Revenue Management: Technology and Big Data

Like most businesses, hotels are relying on technology and data to drive almost every area of their operations, but perhaps this is especially true for hotel Revenue Managers. There has been an explosion of technology tools which generate a mountain of data – all in an effort to generate profitable pricing strategies. It falls to Revenue Managers to determine which tools best support their operations and then to integrate them efficiently into their existing systems. Customer Relationship Management, Enterprise Resource Planning, and Online Reputation Management software are basic tools; others include channel managers, benchmark reports, rate shopping tools and review systems, to name a few. The benefits of technology tools which automate large segments of a Revenue Manager’s business are enormous. Freed from the time-consuming process of manual data entry, and having more accurate data available, allows Revenue Managers to focus on analysis, strategies and longer-term decision-making. Still, for most hotels, the amount of data that these tools generate can be overwhelming and so another challenge is to figure out how to effectively utilize it. Not surprisingly, there are some new tech tools that can help to do exactly that. There are cloud-based analytics tools that provide a comprehensive overview of hotel data on powerful, intuitive dashboards. The goal is to generate a clear picture, at any moment in time, of where your hotel is at in terms of the essentials – from benchmarking to pricing to performance – bringing all the disparate streams of data into one collated dashboard. Another goal is to eliminate any data discrepancies between finance systems, PMS, CRM and forecasting systems. The October issue of the Hotel Business Review will address all these important developments and document how some leading hotels are executing their revenue management strategies.

Library Archives

 
Tammy S. Miller

There is a generation of young people that have redefined travel for all of us. Actually, they have redefined many things for all of us! The advent of social media platforms and the influx of visually stimulating photos posted everywhere have enabled people to open their minds to new ideas. Where the unknown used to be scary, there is very little unknown these days because you can tap into new experiences from friends and strangers gaining comfort in your interests. You can follow innovators and be exposed to what others are seeing and what they are experiencing and put those ideas on your bucket list. READ MORE

Reto Brader

For most of us, the process of checking into a hotel is not particularly memorable. Nor do many of us often recollect how hotels engaged our sense beyond standard guest relations. Technology has come a long way in filling this void, and hotels have made significant strides in how they engage visitors. From a purely audio-visual perspective, video – i.e., digital signage – tends to get the most attention as a branding, engagement and monetization tool. However, used appropriately, audio can deliver the same benefits in hospitality environments in hotels and resorts, and at a far lower investment point that deploying and operating a digital signage network – particularly when working across multiple sites. READ MORE

T. Dupree Scovell

Woodbine Development Corporation designed, developed and opened the Hyatt Regency Hill Country Resort and Spa in San Antonio in 1992, the year of MTV VJs and Arsenio Hall. At the time, my father was calling the signals and this was the first of five similar resorts throughout the Southwest that Woodbine was responsible for developing over a period of about 15 years. The formula was pretty consistent: 300+ acres, 500 guest rooms, 100, 000 square feet of meeting space (or more), two or three golf courses, a water park and a few resort mascots, which have included dogs, longhorns, hawks and spray-less skunks (don’t ask). READ MORE

Amanda Hertzler

Millennials and technological innovation are leading some of the most substantial transformations in American hotels since the business-centric 1970s. The next generation of urban hotels resemble the minimalist European model where limited amenity hotels are connected to high-amenity neighborhoods. Stripping hotels of their traditional amenities, the design of spaces becomes crucial. Architecture and design are to be used to support guests in their total hotel experience. What do these hotels look like? If the country’s newest hotel brands are any indication, they will be historically rich, locally relevant, minimalist, full of multi-use space, interactive, and community- and wellness-oriented. Let’s take a look … READ MORE

Steve  Van

Do you have a catering assistant whose first question each morning is Did we sell out? or What was our occupancy and ADR last night? What about a front office associate who is so hungry to earn the perfect sell incentive that every time she works the 3:00 to 11:00 shift and the hotel has just a few rooms left to sell, you can count on the fact that you are going to end up with a perfect sell? If so, you may have just found your next revenue manager! READ MORE

Will Song

Airbnb is less than a decade old, but it has already begun to make waves in the travel industry. The online marketplace where individuals can list their apartments or rooms for guests to book has been able to secure a surprisingly stable foothold for itself. This has caused some hoteliers to worry that there’s a new competitor in the market with the potential to not only take away market share but drive prices down lower than ever. Let’s take a closer look at how Airbnb fits into the industry right now and then walk through the steps of the ways your hotel revenue management strategy can be adapted to the age of Airbnb. READ MORE

