This is a principle that Michael McCartan, vice-president of software-as-a-service (SaaS) company IDeAS (Integrated Decisions and Systems) for Europe, the Middle East, and Africa (EMEA) understands well.

Once only accessible to industry giants with deep pockets, revenue management technology has now become available for hoteliers of all sizes, and IDeAS is working with hotels to transform data into actionable insights.

Speaking to Hotel Management Network, McCartan asserts that revenue management technologies can “help hotels make smarter decisions with fewer people.”

So what does revenue management look like for hotels in practical terms?

Deploying a revenue management system

McCartan explains that there are three factors for hoteliers to consider.

“Typically, the first problem that a revenue management system will solve is finding the right price for different room types. In the past, only a standard room was priced. But these days, good revenue management systems will price all room types and rate codes in a flexible manner.

“Next is inventory management. More opportunity can come from managing length of stays. A good revenue management system will understand demand not just on a single day but on all days, which is important.”

McCartan likens forecasting demand to the game Tetris, as hoteliers have to combine different lengths of stays to fill a whole week profitably.

“The third consideration is overbooking. An accurate over-booking number will ensure that the hotel is filled at the optimal price and to the max capacity.”

These three factors make up a successful technical revenue strategy, provided the system is engaging with other managerial departments.

“If the revenue management department is operating in isolation, it's going to be inefficient and ineffective. You need to work closely with sales and marketing and even the general manager in certain circumstances,” says McCartan.

The technology must integrate with other third-party systems as well, operating within an ecosystem.

“The tech stack that a hotel has will determine how easy integration is to start with and how quickly the system can be primed to start ingesting quality data and making recommendations for good decisions.”

Rising interest in revenue management tech

IDeAS has seen accelerated adoption of revenue management systems across the hotel industry in recent years.

McCartan attributes this to “hotels realising they’ve had challenges hiring good quality staff, and so they’ve had to do more with less.

“When you've got fewer staff operating in a more dynamic and volatile market where demand patterns are unpredictable, you need to look for solutions that can support you.”

Having some form of digital assistant means hotels can ingest market information, forecast how much demand is coming, and then make real-time automatic decisions for optimal revenue.

“A system can find revenue opportunities that even the most experienced revenue manager wouldn't be able to do manually,” McCartan points out.

The technology is also available to hotels of any size in any segment. IDeAS recently introduced a product aimed at franchisees, which are typically owner-operators with more limited staff and budgets than the bigger players.

“Historically those owner-operators would be working off instinct, knowledge of the markets, and even looking across the road at their competitors. But we developed a mobile-first application that changes prices as the market changes, so owners don’t have to be revenue management experts,” explains McCartan.

Advancements to IDeAS’ offerings have come about from specific requests from hotels looking to create a competitive advantage through automation.

“Some of our most interesting enhancements have come from fringe elements within the hospitality sector that historically haven't had wide adoption of revenue management technologies, such as extended stay resorts, or outdoor lodging. We've had brave, innovative companies come to us and say we want a revenue management system.”

IDeAS then makes these solutions available to its whole client base. McCartan believes there is a “broad recognition in the hotel industry that these improvements help everyone. We all get better together if we share our knowledge and experience.”

The outlook for hotel revenue management

It’s easy for hoteliers to be entirely focused on prioritising their properties’ rooms, but McCartan emphasises that management systems will start factoring in other spaces in hotels too.

“The complex costs of spaces like restaurants and meeting rooms are much more volatile and the margin is much smaller. So we need to get better cost data to establish the profitability of utilising those spaces.”

The technology will also incorporate guest information into data more. While McCartan identifies price personalisation as the “ultimate goal”, he predicts that management systems will also be able to inform marketing campaigns.

“Historically, we've used crude measures to segment guests into groups such as ‘transient’ or ‘corporate’. But we need to look at smaller profiles to reach target audiences during leaner periods. Marketing systems can perform more refined analysis of guest information for conversion rates.”

With talk of the efficiency that automated systems can bring businesses comes the fear surrounding a future widescale replacement of human workers.

But McCartan clarifies that revenue management systems would only replace “redundant and repetitive data capture and analysis."

McCartan envisions a future where revenue management systems can work in the background executing the strategy that humans set for the business, giving them the insights and the data to ensure that those strategies will be executed correctly while making adjustments if needed.

Ultimately, this will free more time for staff to spend with guests, which is an undeniable benefit for all.

Claire Jenns