Sponsored by Fourth
The hospitality industry has been slow to take advantage of “Big Data.” However, harnessing and interpreting the large volume of data generated every day to drive better decision making is no longer an option – it’s a must.
Big Data marks a shift from analyzing the past to forecasting the future. Hospitality chains with a sophisticated IT infrastructure have begun to take advantage of Big Data, but others have only started to scratch the surface. This is changing with the convergence of analytics software, cloud computing and mobile devices, which together make Big Data more accessible and available.
Today, Big Data’s benefits are available to just about everyone in the hospitality sector. Adding an analytics solution to existing IT systems is cost-effective and gives decision-makers across the business the evidence and insight they need to cut costs, improve efficiency, enhance customer satisfaction and boost the bottom line.
The hospitality industry constantly challenges its operators to confront unprecedented and often uncontrollable cost pressures, from rising labor costs and regulatory compliance requirements to surging food prices. Operators must understand all the numbers and keep track of sales, performance, profitability, operating costs and the like. Based on years of experience, most operators have a reasonable idea of the overall picture. But “a reasonable idea” is no longer enough in an environment of increasing operating cost pressures coupled with intense competition that keeps a lid on menu prices.
The smartest operators know exactly what’s going on with precision and what to do about it quickly. They dig deeply into their business and their customers’ behaviors so that they can adapt their menu offerings, adjust their pricing, scrutinize purchasing, change vendors, improve training or move around staff. This is what Big Data brings to the table.
Its benefits are significant and almost immediate. By using technology to collect, analyze and understand huge amounts of data from different sources, operators can transform the customer experience and, simultaneously, operate more efficiently. Operators can include in their analyses data derived from POS, Property Management Systems, Kitchen Management Systems, bookings, labor and payroll, purchasing and invoicing, internal audit, rates, industry trends, competitor analyses, social media and more.
Analytics software can tap into Big Data to give operators a holistic view of their businesses. For example, it can automatically record every keystroke to provide a wealth of transactional information – not just what was sold, but who sold it and to whom, when it was sold and what else the customer bought. Combined with other data within their business systems, operators get a dramatically clearer understanding of underlying performance and the reasons behind it.
Armed with that data, operators now have new power to make changes. They can adjust almost anything on a company-wide or individual outlet basis. For example, by mapping sales against staff costs, margins and customer experience ratings, they can examine the difference between actual and theoretical gross profits, identifying how each outlet is performing. Or, they can assess the influence of specific area managers, sites and menu ingredients. Big Data transforms understanding into innovation.
Big Data is also a practical tool that brings relevant information and actionable insights to all managers of a business, from senior executives to central services to site managers. By presenting the information on mobile devices, it also brings managers out of the back office. And because new machine learning technologies can automate nearly 90 percent of the everyday decisions a manager must make, they have more time and energy to devote to the issues ideally suited for humans to handle. The best managers now spend less time at a desk and more time on the floor, where they can really make a difference.
Once adopted, the distinction between transactional and analytical data fades. The smartest operators will run flexible businesses that take a holistic view of transaction, analysis and action. Efficiency wins. Activity that used to be managed daily or weekly is now done by the hour or even more frequently. Site managers can adjust variables just as easily as head office staff. Pricing, offers, inventory, staffing and kitchen schedules are now more powerful tools that can be deployed quickly and easily across businesses or in individual circumstances.
Above all, Big Data—when used well—can have a huge impact on the bottom line of hospitality operations.