Brian Bolf

Revenue management tends to be one of the most challenging hospitality disciplines to define, particularly due to the constant evolution of technology. Advancements in data processing, information technology, and artificial intelligence provide our industry with expanded opportunities to reach, connect, and learn from our guests. Ultimately, the primary goals of revenue management remain constant as the ever-evolving hospitality industry matures. We must keep these fundamentals top of mind, while proactively planning for the tighter targets that lay ahead. That said, how can we embrace these innovations, operate under constricted parameters, and learn from the practices used today to achieve our same goals moving forward? READ MORE

Sanjay  Nagalia

Every year, it seems as though the hospitality industry faces more competition, new opportunities to leverage their data, and difficult organizational challenges to overcome to remain competitive in a hypercompetitive marketplace. The popularity of the sharing economy, dominating OTAs and a growing generation of often-puzzling consumers all give pause to hotels as they strategize for a more profitable future. Hotels have been feeling the heat from OTA competition for several years, causing many organizations to double down on their efforts to drive more direct bookings. Revamped loyalty programs, refined marketing campaigns and improvements to brand websites have all become primary focuses for hotel brands looking to turn the tables on their online competition. READ MORE

Gary Isenberg

Hotel room night inventory is the hotel industry’s most precious commodity. Hotel revenue management has evolved into a complex and fragmented process. Today’s onsite revenue manager is influenced greatly by four competing forces, each armed with their own set of revenue goals and objectives -- as if there are virtually four individual revenue managers, each with its own distinct interests. So many divergent purposes oftentimes leading to conflicts that, if left unchecked, can significantly damper hotel revenues and profits. READ MORE

Jon Higbie

For years, hotels have housed their Revenue Management systems on their premises. This was possible because data sets were huge but manageable, and required large but not overwhelming amounts of computing power. However, these on-premise systems are a thing of the past. In the era of Big Data, the cost of building and maintaining an extensive computing infrastructure is incredibly expensive. The solution – cloud computing. The cloud allows hotels to create innovative Revenue Management applications that deliver revenue uplift and customized guest experiences. Without the cloud, hotels risk remaining handcuffed to their current Revenue Management solutions – and falling behind competitors. READ MORE

Jenna Smith

You do not have to be a hospitality professional to recognize the influx and impact of new technologies in the hotel industry. Guests are becoming familiar with using virtual room keys on their smartphones to check in, and online resources like review sites and online travel agencies (OTAs) continue to shape the way consumers make decisions and book rooms. Behind the scenes, sales and marketing professionals are using new tools to communicate with guests, enhance operational efficiencies, and improve service by addressing guests’ needs and solving problems quickly and with a minimum of disruption. READ MORE

Yatish Nathraj

Technology is becoming an ever more growing part of the hospitality industry and it has helped us increase efficiency for guest check-inn, simplified the night audit process and now has the opportunity to increase our revenue production. These systems need hands on calibration to ensure they are optimized for your operations. As a manager you need to understand how these systems work and what kind of return on investment your business is getting. Although some of these systems maybe mistaken as a “set it and forget it” product, these highly sophisticated tools need local expert like you and your team to analysis the data it gives you and input new data requirements. READ MORE

Francesca Vereb

The big data revolution isn't just on the way, it's already here. As of 2012, more data crossed the internet every second than was stored on the entire world wide web 20 years before. From bounce rate to time spent on site to conversion rate and more, it's now possible to access every step of the buyer's journey in great detail. As an enterprising hospitality professional, it's your job to take advantage of that unprecedented access to data. The problem is that big data often feels overwhelming, leaving you and your team to filter what correlations are important, which are just noise, or how to sift the wheat from the chaff and incorporate the useful data into your marketing strategy. Here are the changes and data to pay attention to. READ MORE

Mark Ricketts

While there are many service industries, hospitality is certainly one of the most complex. The closest comparison may be a cruise ship, or, to a certain extent, air travel. But for something firmly rooted at all times to the ground, we’ll take bragging rights. We are providing an extremely intimate service, lodging, within the confines of what is nothing more ambitious than running a small city. The modern hotel comprises housing; utilities and other infrastructure; security; an employment force; a commons, i.e. lobby; and, oftentimes, food, beverage and recreation. We bring together under one roof people from all walks of life, with varying needs, expectations and personalities, everyone from a business executive stressed over tomorrow’s important meeting to a senior couple celebrating their 50th anniversary. READ MORE

