Industry Update
Opinion Article14 May 2019

Why You Should Choose Automated RMS

By Aymeric Erulin, Multi-Property Revenue Manager

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Erulin

After writing my last article (Three ways to upper your revenue management game), I was surprised by a few questions I received from hoteliers doubting that automated RMS could do a better job than a senior revenue manager. Hence, my profound belief that the industry should adopt automated RMS, the software will not fully replace a revenue manager whose mission will go far beyond pricing & planning.

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Brain and tools are limited

As a revenue manager and your excel spreadsheet you can look easily at your main KPIs compared to last year, maybe the same point in time and if you are very lucky you can also compare those data to other periods in the year. Also, if you are thorough you need to do that twice for each decision: once when you take it, and once when you need to asses it. More realistically, the quantity of data one can physically analyze per day is limited by our tool, our time and often clouded by our feelings/beliefs. To theses challenge you can also add the quantity of available data, the time lost just to extract it (if you can access it which is another technological challenge) and the time needed to proceed to a full analysis that you can then multiply by the number of days our hotel is available for sale. On top of this, and despite the fact that revenue management is based on a mathematical set of rules combining statistics and probability, one rule does not fit all (different hotels for sure but also different days, month or even what we believe are comparable dates"). So if you believe you can achieve this for every single pricing and planning decisions for all the days your hotel is open for sale on your own in a day and still take the right (and objective) decisions, you are either Superman or lying to yourself.
NB: of course it is still possible handle basic revenue management by yourself with excel, but you will not go really far nor deep.

Market knowledge is not a metric

Market knowledge means everything and nothing at the same time. It could be defined as the global understating of a market: the events, the competitors, the seasonality and the acceptable pricing & planning. And hotels use it to measure the value of a revenue manager: "a good revenue manager has a good market knowledge". How can this be quantifiable? A situation only happens once and no one will ever know if this was the best solution (you beat competition? yes fine, but you could probably have done better) Also, the knowledge of your market is not really something you can acquire for the simple reason that a market is not a stable reference (neither yearly, nor monthly, nor daily). We still believe we can, but our market is constantly changing, not necessarily in its global picture or performance, but every day is a new day with new guests, new demands, new purpose of travel, and new events or meetings. Believing you know your market is what drives you to make unanalyzed decisions. It could be felt a certain situation is a "déja-vu" and that the decision taken last time was the right one. What says that the first Wednesday of June is comparable to any other dates? Is the booking pattern exactly the same? Are the same clients booking your hotel through the same channel at the same time for the same reasons? Of course, they are not and this is why you need the help of a machine to help you take these decisions and to focus on what's really important - the long term strategy & plan.

Revenue managers will still be key (but differently)

Well no, of course, they are not. But there are not useful for the reasons one could think about. The revenue manager 2.0 will not be making decisions but he will be the essential fuel for the machine to properly work. He will also be the point of contact for general managers, HOD, owners to explain what they can expect for the upcoming days/months/years through a translation of the RMS decisions into a set of comprehensive information. This will also give him time to work on the long run and not day-to-day decisions, this is how results will be improved and the payroll expense will remain profitable.
RM 2.0 will be like a pilot: he does not manually fly the aircraft but adjust the few parameters ensuring all passengers arrive safely at destination while giving them useful information to make them feel safe.

Technology is improving fast and even though current classic revenue management organization will still work as it is today and that the goal will remain increasing total RevPAR, there is a lot to gain by embracing the transformation of current working methods and evolving with the new products available on the market.

Find your revenue management system

A lot of different system are available now on the market. From the most corporate (and often expensive one) such as IDeaS to new players making a strong step within the market with easy to use & cloud based tools as Beonprice, the most adapted solution to fit your need is already available ! HotelHero short-listed a wide range of them. Click here to access the list.

Aymeric Erulin

Aymeric is a graduate from the Ecole hôtelière de Lausanne currently working in Revenue Management in Zürich, Switzerland. Technology and innovation enthusiast, he focuses on the unavoidable means required to bring organizations and working methods to their most efficient and up-to-date form.

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