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put into it. It’s what the customer gets out of it.
—Peter Drucker
I
n the next five chapters, we will go function by function in the hospitality organization and describe how analytics can help these functions meet their goals and move their businesses forward. I start by describing the purpose of that function and the kinds of challenges it currently faces. I talk about the available data, challenges associated with collecting the data, and new data sources that could hold great potential for that function. I will outline the type of analytics that can be used to support typical business goals for that function, and provide suggestions for both common and potential use cases for analytics in that function.I provide some benchmarking information about what I believe is the minimum being done with analytics in each function, what an average hospitality or gaming company is doing, and what the most sophisticated players are taking on. Fair warning: I have not conducted an empirical study in this area. I think it would be very interesting to do so. These are merely my own observations based on what I have seen both within hospitality and outside of it. Take this information as a directional indication of how you should be planning your analytics program.
I always get asked about technology investments, including which systems are required, which are the best, and what companies are typically investing in. I will provide some directional guidance in each chapter for the best technology investment areas and a little bit of advice on what to look for in those systems. I have purposely kept this high level and relatively light. Technology moves so quickly that any specific recommendations will be outdated before this book is even published.
I have asked technology vendors to contribute their perspectives on where the hospitality and gaming industry is in their use of data and ap- plication of analytics in each functional area (you will notice that I have
already featured two technology vendors in the previous chapters). I am certainly not advocating for any of their technology solutions, but keep in mind that vendors talk to many different types of hospitality and gaming companies across the globe, and so they have a holistic perspec- tive on where the industry is and where the potential for advancement lies. I picked people who I trust to give (relatively) unbiased opinions.
I am a firm believer that we need to break down departmental silos, so after you have an opportunity to think about how data and analytics are applied function by function, in the final chapter of the book, I talk about how the functional areas should think about leveraging one another’s data and analytics for more holistic decision making.
As you no doubt already realize, analytics programs are frequently among a company’s most protected competitive advantages. Analytic hospitality executives often cannot talk in specifics about their model- ing techniques, applications, and results. Where possible, I’ve included testimony and examples from leading hospitality companies. These inspirational examples are designed to help you build a program that you can turn into a competitive advantage. After all, it’s not about who can build the most elegant and robust model, it’s about what you do with those results that will make the difference. Most companies’
“secret sauce” is also how they infuse the analytics into their opera- tions to make decisions and take action, not just in the techniques they choose or the models they build. In each chapter, I also provide some examples of operationalizing analytics, focusing on a key business pro- cess for that function. Frequently they contain research and best prac- tices that are more holistic than just the implementation of analytic results, so that you can think broadly about developing an analytics- supported business strategy.
I’ll first talk about the operations department, which is at the heart of delivering the guest or patron experience. Then I’ll address marketing, sales, revenue management, performance analysis, and gaming.
OperAtiOns
Operations in hospitality and gaming represents a wide variety of guest- facing functions on property, as well as the supporting infra structure at the regional or corporate level. I refer here to front desk, concierge, and
housekeeping, as well as food and beverage, banquets and catering, re- tail, spa, and other related services. I separately address the gaming floor specifically in Chapter 10, and I address pricing and revenue manage- ment for all outlets in Chapter 8.
Operations has two unique challenges. The first is that they are the group that executes the guest experience when the guest is on the property. This means that they have the challenge of satisfying guest needs while the guest is in the experience, and they often must make decisions about the best course of action for serving the guest while the guest is right in front of them. This is fast and immediate. Second, operations has the most cost pressure of any department, since man- aging the variable costs associated with line level labor and perishable products are the responsibility of this function. Perhaps more so than any other area in the hotel or casino, operations feels the pressure to balance the guest experience with the need to minimize costs.
Operations departments frequently leverage technology to facilitate service delivery, and so the technology footprint in operations can get quite complex. Different systems manage the process of checking guests in and out of rooms, tracking and charging spa appointments, calcu- lating guest reservations at restaurants, and ringing out retail custom- ers. Housekeeping might deploy an automated system to keep track of which rooms have been cleaned. Maintenance could be automating the service requests and resolutions. There are phone systems, in- room technology like televisions or automated lights and blinds,
Figure 5.1 Operations Must Balance Cost and Guest experience
mini-bars, elevators, digital signage, and so on. Any systems that collect guest charges need to be integrated, and respond fast enough to rec- oncile the guest folio when guests depart, especially if they walk right from charging their breakfast at the restaurant to the checkout coun- ter. Now organizations are talking about keyless entry for rooms and tracking location to deliver real-time recommendations. All this is just to execute the service experience, let alone analyze it!
