During a recent chat with LODGING at Red Roof’s Regional Meeting in Dallas, Chief Information Officer Ted Hutchins and Senior Vice President of Revenue Generation & Analytics Alex Javier Cisneros emphasized the positive—the brand’s performance even during the worst of the pandemic. They also described how and why their economy-sector brand is using business intelligence (BI) to make smarter decisions, including when to discount prices, how to attract the right guests, and what technology they should consider.
How did your properties fare during the pandemic?
Cisneros: During the worst of COVID, we were operating at 40 percent occupancy, which was much better than many in our segment. We also learned a lot; COVID actually helped us think more about who our customers are—or could be—and how to get them to stay with us.
Hutchins: As well as we did during the pandemic, since spring, despite its continued presence, we’re doing almost too well because of the labor shortage. Alex and I are both struggling with the issue of rooms availability—planning for more and less demand; this was especially challenging over the summer, when we were often selling out.
How have you been developing and applying your respective areas of expertise to face these and other challenges?
Hutchins: The first couple of years I was here, we spent just a lot of time just building all the data repositories. From an infrastructure perspective, we use Microsoft Power BI. My group and I do all the data cleansing hygiene, which Alex has developed further and began using in innovative ways once he joined us.
Cisneros: Building upon the foundation of a very clean data warehouse built by Ted’s team, we are investing in customer analytics to understand their preference—where they become engaged, where we lose them, how we can recover their business—then adding pieces on the revenue-generation process, like pricing and revenue management.
How is BI used to optimize revenue?
Cisneros: Our segment doesn’t conform to the model used to optimize revenue in the rest of the industry. While in other segments, bookings are made two weeks ahead, our demand curve is much closer; 60 percent of our bookings are made in the last 48 hours, so dropping rate and discounting prematurely doesn’t make sense for us. We’re now adding some other elements to the foundation of BI tools that were in place to look into the future to decide where to head next. This includes using Python and R—which use data manipulation and visualization—for statistical analysis.
How are franchisees benefiting from access to data generated by BI?
Hutchins: Before, when franchisees asked revenue managers a question they were not prepared to answer, they would have to wait for the information they might need to make decisions. With the BI tools we have now, that franchisee can access a picture of performance—such as with a map or chart—which is easier to understand and act on than numbers and statistics. Also, unlike the methodology used in the past—Excel spreadsheets and other reports—data generated with this system is interactive, not just static, so they can delve further in.
What is your vision for the future, including infrastructure to realize that vision?
Hutchins: We’re passionate about the guest experience, and there are ways to use technology to improve it for them, while also using it to improve the experience of franchisees, including their bottom lines. BI tools can help franchisees optimize their business by using this information to learn about guests and price rooms according to principles of dynamic pricing. For the guests in the room, we need to bring the level of “infotainment” up to that delivered now by midscale products. But the buzzword of the day is something that used to be called self-service and is now “contactless service”—what I like to think about as a friction-free experience for the guest all the way from booking, to check-in, to checkout, to exiting the property. Just as friction points have been removed by car services and airlines, guests should be able to bypass the front desk if they so desire.
What then would you say is your vision for the present?
Hutchins: While the bottom line in our sector may be providing a clean room at a great price, beyond that, we need to understand what our guests want and expect today and how we can provide what really matters to them and still turn a profit. We can work toward providing that better in-room infotainment and the frictionless guest experience, but, ultimately, the best immediate strategy is to go after customers who won’t consider choosing another brand over ours and those like them. For us, it’s those traveling with pets. We are the only pet-friendly, consistent chain in the United States. Regular guests know what to expect from us when they’re traveling with their dog. And that’s a customer that’s otherwise hard to get because they traditionally avoid economy brands.
What is the overall takeaway about how Red Roof is using BI?
Cisneros: We are now in the process of becoming a data-driven environment. With BI, we are all looking at the same data—information that can lead to more engaging conversations about how to develop strategies to, for example, figure out why a hotel is underperforming.
Hutchins: Now, we can consult the data to address the underlying issues. With timely answers to their questions at hand, operators don’t need to just go with their gut.
Cisneros: BI gives revenue managers a better ability to analyze and apply data to improve outcomes for franchisees. It can provide answers to more pertinent questions. Sometimes the questions should be not just about getting more bookings, but about getting the most profitable bookings. If you’re operating a hotel, if a booking costs you 10 percent here, 15 percent there, 20 percent there, the challenge is to find the optimal mix, which is now possible with the data we have.