The Modern Evolution of the Hospitality Industry

Over the past thirty years, the hotel and restaurant industries have evolved at a rapid rate, with the hotel industry coming to maturity before its less capitalized cousin. Hotels use a wide range of data analytics to set rate, staffing levels, connect with their customers, and bring that unique attention required to obtain repeat customers. Restaurants behave more like hotels did before the 1990’s; by relying on their staff to remember regular customer’s habits, by not differentiating their most profitable customers from least profitable, and by making decisions without the guidance of advanced data.

In the early 1990’s the US hotel industry was practically decimated. A change in the accounting rules during the 1980’s created too many rooms for the market to absorb, and the Savings and Loan crisis almost destroyed the industry. Many profitable chains went out of business, and some small operators were bought out at bargain prices. Business intelligence went from being an unlikely expense to becoming an essential unit for hotel companies. The industry is still evolving today; innovative hotel companies are using these techniques in their food and beverage operations, function spaces, and spa services.

Business evolution is inevitable, but it takes a major change in operating climate for most owners to recognize the need to change. That change occurred with the economic meltdown of 2008, and the ‘V’ shape recovery that many of us hoped for did not occur. Consumers are trading full service meals for quick service establishments (i.e. Panera), and corporate customers are rarely buying private dining spaces, cutting into restaurateur’s already slim profit margin.

Hospitality Enhanced was created with this paradigm shift in mind. We offer a Business Intelligence unit for hire, taking your data and turning it into something you can use to make decisions. We train you and your key staff in the concepts of data mining, and for more advanced users, even set you up to use these tools without us. We recognize that every profitable restaurant business will be adding these services over the next few years, so our client’s self-sufficiency is very important. We are a collaborative organization with very few fixed costs, and most of the software we use is Open Source. We embrace this unique, new operating environment, and strive to increase our client’s margin.

Evolution is inevitable, embrace it, or outsource the expertise of those who do. Data is the new oil; it’s time to start using yours to increase profitability.

Data Mining for the Restaurant Industry

Data mining, also called data discovery, is the process of exploring and analyzing large quantities of data in order to discover meaningful patterns. Many different industries use this tactic to gain a better understanding of their operations; in the hospitality industry, hotels use it to differentiate their best customers and to make more informed revenue management decisions. Conversely, in the restaurant industry, very few operators are aware of or are using this essential information to make decisions, and are not as profitable as a result.

Hospitality Enhanced, a data driven decision-making consultancy, has been created to assist restaurateurs and their managers in utilizing their data to make more informed business decisions. According to the academic paper Data Mining on Time Series, an Illustration using Fast-Food Restaurant Franchise Data, “mining the large amounts of transaction data allows each restaurant to improve its operations management… and product management." The authors were referring to regression analysis, one of the principal tools employed by data mining experts.

For many restaurateurs, this information is not intuitive, and is therefore dismissed as not pertinent in their day-to-day operations. Many owners and managers are not grasping the extent of the paradigm shift that has occurred in this new economy; as a result, beginning in January we will be creating video blogs that introduce data mining techniques to the restaurant industry. Hospitality Enhanced’s goal is to guide the food and beverage industry in comprehending the advantage of fully utilizing the data at their disposal.

Our first video blogs will address the subjects listed below. Since collaboration is one of our key values, we want to know what you, the industry insider, would like to learn about. Please email hospitalityenhanced@gmail.com, or post ideas in the comments below.

-Intro to data mining
-Open source technology and the restaurant industry
-American eating habits and data modeling
-Data visualization and day-to-day operations
-Data and its use in a new (or potential) operation

Data is the new oil; it is time to start using yours to increase profitability.