Jaavid Bharucha

Revenue management is widely defined as the application of disciplined analytics that predict consumer behavior at the micro-market level and optimize product availability and price to maximize revenue growth. The primary aim of revenue management is selling the right product to the right customer at the right time for the right price. The essence of this discipline is in understanding customers' perception of product value and accurately aligning product prices, placement and availability with each customer segment. READ MORE

Ahmed Mahmoud

The more data you have the better but only when the RMS analytics improve price-demand estimates, provide controls for your particular business mix and pricing strategy, and enhance the optimization process. A good example of this is the use of rate shopping data for competitive pricing. A key evolution-in-the-making in revenue management technology in an age of Big Data is the optimization of profitability rather than revenue generation. Profitability optimization can be undertaken by obtaining ancillary revenue and cost data to generate profit contributions by various customer segments. READ MORE

Megan Wenzl

It is hard to argue that a company’s primary focus be anything else but the customer, but just how essential is it for companies to be customer-focused? The answer is - very essential. A major part of being customer-focused is understanding and then ensuring you are giving customers what they want. Specifically, if customers are looking for experiences, then create experiences that are unique and personalized. Details matter. In the 21st century, customers have access to a wide variety of valuable third-party information about businesses to help them decide on a hotel at which to stay on their next vacation. READ MORE

Michael McCartan

Michael McCartan, Managing Director of Europe, Middle East & Africa for Duetto, looks at why the hotel industry has historically lagged behind the technologically advanced online travel agents (OTAs). He addresses the issues of data sharing and analytics, and how these can help shape revenue management decisions as well as enhance the guest experience. He looks at machine learning and technology as a way of removing friction from the guest experience, and questions how this can be incorporated into hotel operations. And he calls on the hotel industry to work together to open up a shared “data lake” and compete head-on with the OTAs. READ MORE

Bram Gallagher

Revenue managers are increasingly interested in the potential for alternative performance metrics to give a better understanding of profitability than RevPAR. In this paper, I describe an NOI metric CBRE Hotels’ Americas Research is developing to give a better understanding of the relationship pass-through performance has with occupancy. To produce this metric, I estimate expenses and revenues from all sources separately with an econometric model. The difference of the sum of expense from the sum of revenues is the NOI. I demonstrate that when occupancy is increasing, revenues grow more quickly than expenses, and NOI growth exceeds RevPAR growth. The inverse is demonstrated for occupancy retrenchment. Forecast values of occupancy and ADR can be applied to the model to produce a forecast of NOI. READ MORE

Jim Vandevender

Revenue management has come a long way since its early days of basic yield management. Many consider 1989 a pivotal turning point when revenue management became a permanent part of hotel management and not just a passing trend. This was the year when Sheryl E. Kimes' oft-cited paper “The Basics of Yield Management” appeared in Cornell Quarterly. Hotels quickly realized that revenue management was a key component of winning the occupancy, ADR, and RevPar race. Hospitality revenue management teams are increasingly integral, strategic, and proactive participants in driving revenue streams. Large and small hospitality organizations alike are committed to the critical function this discipline serves and have developed structures to support the professionals who focus on this key area of a hotel’s success. With advancements in market data, decision science, and technology, revenue management continues to evolve. This is especially true of the groups and meetings segment, where revenue managers are using market data and advanced analytics to inform their actions, hone sales strategies, and unite sales and revenue management toward a common goal. READ MORE

Coming up in January 2018...

Mobile Technology: Relentless Innovation

Technology has become a crucial component in attracting and retaining hotel guests, and the need to enhance a guest’s technology experience is driving a relentless pace of innovation. To meet and exceed guest expectations, 54% of hotels will spend more on technology in 2018, and mobile solutions in particular will top the list of capital investments. Many hotels are integrating mobile booking, mobile keys, mobile payments and mobile check-in into their operations. Other hotels are emphasizing the in-room experience, boosting bandwidth and upgrading flat screen TVs to more easily interface with guest mobile devices. And though not yet mainstream, there are many exciting technology developments on the near horizon. The Internet of Things (loT) is taking form in some places, and can be found in guest room control systems, voice activation systems, and in wearable sensors that can be used for access and payment options. Virtual reality headsets are available at some hotels so guests can enjoy virtual trips to exotic locations or if off-property, preview conference facilities and guest rooms. How long will it be before a hotel employs a fleet of robots for room service, or utilizes a hologram as a concierge, or installs gesture-controlled walls that feature interactive digital displays? Some hotels are already using augmented reality for translation services, or interactive wall maps, or even virtual décor. This pace of innovation is challenging property owners and brands to stay on top of the latest technology trends while still addressing current projects. The January Hotel Business Review will explore what some hotels are doing to maximize their opportunities in the mobile technology space.