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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