Averages Are Meaningless: Why Hotels Needs More Than Simple Metrics

The Pitfalls of Relying on Averages

• Masking Variability: Averages have a way of ironing out peaks and valleys. Like in our occupancy example, they hide the days you're hitting full capacity and when rooms sit sadly empty. You miss out on celebrating the potential of those fantastic Saturdays and investigating the underlying causes of the bleak Fridays.
• False Trends: Looking at your average metrics over time might falsely indicate that things are steady. In reality, your hotel could fluctuate wildly. Say your monthly occupancy has averaged 60% for the last six months. This might hide the fact you've been on a roller coaster, going from 40% occupancy to 80% and back again.
• Missing Outliers: If a few specific days drastically outperform or underperform the rest, the average doesn't spotlight them. What if this past New Year's Eve, you had 95% occupancy while you usually struggled during that period? That's a valuable outlier! Your average won't scream at you to figure out why that day was different and how to replicate that success.

Getting Actionable Insights Beyond Averages

• Segmentation: Ditch the one-size-fits-all approach! Break down your data into meaningful segments. A few great ways to do this include:
  • Day of the Week: Like our occupancy example, this lets you pinpoint high-demand and low-demand days.
  • Time of Year (Seasonality): Discover the impact of peak seasons, holidays, and slow periods.
  • Room Types: Is there a preference for suites versus standard rooms? This affects inventory and pricing decisions.
  • Source of Booking: Did guests book directly through your website or a third-party platform? This informs marketing and commission strategies.
• Distribution: Visualize how your data points are spread out. Instead of just the average, look at the range. Tools like histograms are excellent for this – they'll quickly show if your occupancy clusters around a specific number or is widely scattered.
• Focusing on Extremes: Look at your best and worst days, weeks, or periods. Ask yourself:
  • What worked exceptionally well and led to that spike? Can you replicate it?
  • What's dragging down performance on low-performing days? What needs to be addressed?

Real-World Applications

• Staffing: Knowing that Saturdays are your busiest day means you can avoid understaffing and being overwhelmed, or conversely, avoid overstaffing on quieter days. It helps ensure the correct number of skilled employees are on hand when you need them without wasting resources when demand is low.
• Pricing: While a simple discount for low occupancy periods might seem tempting, you're right that it can be ineffective and can devalue your brand. Here's a more strategic approach:
  • High-Demand Periods: Target premium guests with high-demand prices while potentially bundling in value-added extras (upgraded room, complimentary breakfast, etc.) that further justify the higher rate.
  • Low-Demand Periods: Rather than slashing prices across the board, consider smaller, symbolic discounts paired with add-ons or experiences that attract guests without undermining your brand value. This helps you create a unique offering and potentially entice travelers from competitors.
• Marketing: Target your campaigns strategically in terms of both timing and channel:
  • High-Demand: Focus marketing efforts on attracting guests willing to pay those premium prices. Highlight quality and memorable experiences to the right audience.
  • Low-Demand: Don't neglect marketing during slower periods! Craft promotional messages focusing on the carefully bundled added value. Consider niche targeting by segment – perhaps your specific area or hotel can cater well to weekend getaways, staycations, or business travelers even during off-peak times.

Conclusion