This complex technology environment provides valuable data about the guests and the operations, but requires careful management and ongoing staff training. While IT is responsible for installing and maintaining these systems, operations feels the immediate impact of any technology failures, and must deal with the implications on the guest or patrons. Operations managers run a 24/7 business, and need to be focused on providing a safe and efficient environment for delivering an excellent guest or patron experience. They can’t afford to be distracted by technology that is overly complex, difficult to manage, or hard to interpret.
In the hotel industry, the brands tend to recommend the technology that should be deployed at the site level, and they develop service systems and processes that align with the brand proposition. Hotel brands rarely own and operate the majority of the properties that carry their flags, so sometimes adopting the brand’s technology recommen- dation is not required. Therefore, the brands must convince owners and franchisees to invest in these innovations in technology or processes in their properties. They need to be able to train management com- panies to deploy and operate these technologies. Contracts with the brands do not necessarily even require that owners redesign lobbies or deploy new in-room technology, even if that becomes the new brand standard. This creates an interesting pressure on the brands, which depend on consistency for their own reputations, to demonstrate the value of the investments in terms that the owners understand (like return on investment, cost reductions, or revenue increases).
The situation can be a bit different for casinos, which tend to both own and operate their properties. They may have more control over their technology implementation decisions. The current trend for the integrated resort type of casinos is to lease their food and beverage and retail space to third parties. This means that the casino does not
control the technology investments for these operators. The reason this matters is that many casinos want to understand the full picture of their on-property patron activity. If they have no visibility into their patron activities with these third-party retailers, due to technology compatibility issues, they could miss an important piece of the puzzle.
OperAtiOns DAtA
Operations generates some similar data across the various functions within the hotel. They capture labor costs for the line-level employees, and the costs associated with ordering the various products used in the delivery of service (food, room amenities). Many operational outlets also capture sales transaction information, including what was ordered, when it was ordered, how many people used the service, and what time the service took place. Consider, for example, a check at the restaurant, which has an open and close time, the number of people dining, and the food that was ordered. These transactions could also contain guest identifying information, depending on how the system is set up.
In fact, a good deal of crucial operations data falls into the categories of demand and time. Demand in this context means the number of people served or number of “jobs” executed at any given service area.
For example, demand for the front desk is how many guests are checked in or checked out, or for housekeeping, it’s how many rooms that needed to be cleaned. Demand in hotels and casinos is a function of occupancy (how many people are staying in the hotel rooms), but many hotels and casinos also serve guests who are not staying at the property. Demand can also be a function of events that are happening on property and in the local market, as well as current marketing promotions or even the time of year. Operations managers are generally very well aware of all of the factors that might influence demand for all of the outlets across the enterprise. The challenge is understanding to what degree these factors will influence demand at any given outlet for any given time period.
the importance of time in Operations
Time refers both to the time of day that something happens (a check-in or a spa appointment), but also refers to the amount of time it takes to
complete a service, such as how long it takes to clean a room or park a car, which is also referred to as duration. Knowing the time of day is important for labor scheduling—making sure there are enough staff scheduled during each time period to serve expected demand during that period. Most operations managers are pretty good at understand- ing business flow at the time of day level. However, the amount of time it takes to complete the service, or any element in the service process, is frequently less well understood because it can be more diffi- cult to capture. It is important, however, because the time to complete the service combined with demand (number served) represents the amount of work that needs to get done, which dictates the amount of staff that needs to be scheduled. Manipulating all of the levers that im- pact these two elements, demand and time, is the most effective way to take costs out of a labor schedule, while maintaining service levels.
When duration is fixed, such as the number of nights that the room is booked, the number of minutes in the spa appointment, or the amount of time a group can rent the function space, it is rela- tively easy to understand how much work will need to be done, and to manage the process accordingly. It is when duration is variable that things become trickier (and way more fun for us analytic hospitality executives). For example, checking in a guest is a relatively standard- ized process, but factors like special requests, computer challenges, or reservation issues can dramatically change the amount of time the agent must deal with the guest.
The branch of mathematics called queuing theory tells us that it is the variability in the service time—these occasions when the service deviates from typical patterns—that creates lines, disgruntled custom- ers, or idle employees eating up payroll. Most of us don’t need math to understand how this phenomenon can occur, as we’ve all experienced the frustration of standing in line behind someone who is asking a lot of complicated questions or creating extra work for the agent we are waiting for, while watching the line grow behind us. I talk a bit more about queuing theory in the analytics section of this chapter and spend a good deal of time on waiting lines, since they are so ubiquitous in our industry. Proper application of both queuing theory and waiting line management requires a good understanding of both the average duration and the variability around that duration.
