How Data Can Help With Seasonality Shifts
Hoteliers can learn a valuable lesson in seasonality from boxing. Contrary to what some might believe, great boxers don't just roll with the punches. They study their opponent's every move, quickly plan, make adjustments, attack and counter attack. The same strategy should go for planning for the dips and swings of seasonality changes in the hotel industry.
Too many hoteliers have fallen into a revenue-based rhythm. They set up a strategy based only on traditional high, shoulder and low seasons. Unfortunately, when seasonality changes, this simple strategy leaves hotels vulnerable to financial body blows.
However, it doesn't have to be that way. With modern data and benchmarking, you can now move your seasonal strategy from one that's reactive, to one that's proactive. Here's a fresh look at how to plan for seasonality changes.
A Better Approach to Seasonality
In the past, the hotel industry has embraced broad seasonality and focused on a revenue strategy that might line up with the season. There's a high season, a shoulder season and a low season. Each of these seasons is always exactly the same, right? Well, not quite.
In reality, there are countless factors that can influence the changing hotel seasons. Here are a few:
- Weather — Weather patterns can quickly change, and that can affect high and low seasons. For instance, longer wet seasons can keep visitors off beach resorts, or rising temperatures can deter snow enthusiasts. These unpredictable trends can completely shift a hotel's seasonality.
- Economic conditions — You can have "high season" marked on your hotel's calendar in bright red letters, but if travelers face hard economic times, then they're more likely to stay home. When gas prices skyrocket or a local economy takes a nosedive, travel seasons can transform completely.
- Work and school schedules — High and low seasons often rely on families traveling together. This means that when school and work schedules change, so do the seasonal windows for travel.
- Local events — All kinds of events can cause seasonality changes. Natural disasters or struggling local businesses can shake up the season. At the same time, new local festivities, political events, or sporting championships can shift demand.
The bottom line is this: Seasonality trends change. And that can leave unprepared hotel professionals guessing.
So, how do you prepare for these question marks and get more out of seasonality changes? Simple: You need to focus on the right data, at the right times.
How to Plan for Seasonality Changes
More often than not, when your hotel faces uncertainty, you can combat it with more complete data. But it needs to be used the right way. Here's how:
First, you have to shift your focus from revenue-only to a more holistic, operational approach. This entails making use of more frequent and more complete data. This means looking beyond the traditional high, shoulder and low seasons and drilling down deeper.
Instead, look at monthly data in addition to longer trends. This will help you see upswings or seasonal inconsistencies right away. And that means you can prepare.
At the same time, data can help you take advantage of high seasons, get more out of low seasons and keep you rock steady regardless of external factors. Still, that requires looking beyond revenue.
Instead, look to profitability and numbers driving operational efficiency.
Think about it: What if you can lower labor costs during lulls? What if your margins are shrinking during the high season because it coincides with high food and beverage costs? With the right data, you can plug those holes in the profit pipeline.
These insights show you how and why changing seasons really affect the operation. If you can up your profitability, your hotel will be rock steady as seasons change around it.
Using Profit to Benchmark for Seasonality
When you've shaken off the illusions of revenue and decided to focus on profit as a benchmarking solution, your gross operating profit per available room — or GOPPAR — will be a solid metric to consider. This metric shows you a clearer picture of how your hotel is operating throughout each trend.
At the same time, you can use it to jump into more intricate operational data, like payroll costs, inventory spikes or turnover trends.
As soon as you dive into the right data and reveal operational issues, you can set up benchmarks to gain an edge from changing seasonality. When you know the factors driving true costs in each new season, you'll actually know how to make a diagnosis and lower operational costs.
Use Benchmarking to Capitalize on Seasonality Changes
When you set up benchmarks for operations rather than just revenue, you get a window into why seasons are changing. From there, you can use that information to predict trends, adjust your strategy and boost your hotel's profit.
Operational data can keep your hotel in strong financial condition year-round, and you'll have the insight to not only roll with seasonality changes, but also proactively plan for them.
David Eisen
Director of Hotel Intelligence and Customer Solutions for HotStats
HotStats Limited
