Moneyball: Big Data and Raising Your Hotel Company’s Batting Average
May 28, 2015 10:39am
'Outside-The-Box' Business Intelligence Analysis and Reporting Reveals Competitive Advantages that Lift Performance and Profitability
By Cam Troutman, Vice President of Aptech Computer Systems
May 28, 2015 - This viewpoint is about money and baseball. Hotel company financial executives are like the general manager of the baseball team in Michael Lewis' book, Moneyball: The Art of Winning an Unfair Game.
The book argues that the Oakland A's' front office took advantage of innovative analytical measures of player performance to field a team that could better compete against richer competitors in Major League Baseball. If you are in the hotel business and are not familiar with the book or the movie starring Brad Pitt as Billy Bean, GM of the Oakland A's, you may find it educational because Moneyball is about how to use creative data analysis to compete more successfully.
How is hotel company operations like Major League Baseball?
Hotels are in competition for guests within their markets. They operate a physical asset with multiple expenses like staff, utilities, maintenance, pest control, and many have franchise fees. All these factors can be represented as data and analyzed to measure revenue, adjust expenses and calculate profitability - much like a baseball player's statistics and the team's winning average. The way a company uses business intelligence (BI) to view, analyze and act on data can give it a competitive advantage.
Flexible BI data analysis gives operators a tool to use like Billy Bean's Moneyball spreadsheet to see their operation's performance in unique ways. Bean's Oakland A's team proved that competitive advantage often comes from breaking away from 'inside the box' thinking and processes. Applying data analysis tools that enable you to think outside the box can provide new ways to see inside an operation and identify ways to improve performance.
Each hotel company's operation is unique. Every manager and owner has his or her own experience-based perspective on how they want to run their business. They know which performance measures, labor costs, ADR, or flow-through percentage are important to their company's profitability. This means the freedom to apply flexible analytics and create custom performance reports is essential to execute an operator's measurement strategy. Totally-flexible BI reporting gives each operator the ability to analyze and run their business their own way based on their unique perspective and operational goals.
If competing operators use the same static, or 'canned,' analytical reports, they are all forced to use the same data measures. They cannot create and test their own individual way of looking deeper at company or property performance. When competing operators have the same vision of their data and processes, neither company can discover a game-changing perspective.
Flexible, personalized analysis makes data accessible from multiple perspectives, like a Rubik's Cube. Each edge, color and intersection creates a different combination of data comparisons that may provide a different perspective. When data elements, such as out-of-order rooms, are viewed from different perspectives, for example, in relation to its relationship to monthly revenue and occupancy, new insights are gained that can impact management and profitability. Data experimentation is often called 'what if' analysis. Flexible, in-depth data analysis enables operators to perform a 'what happened and why' performance discovery. This is how the Moneyball example worked in baseball.
Our industry has several "Billy Beans." They use the same raw data as everyone else, but they create unique views and calculations that give them strategic insight. While they look at the common metrics (Occ, ADR, RevPAR, GOP, etc.) they also take the next step and dig deeper. Aptech's role in this process is to make sure it provides BI tools that not only deliver the right metrics, but more importantly, inspire creative thinking.
How do you measure flow-through analysis?
One example I can share is on the topic of flow-through. The new Uniform System of Accounts for the Lodging Industry, the 'blue book,' now includes an official definition of flow through. Many of our clients use this definition, but I have personally seen four other unique definitions also labeled 'flow-through.' These variations give unique insight and enable the operators that use them to see hotel performance in a different light. A flexible business intelligence system gives each operator the ability to create flow-through analysis in the best way for their operation.
By re-evaluating the data and strategies that produce wins on the field, the 2002 Oakland A's, with approximately $44 million in salary, were competitive against teams like the New York Yankees, who spent over $125 million in payroll. You can do the same and out-perform your comp-set by looking at your team, operation, and processes in unique ways.
At HITEC June 15 - 18 visit Aptech in Booth #921 at the Austin Convention Center
Tags: aptech computer systems,
budgeting and forecasting,
Aptech's state-of-the-art products include Profitvue® enterprise back office accounting, Execuvue® business intelligence, Webvue® internet accounting support, and Targetvue planning and budgeting. Clients comprise over 3,200 properties - including large chains, multiple-property management companies, and single-site hotels. Aptech's solutions give operators the ability to be proactive operationally and financially. Execuvue and Profitvue are registered to Aptech Computer Systems, Inc. All other trademarks are owned by their respective holders. For more information, please visit www.aptech-inc.com.
Contact: Cam Troutman, Vice President
800-245-0720 or 412-963-7440
Contact: for media - Julie Keyser-Squires, APR, Softscribe Inc.
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