Dining duration at restaurants is a very good example of variable duration. Guests do not book a table for a specified period of time.
Once they are seated, there is generally an implicit agreement that that party is able to use the table for as long as they want. When the restaurant is busy, the amount of time that guests use the table has a direct impact on throughput for the restaurant, which is the number of guests that can be served during a certain time period. A table that turns every hour potentially generates much more revenue than a table that is used for three hours by the same party (yes, I know it can also depend on how much wine that three-hour table ordered, but you see my point). If the restaurant takes reservations, the problem gets harder. You need to have some idea of the amount of time a table will be used by any given party to know when you are able to book it again—however, if you estimate too long of a time, the table sits emp- ty when it could be generating revenue. Estimate too short of a time, and you’ve got angry waiting guests who were promised a certain time for service (many of us have also experienced this personally).
The challenge is that there is generally very little technology that automates the measurement of duration, and what technology there is, is heavily dependent on user entry, and therefore, prone to user error. For example, the point of sale in a restaurant captures the time the check was opened and closed, which should be a good proxy for the total dining duration. However, the server generally opens the check at the time they are able to enter the first order—
which could be long after the party was actually seated. Similarly, the server might be too busy to close out the check immediately after the party leaves, so the duration continues to increase until the check is closed. It gets harder in other areas of the hotel or casino. For example, there is generally no technology utilized to capture the duration of interactions at the front desk, concierge, or valet stand.
The best way to accurately capture variable duration is through a time and motion study. This type of study involves deploying people to time the service process with a stopwatch and note the exact time that certain events occur (see Figure 5.2—party is seated, party orders drinks, party receives drinks, etc.). This task is time consuming and resource intensive, but it does provide a very detailed view of the service process and highlights areas for improvement. Early in my
career, I conducted a few such studies at restaurants. We looked at a few full-service restaurants, and also a few buffet-style restaurants. At the full-service restaurants, we noted that the time it took the server to drop off the check, take payment, and return it to the table was at times greater than the time it took the table to consume the entrees.
Frequently, these parties were ready and waiting for the server to take their money, yet the server did not prioritize this activity.1
Besides being an interesting study in human behavior (we watched a gentleman dragging an oxygen tank and two plates full of crab legs stacked on top of each other. We also saw a lady build an assembly line to wrap her plate full of mufaletta sandwiches in paper napkins and drop them in her purse for later), the service process at the buffet also offered areas for immediate improvement in controlling duration and increasing the number of guests that could be served. Despite there being a long line for service at peak times, it was taking a long time for the staff to clear and reset tables. This stage of the service process is completely under the control of the staff, and represents a huge
Figure 5.2 Stages of the Service Process
When you plan to conduct a time and motion study, generally the first step is to map out the stages of the service process that you want to time, such as those shown in this diagram. It is useful to note which are in control of the operation (light gray) and which are in control of the guest (dark gray).
opportunity to improve throughput. Imagine if the buffet restaurant were open for four hours with a line the entire time. Say the guests occupied the table for 45 minutes, but it took 15 minutes to clear, reset, and reseat the table. Total dining duration is an hour, so there would be four turns per night for each table. If the reset and reseat time was reduced to a minute or so (remember, this is a buffet, so the setup is relatively simple), total dining duration becomes 46 minutes, so the table could be available for another entire turn each night.
The other useful benefit of a time and motion study is the opportunity to stop and watch the service process and demand flow.
Managers can get so caught up in the details of execution that they fail to see the forest for the trees. Stopping to watch the process can help to identify opportunities to improve efficiency. Even little things like noticing that the service station is too far from the floor or that there aren’t enough trays to bus tables can result in small investments or changes that make big differences in efficiency. Often, your staff will not be able to articulate these issues because they have simply become too used to dealing with them.
In high-volume services where seconds matter, these time studies can also make a difference. Fast food companies, for example, use these types of studies extensively to justify major investments in processes that can shave seconds off service delivery—whether it is technolo- gy, design and layout, business process, or training. Time and motion studies are used in manufacturing assembly lines as well, where they can shave days off delivery times. They are useful anywhere there is a multistage production or service process, and where technology is not able to capture the duration of each stage.
Customer satisfaction
In addition to sales and cost information, hotels and casinos also collect satisfaction information from guest surveys. Guest surveys have evolved over time, but the value of understanding reactions to the service experience remains the same. Many say that with the emergence of review sites, a “24/7 Focus Group” has been created online, which is making guest surveys obsolete. I would argue that because you can’t control the conversation topics in these review