Turning Data into Action
“What gets measured gets managed” Peter Drucker
Of all the resources a company has its disposal, physical assets, personnel, inventory, software systems, real estate, etc., the data residing in its database is often the most under-rated and most neglected. In fact, the most valuable asset a Vacation Rental Manager has at his or her disposal is the business intelligence in their Property Management System. For many though, their database is where business saving information goes to die.
Within your PMS system lies your guidebook to most of your strategic, marketing, branding, operational, personnel and business decisions. The irony is that most folks in our business are more worried about protecting their data than using it. They worry about it getting into the hands of evil competitors who will use it for nefarious purposes. Ironically, they rarely take a hard look it at themselves. They suspect that there is something valuable there, though they rarely explore its possibilities. When they do take a step into the dark forbidden forest of data, it is often to affirm an existing theory, collecting a set of “facts” to confirm an already entrenched opinion. In fairness, this is largely because the task seems too arcane and daunting. Many “forward-thinking” companies turn to experts for help. They spend a ton of money, paying these ”experts” to collect market intelligence, enhance their web and social exposure, or they outsource their distribution to high-cost listing sites all the while ignoring the valuable information and resources they already own.
Save Money, Improve your Business
“Use of analytics is accelerating, and that means more data driven decision making and fewer hunches. Evidence based management complements analytics by adding validated cause-and-effect relationships.” Author Paul Gibbons
The question every VRM is compelled to ask itself is, “Can I avoid the low-return, high-cost consultants and outsourcing expenditures by listening to the story my current and historical data is telling me? Think about it — the stories your data could tell. Typically, you have your homes’ past performance and trending information. This includes rates, booking windows, discounting, and feature sets and amenities compared to similar properties. Listen carefully and your data will tell you the impact of changes such as rates, remodeling, new amenities, as well as the impact of neglecting to keep a property in great shape. Listen further and you’ll hear the effects of pricing, advertising, packaging and internal processes all designed to maximize performance.
Perhaps the greatest story “never” told is that of the guest information stored in your database. Consider it everything you ever wanted to know about your guests. You know where they live, how much they spend on their vacation, how long they stay, how often they come, what amenities they prefer, when they come, how many people they vacation with, and the composition of the party. Are they single, family or multi-family groups? Who is paying for the vacation? How do they pay, (credit card, electronic fund transfer, payment programs)? Are they planners or impulsive? Do they book early or at the last minute? Are they attracted to discounts, promotions, packaging or reward programs? Are they bringing a pet? Are they active or laid back? With a little imagination, you can extrapolate about their preferences. For example, do they want to be as close to the slope as possible or is the view and proximity to great restaurants the more critical factor? What is the determining decision maker: price. Convenience or quality?
Reading the Story in Your Data
Believe what you wish, but prove what you can!” Carmine Savastano
Reading your data is like reading a good novel. It will always tell a powerful story. In some cases, it is a tragedy, but most often it is a Charles Dickens novel, full of hope, opportunity and good fortune for those with ambition, imagination and perseverance. Numbers and data have a compelling story to tell, but they rely on you to give them a convincing voice. Data expert Stephen Few notes, ”Data becomes useful knowledge when it builds a bridge between a question and an answer. This connection is the signal.”
The best way to visualize your PMS system is as a great database that contains all the vital information bridging your questions to answers, your problems to solutions. The primary purpose of a PMS system is to document all your reservation and transactional data. In order to accomplish this task, it is the repository of the most important attributes about the properties a VRM manages, including the number of bedrooms, location, rates, amenities, attributes, special features, etc. It tracks and stores all the transactional information, including rates, payments, taxes, extras, etc. It also collects vital guest information, such as where are they coming from, how large is their group, how did they pay, have they booked with you in the past, are they visiting for a special occasion?
PMS systems typically do an excellent job capturing the information needed to conclude a transaction, book a reservation, and ensuring everything is prepared for incoming and outgoing guests. While many PMS systems generate useful reports for operational purposes, most are not designed for a VRM to extract the customized data that tells all the nuanced relationships and stories that reside within the database. For most VRMs this would require a specialized staff member who understands the coding languages in which a PMS is written as well as the permissions required to get at that data (some of it is protected to avoid irreversible errors and unintended consequence that arise from inadvertently making changes).
Using the “data as a terrific book” analogy, for most VRMs, it is like trying to read a novel in foreign language. They know there is an exceptional story in there somewhere. They are intrigued, but absent learning a new language, they are resolved to wait for the translation.
Data mining solutions that cater to the vacation rental industry have been in place for some time though often hiding in plain sight. These are essentially easy-to-use query tools designed to extrapolate disparate pieces of seeming unrelated data, build the bridges that connect them, and help one to understand the stories they are telling. These tools require no specialized knowledge and use familiar filters to sort and identify trends and patterns and to assemble the information into useful and actionable reports. Common filters include date ranges, house types (e.g. condo, single-family) number of bedrooms, location, rates, amenities, (pools, hot tubs, game rooms, elevators, in-home theaters, linens) and promotional packages. The filters allow the VRM to see performance comparisons on an array of metrics including average week-by-week Booking Windows, ADR (average daily rate), year-over-year reservations and revenue comparisons, total revenue, total nights booked, among others for both individual homes as well as specific house types as sorted by any combination of filters selected.
The guest database query tools are similarly robust. The information here is a marketing team’s dream. In many ways extracting often neglected information to define your guest’s previous buying patterns and matching them to open inventory is the golden ticket. This often-ignored group is like proselytizing to the converted. These are people who are already sold. They have done business with you in the past. They are familiar with your company and inventory. You do not have to sell them on coming to your area. You know when they come, how much they spend and what motivates them. Despite having this information at hand, many if not most VRMs are more prepared to spend their money and resources acquiring new clients rather than investing in and preserving their current fanbase.
Finding the relationships between your inventories performance and your guest’s previous buying patterns and preferences represents the best, easiest and least costly way to fill open periods. It also reinforces relationships with your guests, keeps them coming back and contributes to owner retention through higher occupancy rates.
Numbers have an important story to tell. They rely on us to give them a clear and convincing voice. To illustrate here’s a simple short database story:
Step 1. Using a data query tool, set your filters to show the average booking window for the month of July for 5- and 6-bedroom oceanfront homes with a pool. The query tells you that these homes are normally booked at least 180 days before arrival (Booking Window). Step 2. Query your database to identify any 5- to 6-bedroom, oceanfront homes not booked 180 days before arrival. Step 3. Query guest database to show any guests who have not yet booked; e.g. Previously rented 5-6-bedroom oceanfront home in July, guests who always rent homes with a pool, guests who tend to book later in the buying cycle, guest who only book with a discount. Any identifiable pattern your imagination can come up with. Step 4. You save the day. The “happy-ever-after” ending is you find matching guests for an open homes, you develop targeted personalized emails, curate a great guest experience and generate revenue for your VRM.
The greatest advantage to using your database to craft targeted and customized matches between your guests and your open inventory is that it is by far the least expensive and most effective way to fill vacancies and retain customers.
I never guess. It is a capital mistake to theorize before one has data. Insensibly one begins to twist fact, to suit theories, instead of theories to suit facts.
Sir Author Con Doyle