Experience vs. Data: A Tale of Two Commercial Managers
08 October 2024
Two contrasting approaches to management shape how hotel businesses navigate challenges and seize opportunities: one based on instinct and experience, the other driven by data and analytics. While instinct may offer quick solutions in the short term, data-driven decision-making provides the strategic insights necessary for long-term growth and sustained success.
In this blog, I want to explore this crossroads by telling the stories of two commercial managers—one who still trusts his instincts and another who has fully embraced data. Through their stories, we'll see how both approaches shape the way they run their hotels and the impact it has on their success. It reflects how the industry is changing and why finding the right balance between intuition and information is vital to thriving in today's hotel environment.
I've been in the hotel business for over 35 years, and when I first started, things were very different. Back then, access to data was limited, and decisions had to be made quickly, often without much information to back them up. Like many others in the industry, I had to gain experience fast and rely heavily on my gut feeling to guide critical business decisions. But deep down, I always knew I was missing something important.
As time went on, I began to gather data in a more structured way, using it to inform my decision-making. I could see how having the correct data made a noticeable difference—how it helped me make better, more informed decisions and, ultimately, how the business improved and became more financially sustainable in the long run. But here's the thing: I still trusted my experience and instincts even though I became more data-driven. I couldn't imagine a world without solid data to back up my gut feeling.
This evolution in my approach to management reflects a broader shift across the hotel industry. Today, managers find themselves at a crossroads between two very different management styles: trusting years of experience and instinct or relying on the precision of data-driven decision-making. Let's dig into the story.
Meet the Managers
The Veteran: John (50s)
John is a seasoned hotel commercial manager with decades of experience. He's seen the industry's ups and downs, navigated countless economic shifts, and weathered more competitive changes than he can count. His career began at a time when the tools for analyzing market data were far more limited than they are today. As a result, John had to rely heavily on his gut feeling—honed through years of managing different properties, understanding the local market, and learning from successes and mistakes.
Over the years, John has developed a deep sense of what works and what doesn't in his hotels. He knows how to forecast demand by reading market signals that aren't always evident in the numbers. When setting rates, launching promotions, or making marketing decisions, John trusts his instincts, shaped by decades of experience. He firmly believes that data can only tell part of the story and that the true essence of hotel management lies in a manager's ability to "feel" the market—something that no algorithm can replicate.
John's philosophy is clear: Numbers cannot replace experience. In his mind, data is a helpful tool but far from essential. He prefers to make decisions based on his business knowledge, and he's confident that his instincts will continue to guide his success, as they have for years.
The Data-Driven Manager: Sarah (30s)
In contrast, Sarah represents a new generation of hotel managers who have grown up in a world where data is at the center of decision-making. She's in her 30s and has been managing hotels for several years, but her approach differs distinctly from John's. Raised in the digital age, Sarah has always had access to a wealth of information. From the start of her career, she has been trained to analyze data, spot trends, and make informed decisions based on real-time insights rather than relying solely on gut instinct.
For Sarah, Business Intelligence tools like Demand Calendar are indispensable. She uses them daily to track key performance indicators, monitor on-the-books bookings, and compare current performance against forecasts and budgets. Sarah's approach to decision-making is methodical: She leverages historical data, predictive analytics, and real-time market insights to craft flexible and precise strategies. Whether adjusting pricing or launching marketing campaigns, her decisions are always grounded in data, allowing her to stay ahead of market shifts and identify opportunities early.
Sarah's philosophy revolves around the idea that information is power. She believes that in today's fast-paced and competitive environment, relying on data isn't just an advantage—it's a necessity. Facts, figures, and trends drive her decisions, but she also knows how to interpret data in a way that adds real value to the business. For Sarah, the ability to make data-driven decisions means minimizing risk and maximizing growth opportunities.
Day-to-Day Decision Making
John's Approach
When it comes to setting prices, John trusts his instincts. He has managed hotels for decades and has developed an acute sense of what works in his market. John doesn't spend hours diving into reports or analyzing spreadsheets. Instead, John takes a more intuitive approach: he reviews occupancy trends, keeps an eye on local competitors, and relies on his years of experience to adjust rates.
