Pioneering Software — Artificial Intelligence - By Jules Sieburgh, CHTP, CHA [inactive]
HITEC - Celebrating 30 Years of Hospitality Technology
The following was reported in the September 1988 issue of The Lodgetown Globe, "Inquisitive crowds waited in numbers to find out about the CLS Yield Management solution and were not disappointed at the International Association of Hotel Accountants (IAHA, now HFTP) show held last June in Nashville. Half-hourly Artificial Intelligence/Yield Management (AI) demonstrations were necessarily scheduled to serve the interested crowds.
Those were the pioneering days of technology, but Erik Orkin must have thought, "I have been preaching yield management for years, and the airlines have been very successful with it." All true, but the excitement of the summer of 1988 could not be denied.
The project started in October 1987, when Dave Berkus, president of CLS, Inc. approached me and proposed to Sonesta an expert system that had the following components:
- A "knowledge base" to work from, a property's information, rooms, facilities, existing bookings, rates and packages, forecast and booking expectations, willingness to oversell, etc. All very detailed by market segment, rate class, source of business, procurement cost, etc.
- Rules or triggers that the property would act upon — these were the situations that would require actions. Rather than management examining stacks of reports, the system would flag dates that might require some change in strategy. The critical factor is that these rules were continually changed.
- Strategies that would typically be implemented based on the triggers — decisions about rates and occupancies that were implemented in the PMS.
- An interface between the expert system and the PMS to update the knowledge base with the latest reservation transactions and front-office activity, and returns to the PMS the recommended and approved strategies from the expert system in the form of overrides to standard rates and restrictions to available inventory.
The project at the Royal Sonesta in Cambridge provided substantial benefits to the property, as well as an invaluable experience for the players involved. I have often compared the process of documenting the manual and intuitive decisions made by the reservations and sales departments as "professional psychotherapy." What also evolved was an unprecedented cooperation between sales and reservation operations, prior territorial maneuvering was replaced by cooperation to achieve a visible goal.
But in the end, it turned out to be the focus upon the process of determining the rules and making manual decisions that yielded the most revenue gains — not the exotic AI machine. So CLS retreated to reprogram the yield system into the reservation and front office PMS system itself, where it resides today as just another valuable extension of the database. AI was a quiet revolution — at least 10 years ahead of its time.
Jules Sieburgh, CHTP, CHA, is senior vice president and CIO for Host Marriott Corp. Sieburgh is a member of the 2002 HITEC Advisory Council and an inductee to the HFTP International Hospitality Technology Hall of Fame.
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