On the 3rd of August, 2016 the Hospitality Sales and Marketing Association invited some of the ‘experts’ from around the region to share their insights and trend forecasts for all things revenue management under the title ‘Revenue Optimization Continuing Education & Training Event’.
When you go to these events, you tend to see two main types of people. There are the people who truly believe that Revenue Management is a science and have faith in the tools that they use ranging from Excel Spreadsheets to amazingly complex pieces of software that apply algorithms to big data and generate those ‘magic’ numbers, and then there are the ‘old school’ crowd that believe that they can ‘beat the system’ and rely on their well weathered gut feeling to know where the sweet-spot is for room pricing of of their hotel.
After hearing the experts speak at the event, one thing was clear – the variables used to determine what price you’re going to be selling your room at tomorrow night are many and more complex than what things were like 15 years ago by many orders of magnitude.
Fabian Bartnik, VP of Asia Pacific LodgIQ in his presentation on “The Art & Science of Pricing” spoke about data trends that were both mind boggling, as well as slightly disturbing.
According to Bartnik, 90% of all data was created in last 2 years, and this will grow 50 times over the next few years. Why is that important? Because this data is being used by machines to learn about human behaviour and predict consumer behaviour to frighteningly accurate degrees.
This data is also turning consumers into ‘smarter’ consumers too. Some of the statistics regarding data and data usage included:
Bartnik warned hoteliers, that if they don’t stay on top of the data and the trends in what’s being done with data, it can come back and bite them.
He also questioned whether the impacts of ‘Best Available Rate’ (BAR) and ‘Best Rate Guarantee’ (BRG) were truly realised by hoteliers. He believes that the concepts of BAR and BRG were originally set as policies when very different data was being used to drive the business. Now things have become much more complex and BAR might not be up to the job anymore. ‘Super Saver Prices’ are not enough anymore with the many other options that are available to consumers including GPS driven geo-located ‘pings’ that could offer a special rate as someone walks by a hotel.
IHG’s Commercial Director for South East Asia and Korea, Graham Lewis also spoke about the increasingly complex job of the Revenue Manager and how to maximise forecasting accuracy. Why is forecasting accuracy important? Lewis believes because it:
He emphasised the importance of Total Revenue (TORE) forecasting and gave the following list of questions that GM’s should be asking their Revenue Managers:
From once being a skill akin to water divining, Revenue Management is becoming more and more complex and the fate of your property could well lie in the hands of your revenue manager. They need to be up to date with the latest technologies, and know how all technology is influencing what is happening and will happen in the future at your property.