For example, if there's a big event in town or a holiday weekend, John knows that demand will spike and raises prices accordingly. He doesn't bother with complex forecasting models or market segment analysis—his gut feeling tells him where the market is heading, and he acts fast. His experience and gut feeling allow him to make quick decisions without being bogged down by data analysis.
Pros:
- Quick decisions: John can make rapid adjustments without waiting for reports or analysis.
- Instinct-based adjustments: Years of experience allow him to "read" the market, often spotting opportunities that aren't obvious in the data.
- Ability to act without overthinking: John's instinctual style lets him stay flexible and adjust quickly in fast-moving situations.
Cons:
- Human bias: Relying on gut feelings introduces the risk of personal bias, which can cloud judgment, especially in unpredictable or unfamiliar situations.
- Limited accuracy: While John's instincts have served him well, they don't always capture the complete picture, especially in volatile or changing environments.
- Difficult to scale: This approach works for John, but replicating it across teams or scaling it for more extensive operations is challenging without consistent data to back up decisions.
Sarah's Approach
As a data-driven manager, Sarah starts her day by logging into Demand Calendar to review her hotel's performance. The platform gives her a clear picture of her on-the-books data, allowing her to see current bookings compared to the forecast, monitor available room inventory, and evaluate her performance against budget and historical data.
For example, Sarah uses the data to dig deeper if she notices a dip in bookings for a particular period. She examines booking pace, assesses market demand, and compares her pricing against competitors. If the data indicates that she needs to adjust, she might tweak her rates, launch targeted marketing campaigns, or optimize promotions for specific guest segments. Everything is done seamlessly through the intuitive platform, giving her the confidence to make real-time decisions.
Pros:
- Decisions backed by data: Sarah's choices are grounded in real-time information, historical trends, and predictive analytics, reducing the likelihood of risky decisions.
- Reduced risk of human error: Sarah makes decisions driven by concrete data by removing emotional or instinctual biases.
- Ability to spot trends early: Sarah's approach lets her detect shifts in market demand, competitor pricing, or guest preferences well in advance, helping her stay ahead of the curve.
Cons:
- Reliance on data quality: Sarah's success still depends on the accuracy and completeness of the data she receives. Incorrect or missing data could lead to flawed decision-making.
- Potential to over-focus on metrics: While her decisions are data-driven, there's a risk of overly reliant on the numbers, which might sometimes lead to a lack of flexibility or creativity.
Response to Market Changes
John's Reaction
When a competitor lowers their prices, or an unexpected event like an economic downturn occurs, John immediately responds. His decades of experience prompted him to lower rates or launch promotional offers to maintain occupancy. While this fast action can protect his hotel in the short term, it carries significant risks. For example, by rapidly lowering prices, John may inadvertently trigger a price war with the competition, which benefits no one and erodes profit margins.
Moreover, while John's swift reactions might stabilize the hotel in the short run, they often fail to account for more subtle market changes that could impact the business over the long term. John may miss trends that indicate a slow but steady shift in guest behavior or broader market dynamics. In these cases, a more nuanced approach could make the hotel better off by positioning it for future opportunities rather than reacting solely to immediate challenges.
Pros:
- Fast action: John's instinct allows him to react quickly to immediate threats in the market.
- Experienced insight: Years of handling similar situations have allowed John to "feel" the market and respond quickly.
Cons:
- Risk of starting a price war: Quick price cuts could trigger a competitive race to the bottom, reducing profits without providing long-term benefits.
- Missing long-term trends: John's focus on immediate issues may cause him to overlook subtle, long-term changes in the market that could require a more strategic response.
Sarah's Reaction
Sarah's approach to market shifts is more calculated and strategic. She can spot subtle changes before they impact her hotel by relying on her Business Intelligence Tools like Demand Calendar. When competitors drop their prices or market conditions change, Sarah reviews the data, assessing long-term impacts rather than making hasty decisions. If the data suggests that demand will decline, she may adjust her rates or shift her marketing focus to different customer segments, but always with a long-term strategy in mind.
