Who Do I Trust - My Gut or My Revenue Management System?

By Motti Tadmor Technology Business Analyst, MICROS Systems, Inc. | March 27, 2011

Somewhere in the world, a group of talented people sat down and developed a Revenue Management System that will help revenue managers manage their business better and maximize their revenue.

Somewhere else, sat the experienced revenue manager at his chair, looking at the screen and wondering – Could this be? My hurdle for today should be so high? Should I be turning down business at this point? My gut instinct tells me something else, what do I do?

This scenario is probably one of the most common ones among today's revenue managers who work with a revenue management system and are told to "let go of their gut feeling."

Now, every modern sales pitch for a revenue management system somehow says – " you MUST let those gut feelings go" and "there is no absolute proven ROI" and "no one can predict the future market," etc… but how true are these statements? What can be done or explained to strengthen the confidence revenue managers need in their Revenue Management software?

The answer is simple, first and foremost, what used to be manual calculations is now bundled into sophisticated mathematical algorithms that systematically collect your past events, demands, lead times, ADRs, etc… and present you with a prediction, assuming the same trends are repeated.

However, one can claim that a good revenue management system cannot rely on history alone. What if we lack historical data? What if events from the past are not re-occurring or new events are occurring today? Can someone look at today's economic downturn and compare it to business in hotels 10 years ago?

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Social Media: Getting Personal

There Social media platforms have revolutionized the hotel industry. Popular sites such as Facebook, Twitter, Pinterest, Instagram, Snapchat, YouTube and Tumblr now account for 2.3 billion active users, and this phenomenon has forever transformed how businesses interact with consumers. Given that social media allows for two-way communication between businesses and consumers, the emphasis of any marketing strategy must be to positively and personally engage the customer, and there are innumerable ways to accomplish that goal. One popular strategy is to encourage hotel guests to create their own personal content - typically videos and photos -which can be shared via their personal social media networks, reaching a sizeable audience. In addition, geo-locational tags and brand hashtags can be embedded in such posts which allow them to be found via metadata searches, substantially enlarging their scope. Influencer marketing is another prevalent social media strategy. Some hotels are paying popular social media stars and bloggers to endorse their brand on social media platforms. These kinds of endorsements generally elicit a strong response because the influencers are perceived as being trustworthy by their followers, and because an influencer's followers are likely to share similar psychographic and demographic traits. Travel review sites have also become vitally important in reputation management. Travelers consistently use social media to express pleasure or frustration about their guest experiences, so it is essential that every review be attended to personally. Assuming the responsibility to address and correct customer service concerns quickly is a way to mitigate complaints and to build brand loyalty. Plus, whether reviews are favorable or unfavorable, they are a vital source of information to managers about a hotel's operational performance.  The February Hotel Business Review will document what some hotels are doing to effectively incorporate social media strategies into their businesses.