Measuring up: Driving the travel economy by changing how – and what – we measure
Online reviews and credit card transactions are useful new metrics
Randy Rudasics has managed the Yampa Valley Entrepreneurship Center at Colorado Mountain College for 15 years. In that role, he nurtures entrepreneurs while keeping a close eye on the Routt County economy.
Rudasics said that while the pandemic has spawned a wide variety of challenges for businesses, key operating metrics in many ways remain unchanged from a year ago. They include monitoring website and social media traffic, average revenue per transaction, average revenue per square foot, gross margins, average sales per employee and table turns at restaurants.
He added that successful business people keep an eye on larger community metrics such as sales tax revenues, lodging occupancy rates, school enrollment, flights and flight loads, and unemployment insurance.
“These are important because it helps you keep a handle on things like employment needs and inventories,” he said.
Rudasics added two metrics that deserve close monitoring as Steamboat eases out of the pandemic are online reviews and credit card transactions, which have grown as cash has fallen out of favor and more business moves online.
That pandemic-driven acceleration of business moving online is likely to continue post-pandemic. Rudasics said that while consumers will return to local retailers at their physical locations when they feel more comfortable going out, the shift online is a permanent one.
“We’ve all set up new accounts with new vendors and learned how to use online tools,” Rudasics said. “Those trends will push some percentage of business to online options that weren’t there a year ago.”
Destination travel providers have long since adopted reliable, actionable metrics to gauge the success or failure of their efforts to create thriving travel economies. And whether it’s the relatively isolated nature of their economies, the seasonality of revenue streams or the significant infrastructure requirements of snow sports, mountain travel partners and suppliers are proactive with a wide range of data.
But suppliers and their overall communities have both a need and opportunity to change how and what they measure to drive the evolution of the industry.
“How” you measure – recovery vs trajectory
Typically, suppliers and governments measure quantitative performance such as taxes, visitation and resource use in terms of year-over-year (YOY) comparisons. Measuring during similar periods helps ensure that conditions such as weather, economic cycles and holidays are similar in both periods, allowing them to identify what is and isn’t working on the operational or promotional side.
The resulting data provide a measure of annual growth or decline, which becomes actionable. But when you encounter disruption in one of the data sets (say, a pandemic, to use an unlikely and extreme example), interested parties need to adjust to ensure they’re seeing performance in the right context.
For example, if we measure lodging bookings at mountain resorts in the third week of March 2021 versus 2020, we find that bookings are up 1,580% due to shuttered destinations at the same time last year. That, in a nutshell, is a recovery metric that helps you understand emergence from the downside, but has little long-term value.
For long-term value we add more data and also compare the same week versus 2019. The results? Bookings are up 58.5% compared to the same week in 2019. We now have both a recovery metric and a long-term trajectory metrics to qualify our recovery findings and make sure we’re on track. For the record, the current 2021 gains are dominated by pent-up demand, with the dramatic gains over 2020 also largely attributable to last year’s shutdown.
While this is a simplified example, the Insights Collective and I recommend that a multi-year discipline be applied across all data points measured, so that decisions through the recovery keep the long-term interests of the supplier or destination on track.
“What” you measure – shifting long-term interests?
Major disruptors have a way of creating challenges and opportunities, but rarely as aggressively as 2020. While many suppliers and towns are looking forward to a return to “normal,” others see this as an opportunity to drive change and address long-standing challenges like workforce housing, community relations, over-visitation or differentiation, to their competitive advantage.
Some of what was important in 2019 – generating foot traffic in a particular part of a town, for example – is still important, but may be lower on the list in 2021. Shifting away from volume in favor of exclusivity, visitor infrastructure in favor of local lifestyle, lodging tax in favor of workforce housing or any one of a dozen other shifts, are all initiatives destinations may identify that will require new ways to measure success.
Carl Ribaudo, president of SMG, and a co-founder of Insights Collective, suggests that resorts may pivot towards “looking at residents’ satisfaction with tourism as it’s currently delivered, making sure it truly benefits all segments of the community.” Ralf Garrison, founder of the Collective, has another approach, but perhaps to the same end, suggesting there’s an opportunity for suppliers and destinations to be more selective in “identifying the type of visitors that are most compatible with the destination.”
Local satisfaction vs. visitor compatibility
In the first instance, we’re adding Resident Satisfaction to the things being measured, while the Garrison approach compels you to identify and measure traits of consumers before they arrive, then refine, repeat and measure again. As an aside, and not to diminish the targeting efforts of destination marketing organizations, while many are engaged in some version of that exercise, visitor traits have most often been driven by price and access rather than premeditation.
In a quantitative example, Bill Wishowski, director of operations at the Breckenridge Tourism Office, says “focusing on room nights (instead of occupancy) has become a higher priority for us as the number of available units has changed year-over-year” an example of getting in front of changes to second-homeowner and rent-by-owner markets by measuring differently.
The travel industry has largely measured success as revenue gained through price since the Great Recession, but is also something of a victim of that success. There are compelling reasons to measure recovery and trajectory in terms of a return to normal. But there are equally compelling reasons to embrace changing consumer, resident and societal dynamics to measure success in new ways, something mountain travel professionals have proven themselves more than capable in the past twelve months.
Insights Collective; a Tourism Economy Think Tank and Resource Center – is a collaboration of destination travel industry experts who are collaborating and working, together with mountain resort communities and their stakeholders, to understand, plan, and navigate through the emerging tourism marketplace. http://www.TheInsightsCollective.com / email@example.com
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