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Using business intelligence software to drive-up revenue

23 February 2006
Using business intelligence software to drive-up revenue

As an increasing number of processes in the hospitality sector have become computerised, the industry has seen the emergence of software tools that use this data to feed back valuable information into the business.

This practice, known broadly as business intelligence (BI), uses a wide range of applications and technologies to gather, store analyse and provide access to data to help companies make better business decisions.

BI applications include the activities of decision-support systems, query and reporting, online analytical processing (OLAP), statistical analysis, forecasting and data mining.

Revenue and yield management
One area where BI is popular in the hospitality sector is in revenue and yield management - allowing companies to use existing and historical data to make decisions on how they price rooms and allowing them to judge better their upcoming inventory requirements.

IDeaS is a leading player in this market, boasting clients such as Hilton, Hyatt International and the Dorchester Group. It has also recently been working with De Vere Group to roll out a revenue-management system across De Vere's estate of 19 hotels and 15 Village Hotels & Leisure Clubs.

The installation is a fundamental part of developing a revenue-management culture within the organisation, according to Mark Kemp, director of revenue management and distribution at De Vere.

The software takes current information from the group's reservations systems and combines it with historical data on bookings. It also automatically brings in data on how competitors are pricing their rooms and breaks down the business into different market segments - ie, leisure, conference, business travellers - and forecasts the level of future bookings based on the past behaviour of those segments.

Each De Vere hotel has a revenue manager who uses the information, together with their local knowledge, to make decisions about pricing and inventory management. The Village Hotels & Leisure Clubs revenue team has been recently centralised in Warrington and receives all information via the web-based system.

Kemp says it would be impossible for the revenue managers to extract the same information just by looking at the reservations on the books, and he thinks this constant transfer of real-time intelligence has led to a climate where pricing happens much more dynamically.

"We are making smarter decisions, which must lead to better results. We are looking at benefits that should bring an extra 3% revpar growth," he says.

Workforce management
Business intelligence is also being used in the area of workforce management to enable managers to make more effective decisions about scheduling and using staff.

One company in this sector is Workplace Systems, which has a history of working in retail, with the likes of Argos and WH Smith, but more recently has installed its software in more than 50 Whitbread pubs and across the seven Sports Cafe properties

In fact, the Sports Cafe Group was so impressed by the impact the software had on its business it asked the chairman of Workplace Systems, Ian Lenagan, to become non-executive chairman of Sports Cafe.

The workforce-management system tracks the ebbs and flows of revenue streams over time to build up a historical picture of the shape of the business and determine when things are likely to be busy or slow in the future.

Fed into this system is information about staff comings and goings as they swipe a card each time they clock on and off.

The information generated helps managers to make better decisions about rostering employees based on the requirements of the business and the monthly hours and preferences of staff members.

Lenagan says, on average, 20% of staff time is wasted, and that with bar pricing being so competitive, efficient use of labour is an area where companies can gain an advantage over their rivals.

"Labour costs traditionally make up a quarter of a bar's costs, so using staff more effectively can bring substantial savings," he says. In the case of the Sports Cafe, the system has enabled the company to reduce labour costs from 29% to 23% of revenue, according to Lenagan.

And with the Sports Cafe's flagship bar on Haymarket in London turning over an average of £90,000 a week, this represents a major saving.

But the principle also applies to smaller venues.

"A manager of a pub can tell you he will do £12,000 next week, but he can't tell you exactly which days and which times of each day will be the busiest," says Lenagan.

Workplace Systems hosts the package, and managers access the system via broadband on a PC. "We look after the technology, leaving the manager to get on with the scheduling," he says.

Booking efficiency Independent hotel reservations, conference- and event-management agency Expotel is also employing business intelligence software to help its agents work more effectively in its four UK call centres.

Using display and alerting technology from Symon Communications, the company can see, in real time, the call status of customers, wait times and the availability of personnel.

Expotel, which booked nearly two million bednights worldwide in 2005, displays this information on large wallboards, visible to every call centre operator. Calls waiting beyond a predefined threshold change colour and prompt a bleeping noise, and even start to flash, with a louder noise, if the call remains unanswered. Information on how many operators are available, actually working on a call, or completing post-call administration is also displayed.

Martin Pearce, networks and telecommunications manager at Expotel, says the technology has prompted call centre staff to process calls far more rapidly, significantly reducing call-waiting times and lost calls.

The company is now planning to expand the system to include data from the reservations system. This will, says Pearce, enable real-time comparisons between current and historical sales patterns, by department, by client and by agent.

"By adding information from reservations and finance it will become an essential business tool, offering unprecedented insight into customer behaviour and profitability that will drive real-time sales strategies," he says.

Profit protection Another business intelligence application that can be applied to the hospitality space is profit-protection software.

IT company IntelliQ offers a system called RetailKey Loss Prevention, which uses a business's electronic point of sale data to identify suspicious activity, which might include: excessive no-sales, wastage, discounting, and refunds.

The software is already used by retailers such as B&Q and BHS and, according to product development director David Snocken, the company is looking to break into the hospitality sector.

He says that while many retailers have relied on technologies such as CCTV and tagging to prevent fraud, theft and other forms of shrinkage in the past, business intelligence tools like RetailKey "can help identify a broader landscape of loss".

One significant area, says Snocken, is the refunding of customers. If a company's refund policy is too lenient or misunderstood by employees who hand back money to customers too easily, this can lead to substantial losses over time.

To see trends of this kind requires a lot of information, typically three to six months' worth. RetailKey centralises this information and allows managers to run reports on any given activity within the business.

"Through analysis of this data, businesses can focus on the root causes of shrinkage, enabling them to change company policy to reduce loss over the long term," says Snocken.

Web links
IDeaS
www.ideas.com
Workplace Systemswww.workplace-systems.com
Symon Communicationswww.symon.com
IntelliQwww.intelliq.com

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