How Technology is Transforming the Future of Revenue Management for Hotels — Source: LodgIQ™

If you ask any hotelier these days, “What is your focus now that demand for travel is returning?”, invariably, their answer will allude to improving pricing strategy and sales and enhancing revenue management capabilities.


Because the hospitality industry grapples with extremely high customer acquisition costs - one of the biggest challenges facing hotels of all types is to preserve margins. Not to mention, a typical hotel makes roughly five million pricing decisions every year.

Tech investment is central to preparing for the future, and with increased costs, labor shortages, supply chain disruptions, inflation, economic uncertainty, and heightened data-related complexity, more and more hotels are turning to technology to drive their revenue management strategies. And given such high cross-functional integration, revenue teams are starting to get more involved in marketing and sales-related technology decisions.

These conditions have hotels seeking out technology that leverages automation to enhance the efforts of traditional revenue managers. This has ushered in a more intelligent, profitable, and efficient era of revenue management. A modern revenue management platform that offers this type of collaboration is no longer a ‘nice to have’ option. Rather, it’s a necessity to respond to competitor actions with agility to retain and improve market share.

Automation, AI + People = Profits

Over the last two years, the hospitality industry has weathered its greatest storm yet. The pandemic-related challenges faced by hotels and travel companies often felt insurmountable, and, in turn, the industry at large was forced to embrace rapid change. It would seem that ‘doing more with less’ has become the swan song of revenue professionals everywhere.

Fortunately, that change has also presented exciting new opportunities. More data and technology are available now than ever, which has unlocked the potential for incredibly sophisticated pricing, product segmentation, and category management tools to supersede the legacy frameworks we relied on. To this effect, advanced techniques like automation, artificial intelligence, machine learning, and predictive analytics are now (finally) being applied to revenue management. With this shift in approach, hotels can feel confident that they are selling the right product, to the right guest, at the right time, using the right distribution channels and tools at the right price. You might be wondering, though, where does AI or machine learning come into the picture?

According to McKinsey, AI-based pricing and promotion can add between $259 Billion to $500 billion to the global market value. Moreover, with the developing business models, changing market dynamics, and constantly increasing competition, it has become imperative that companies turn to data for making accurate, reliable decisions.

Over the last few years, AI has consistently been splashed over headlines, touting its potential as the future of technology across both personal and professional use cases. Gone are the days of tedious, manual processes and abstract hypotheses. AI exists to effectively automate inefficient workflows, which enhances productivity and operational bandwidth, eliminates downtime, enables companies to provide 24×7 consistent support, and much more. When we apply this technology to hospitality revenue management, we enable a data-driven approach that helps hotels improve the accuracy of their evaluations and maximize revenue and profit opportunities.

The influence of AI, in this case, is not posed as a solution devoid of the human touch; autonomous intelligence is simply not likely when it comes to the future of hotel revenue management. Instead, AI used in conjunction with hotel talent and processes will pave the way to a better employee experience and optimized forecasts based on real-time data. Finally, Revenue Managers can also use AI to automate repetitive tasks, freeing up their time to redirect their energy and focus to more critical tasks.

The Transformative Effect of Next-Generation RM Technology

The resounding impact of next-generation revenue management has already been demonstrated. According to a recent study, Revenue Management Software Market revenues were assessed at US$ 27.2 Bn in 2021 and expected to develop at a CAGR of 12.3% from 2022-2032. Toward the finish of 2032, the market is supposed to arrive at a valuation of US$ 103.7 Bn.

When it comes to revenue management automation, McKinsey reports that AI-based pricing and promotion have the potential to deliver between $259.1B to $500B in global market value, and BCG has found that automating revenue management systems' pricing rules with AI can increase revenues up to 5% in less than nine months. Moreover, if the pandemic taught us anything, it should be the importance of tech-enabled market resiliency. Now, more than ever, hotels should look to invest in technology that empowers a more agile (and data-backed) response to shifts in demand and industry trends.

Fortunately, AI-driven RM platforms automatically analyze market variables when optimizing forecasts and room rates, including the current supply and demand in the destination, room rates of direct and indirect competitors, historical room rates, flights, and local events, among many others. This helps to independently inform and optimize pricing, inventory, marketing, and channels while accelerating revenue management in areas such as portfolio price optimization and leakage prevention. Not only that, but historically challenging and expensive revenue management processes can now be executed at a lightning-fast pace without sacrificing effectiveness or alignment with the needs of the business. Finally, next-gen revenue management systems like LodgIQ work in the background to seamlessly identify and eliminate unproductive guest discounts and segments, offer powerful rate optimization at both BAR and Room Levels, and monitor and flag potential revenue changes/risks.

The writing is on the wall: future demand data provides a unique competitive advantage for the hospitality industry, and hotels need technology that involves a daily cycle of diagnostic, predictive, and prescriptive analytics. Hotels can make the best pricing decisions and maximize ROI by combining the power of automation and AI with traditional revenue management talents. AI-powered revenue management technology acts as the ultimate co-pilot to any revenue manager – so why should any hotel attempt to navigate the future without such a profitable advantage?

About LodgIQ

LodgIQ™ is a leading commercial strategy platform for the hospitality industry, transforming data integration and decision-making for hotel commercial teams. Our platform consolidates Revenue, Sales, and Marketing data, providing insights into market trends and consumer behaviors for strategic, data-driven decisions. Evolving from an AI-enabled Revenue Management System, LodgIQ offers a real-time, comprehensive view of key metrics, enhancing room rate adjustments, marketing campaigns, and sales strategies. Committed to optimizing operations and maximizing revenue, LodgIQ is the essential tool for unified commercial strategies in hospitality.  Currently working with over 550 hotels LodgIQ"s products combine sophisticated machine learning with an intuitive and powerful user interface delivering advanced recommendations and actionable analytics. LodgIQ is headquartered in Silicon Valley, with offices in New York City, Phoenix, and Bangalore. For more information, visit 

Puzzle Partner (for LodgIQ)
Ivana Johnston, Co Founder