What are the best technology solutions for optimizing revenue?
— 11 experts shared their view
Nothing divides revenue managers more than the discussion around artificial intelligence and machine learning. The two schools of thought fall into the category of technophobics and technophiles, with AI-enthusiasts on one side and Luddites on the other. As usual, in medio stat virtus, so it's time to ask the right questions about the use of AI, ML, BI, blockchain, advanced analytics, etc. in our industry. What, if any, technology(ies) can facilitate the work of revenue managers? And will revenue management as we know it disappear with the rise of AI?
Episode #8 THEREVENUEMANAGER - What's New in The Toolbox
Adjunct Professor NYU Tisch Center for Hospitality and Hospitality & Online Travel Tech Consultant
Let's remind everyone what the primary goal of revenue management (RM) is: to ensure that the property sells the right product to the right customer at the right time for the right price on the right channel.
In the past revenue management systems (RMS) and revenue managers used historical, comp set pricing and market data and combined this with forward-looking demand signals like pacing to recommend the optimum rates. Now that historic data has become completely irrelevant, I believe comp set pricing data has also diminished in value - how sure are you that your competitors are smart in their revenue management (RM) practices and use the right RM tools and not just plagiarizing each other's rates in a suicidal downward spiral?
In addition, this year short-term rentals consume one-third of travel demand, while in 2019 they accounted for only 19%. Obviously you need different methodology and technology to account for that.
I see three next-gen revenue optimization solutions that will change the way hoteliers conduct their revenue management practices and optimize their revenue:
1. Implement an AI-powered Revenue Management Systems (RMS)
Unlike the old-fashioned RMS that utilize business rules to execute decisions, the new crop of cloud-based, AI-driven RMS like IDEAS, Duetto, Atomize and SHR Wave RMS are able to process mountains of data from various real-time data sources, learn from this data analysis, come up with real-time recommendations or automatically implement these recommendations and then learn from the result of these decisions and auto-correct in real time. Some of these real-time data feeds include: forward-looking demand data feeds from BI providers like OTA Insight, TripAdvisor Spotlight BI, TravelCLICK Demand 360, etc.; comp set and rate shopping comparison BI players like Fornova and RateGain; Property website analytics like booking engine denials, user pathing behavior, intent data (dates and room type search patterns in the booking engine), geolocation of users, content pages about hotel amenities and services visited, etc.; CRM data of past guest demand and booking behavior and repeat business pick-up; Online Reputation Management (ORM) players like TrustYou, Revinate and ReviewPro; PMS historic data and real-time booking pace feeds; Group demand BI from Knowland Group, Group RFPs and booking pace; Short-term rental comp set pricing data, macroeconomic data, market BI from STR and TripAdvisor's Market Spotlight BI, etc
2. Implement CRM Technology to boost your repeat business
In the post-crisis world, repeat business should be the main focus for any hotel property or brand. Today it is 15-20 times more expensive to acquire a new customer than retain past customers. Unlike potential guests, past guests already know your property, your product and location, all you need to convince them is that your property is safe to stay at because of your rigorous cleanliness protocols. In 2019 - the last normal year before the pandemic - only 10%-15% of guests at independents on any given night were repeat guests vs 58.2% for the major hotel chains.
In the post-crisis era, success in bringing repeat business will make or break the property. And you cannot increase your repeat business without implementing CRM technology and program. A CRM technology like Cendyn's eInsight CRM, SHR Maverick CRM and Revinate CRM allows you to “know your customer” and deliver personalized customer service and marketing, based on the past guests' RFM Value (Recency, Frequency, Monetary), as well as on their behavior pre-, during and post-stay, their preferences, likes and dislikes, etc.
3. Implement a Customer Data Platform (CDP) to personalize revenue management, marketing and customer service
Privacy laws like GDPR and CCPA and the latest privacy moves by Apple, Google, Firefox and Microsoft underscore the importance of first-party data, hence the urgent need for a Customer Data Platform (CDP). First-party data is the customer data (past customers & guests, website users, opt-in email subscribers, lists of corporate travel managers, meeting planners, wedding and event planners, SMERF group leaders the property has been doing business with or at least in communications with, etc.) that comes from the PMS, CRS, WBE, CRM program, from the property's website, opt-in email sign-ups, even customer lists sitting on laptops of sales and marketing personnel.
A property Customer Data Platform (CDP) like Cendyn's Starling CDP not only aggregates all of the property's online and offline customer first-party data, but it cleanses, de-dupes, enriches and appends the data in real time. The CDP provides “a single source of truth” for your customer data and not only creates 360-degree customer profiles, but more importantly augments these profiles with preferences, social media ambassadorships, customer review data, customer engagement data, etc. Using this data, the CDP enables one-to-one pricing, marketing and personalization, significantly increases customer engagements via similar audiences/cohorts, as well as vastly improves and personalizes guest services and operations.
Episode #8 THEREVENUEMANAGER - What's New in The Toolbox