5 Lessons Learned about Hotel Analytics at the 2023 Hotel Data Conference

Good news for organizers of the 15th annual Hotel Data Conference (HDC), which took place last week at the Grand Hyatt Nashville: When it comes to implementing a holistic data strategy that permeates decision-making across the entire organization, most hoteliers will admit they’re only in infancy stages. It would be safe to say making better use of data will be a critical topic of discussion in our industry for the next 15 years and beyond.

This year, speakers took the stage to provide a high-level overview of where the industry is headed, then engaged in smaller discussions about implementing a more data-driven culture.

Below are five of the key takeaways:

1. The travel industry is expected to withstand a likely oncoming recession.

Despite recent talks of a “soft landing,” most of the travel data analysts on stage at HDC suggested a strong likelihood of an economic recession. However, the good news is that the travel and hospitality industries are expected to withstand an economic downturn and are poised to continue growing across most metrics, for several reasons:

• Different segments of the industry are still recovering at different rates. While resorts led the pandemic recovery, urban areas are leading recovery in 2023, and business travel continues to grow. 
• The U.S. is still missing about 1 million inbound tourists every month when compared to pre-pandemic numbers. Slowly returning international business will help hotel demand keep pace. In fact, the U.S. could see one potential upside to a recession:  Most other countries have gone through theirs – “the U.S. has just procrastinated,” said Robin Rossmann at STR – and a weakened dollar could drive international visitors.
• Hotels continue to make money. Gross Operating Profit Per Available Room was nearly back to pre-pandemic levels in 2022 and is expected to reach that high watermark in 2023.

2. Hotel companies need ‘data stewards’ to ensure all departments are aligned on the numbers and strategy.

A candid conversation between two hospitality data gurus uncovered several important best practices for companies looking to refine their data strategy and implement a data-driven culture throughout the organization.

Ray Boyle, VP of Data, Analytics and Insights at Hyatt, and Elizabeth Randall Winkle, senior VP at CoStar, suggested companies appoint “data stewards” to focus on high-quality data and ensure all departments are making data-driven decisions based on a single source of truth.

“Sometimes you’ll run into situations where these guys calculate it this way, and these guys calculate it that way – and we can’t have that,” Boyle said. “If someone on the team wants to understand our loyalty data, for example, they should be able to go to the loyalty leader who should have the same information as the data analyst. Stewards are really helpful in guiding that process.”

3. Artificial Intelligence (AI) has brought the hospitality industry to the cusp of a technological revolution.

Hyatt’s Boyle said he’s “generally humbled” by the current pace of innovation across the hotel industry and that advancements in AI over the next several years will give hotel guests much more power over their entire experience. However, he expressed concerns over the safety, protection, and ethics that surround AI. 

“You can misapply the technology. But, at the same time, you can do some really beautiful and amazing things in a hurry,” he said. He continued comparing AI to fire: “You can either warm your house with it or you can burn it down.” 

Boyle said he’s most intrigued by the increasing amounts of guest data that is available to hoteliers today, including, “real-time flows of guest data, data on how heavy travelers spend their money – what brands, what trips, and how that changes over time.”

“We often think of data as a foreign object,” Winkle added, “but remember that we make data-driven decisions every day. Something as simple as the weather – we check the weather and base our decisions for the day from there.”

4. On average, hotels are most profitable when they run around 87% occupancy.

With the increasing availability of P&L data across all the revenue-generating sources within a hotel property, a big focus of HDC 2023 was the shift from a top-line revenue strategy to bottom-line profit measurement.

Raquel Ortiz of STR presented some standout data points on hotel profitability:

• At what occupancy are hotels most profitable? While there are many other factors to take into account for maximum profitability, hotels are most profitable when running somewhere between 83% (full service, luxury) and 91% (upscale). Remember: More guests means more staff, more wear and tear, and long lines that could lead to lower guest satisfaction scores.
• Interesting correlation: As RevPAR moves either up or down at a hotel, GOPPAR moves an additional 1.5% to 2% on top of that number.
• In the full-service luxury segment, which includes many resort properties that have a high dependency on ancillary revenue from golf, spa, parking, etc., GOP margin averages 35%, which equates to $122 GOPPAR. In these types of properties, naturally, a focus on boosting occupancy over ADR leads to higher GOPPAR, as more guests on property means more opportunities to drive revenue across other outlets.

5. More hotels are increasing transparency over ancillary fees and showing total costs to the guest at the time of booking.

Some high-level debate bubbled up during a session on “The Future of Fees,” considering the timing around U.S. President Biden’s promise to target unexpected fees tacked on to plane and concert tickets, hotel rooms, etc. 

Hoteliers on the panel consistently agreed that there needs to be more standardization across the industry as to how fees are presented to guests at the time of booking. One solution already implemented on some travel booking sites is a toggle that allows the user to see rates with taxes and fees included. 

Also critically important, suggested Jason Pirock, Head of Marketing at Springboard Hospitality, is full transparency with guests around the value they are receiving. 

“Justify the fee if it provides value,” he said. “Also, if you aren’t a resort, consider changing from calling it a Resort Fee to an Amenity Fee so you are using the right word associated with what they're getting.”