, unstructured social media and news data can be transformed into quantified metrics using natural language processing and econometrics. Airbnb data is hard to come by, but it does exist if you look hard enough. And understanding what’s happening in the shared/gig economy, both related to rooms being rented and how customers are transporting themselves, is more essential than ever. Credit card transaction data is now broadly accessible and can provide fascinating trends. Trading and market based data is often predictive rather than coincident. IOT (internet of things) data and geo-focused market data are filled with insight. The exhaust data of global business is often at the top of the list in term of value. There is no shortage of “alternative data” options available. And there is no shortage of tools to analyze the data.

The hotel industry is smart to recognize there is more to data than the basics. Data that helps us understand competitive positioning and the causes of hotel performance are essential. Data can be used for marketing, branding, operational predictions, underwriting, market assessments, budgeting, etc. Use cases are limited only by a lack of creativity.

Comparing newer sources of data to traditional metrics really brings insight to life and delivers actionable intelligence. For example, if an owner learns that various quantified emotional scores derived from social media and the news are predictive of bookings and, in turn, occupancy and ADR, far more surveillance and monitoring of those metrics should be undertaken in order to operate efficiently. Additionally, once operators are able to pinpoint causal trends, action can be taken through targeted campaigns to change customer behavior. This is the holy grail of big data analytics, and it’s at our fingertips. Both traditional sources and new sources are needed in parallel to make this happen.

Actionable hotel data is not beneficial only to one group of stakeholders. Lenders and franchisors should be reviewing these trends and tools with as much focus as owners and operators. Understanding what’s happening in the world around us is becoming far easier, and relating how the world is changing to the operating performance of hotels is essential to continued financial success across the industry.

Zak Selbert is the founder and chief executive officer at Vista Capital Company. Vista is a boutique real estate investment banking firm that specializes in arranging financing for hotels. Selbert can be contacted at 310-285-3803 or selbert@vistacapitalcompany.com.

The opinions expressed in this column do not necessarily reflect the opinions of Hotel News Now or its parent company, STR and its affiliated companies. Bloggers published on this site are given the freedom to express views that may be controversial, but our goal is to provoke thought and constructive discussion within our reader community. Please feel free to comment or contact an editor with any questions or concerns.

No Comments

Comments that include blatant advertisements or links to products or company websites will be removed to avoid instances of spam. Also, comments that include profanity, lewdness, personal attacks, solicitations or advertising, or other similarly inappropriate or offensive comments or material will be removed from the site. You are fully responsible for the content you post. The opinions expressed in comments do not necessarily reflect the opinions of Hotel News Now or its parent company, STR and its affiliated companies. Please report any violations to our editorial staff.