Rather than engaging in a price war, Sarah uses data to optimize her pricing strategy, ensuring that she maintains profitability while staying competitive. Additionally, she has the advantage of identifying market trends early, allowing her to take actions that make her hotel better positioned for the future, even in challenging times.
Pros:
- Informed, strategic decisions: Sarah's reliance on data allows her to make well-informed adjustments that fit into her hotel's broader strategy.
- Avoids reactive price wars: By using data, Sarah can maintain competitive pricing without sacrificing profitability in the long run.
Cons:
- Time for analysis: Though her decisions are data-backed, they may take longer to implement due to the time needed for in-depth analysis.
Results and Long-Term Impact
John's Outcomes
Over the years, John's hotel has maintained a steady performance, but it's clear that his reliance on instinct comes with limitations. While his quick reactions to market changes help him manage short-term challenges, the hotel struggles to adapt to significant shifts in the industry—whether it's changes in guest behavior, evolving traveler preferences, or the adoption of new technologies like digital marketing and advanced revenue management systems.
One key issue is that John's team spends significant time on manual tasks. Without automated, data-driven tools, the team gathers reports from different systems manually, analyzes data by hand, and adjusts strategies reactively. This reactive approach means they frequently play catch-up rather than stay ahead of trends. As a result, John's Hotel is slower in implementing new initiatives and may miss out on opportunities to grow revenue or optimize operations for the future.
Additionally, John's instinct-based decisions, while valuable in specific situations, may not always align with the broader, long-term goals of the business. In an increasingly data-driven industry, his hotel risks falling behind competitors leveraging technology to understand their guests and market dynamics better.
Sarah's Outcomes
In contrast, Sarah's hotel has seen significant revenue growth and performance improvement. By making proactive, data-driven decisions, Sarah has been able to anticipate market trends and capitalize on opportunities early. This forward-thinking approach has resulted in higher occupancy rates, optimized pricing strategies, and an improved ability to target the right guest segments.
Her team, equipped with Business Intelligence Tools like Demand Calendar, spends far less time on manual data collection and report preparation. Automated reports give Sarah and her team real-time insights into performance, freeing them to focus on executing strategic initiatives and analyzing future opportunities. This agility allows Sarah to pivot quickly in response to market shifts rather than reacting after the fact.
As a result, Sarah's hotel performs well in the present and is better positioned for the long term. Her data-backed decisions ensure that her hotel adapts to new trends and technologies, keeping her competitive edge in a rapidly evolving industry.
Conclusion
The contrast between John's instinct-driven approach and Sarah's data-driven decision-making highlights a fundamental tension in today's hotel management landscape. On one hand, John's decades of experience have taught him to trust his gut. His method has served him well; from his perspective, there's no need to change what's worked for so long. On the other hand, Sarah, who lacks John's deep experience, leans on data to guide her decisions. Her reliance on business intelligence tools like Demand Calendar allows her to stay ahead of the competition, spot trends early, and make precise adjustments based on real-time insights.
Both approaches offer valuable lessons. John's experience is a powerful asset, giving him an understanding of the market that can't be learned overnight. However, as the hotel industry becomes increasingly complex and fast-paced, relying solely on instinct is no longer enough. Data provides the edge that today's managers need to stay competitive and make more informed decisions.
Sarah, for her part, will continue to gain experience over time. As her knowledge deepens, she'll improve her use of intuition and data to make smarter, more strategic decisions. This blend of experience and data-driven insights will make her a formidable force in the industry.
However, if John doesn't embrace data-driven decision-making soon, he risks becoming out of touch with how hotels are managed in the future. He may continue to rely on his instincts until he retires, never fully understanding data's power to hotel management. The challenge for John—and many managers like him—is learning how to evolve, integrating data with their wealth of experience to drive long-term success.
For anyone reading this, the takeaway is clear: experience is invaluable, but data is the key to thriving in today's competitive environment. I invite you to reflect on your management style and explore how you can evolve by incorporating more data into your decision-making process without losing the wisdom of experience. This balance is the key to staying relevant and successful in the future of hotel management.