![]() ![]() ![]() The technology really is affording us this deep look at both when and where a customer is, and this environment will come to be dominated by whoever has the biggest computing engine, the most effective systems and the capabilities to effectively merchandise the hotel product. By using a combination of elegant algorithms and the sheer force of computational power to predict where that price is likely to move in the near future – the Holy Grail of trading – and make the most competitive offering available. Like the rocket scientists who analyse price movements in a trading market, today’s systems also look at markets and try to establish the influences on a price point within that environment. In many ways what we are looking at are models that share a lot with sophisticated trading systems. By employing price management techniques hotel revenue can see improvements of up to five per cent which is a convincing argument for any hotelier worried about how best to survive in an ever more competitive marketplace. In essence, the fixed, disconnected and disparate model of revenue management has now been overtaken by the fluid, dynamic model of price management, and this multi-variable model works much more effectively with the complexities of the hotel industry. Those who’ve developed or implemented the systems and processes to take advantage of the multitude of data sources will have a very real competitive advantage,” Andy Grinsfelder, Director of Business Intelligence & Marketing Technology Services, Delaware North Companies Parks & Resorts, Inc. The rapidly growing availability of information will eventually allow us to paint pictures of our customers with striking accuracy. Imagine optimisation techniques where you’re holding inventory for soccer moms from Tennessee or setting pricing tiers for iPad users searching long tail keywords on Google. We can expand our data collection beyond the PMS and really start to abandon old archetypes we’ve used to pigeonhole consumer behavior patterns used for our revenue management strategies. “ We live in an exciting time where the speed and breadth from which we are receiving data opens whole new possibilities regarding to revenue management. This can be done in real-time, adjusted dynamically to changes in the hotel environment, ensuring accurate and reliable ‘always on’ business intelligence. By looking ahead using future booking data, and back with detailed historical records, advanced forecasting models can make intelligent rate and inventory recommendations. With dynamic price management techniques hotel rooms can be filled at the most profitable price according to learned demand patterns. And this enables systems to reveal many more opportunities for increasing revenue for hotel companies. By discarding the traditional capacity allocation models inherited from the airline industry it is now possible to address, at a macro-scale, the pricing issues that hoteliers are facing, and at a micro-scale provide pricing solutions, including dynamic pricing, real-time group quotations, with more granular competitive intelligence. ![]() It is possible to move effectively from just inventory management to channel management. It is possible to realise a vision of a market tied to customer personalisation in place of more limited customer segmentation. Price management thrives in an environment where revenue management does not. The importance of price management not just revenue management Looking forward, it is the complete integration with multiple systems and an approach more aligned to CRM which is what hotels of the future need. Today, it is price management based on many factors that is superior to revenue management based on capacity, according to Amadeus, which has developed a spotlight paper outlining its vision of revenue management. However, by 2000, its application in the hotels sector was proving not to be as effective as hoped. Revenue management, with its roots in the airline industry, was traditionally based on capacity. ![]()
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