I have been part of the industry for the last twenty-five years and as part of my job – had the good fortune of working with amazing hotel groups in different parts of the world.
NB: This is an article from RateGain
The last twenty-five years also witnessed the maximum number of disruptions in the way guests analyze, decide, and book travel – making it harder for the commercial teams to engage, acquire and retain the guest.
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However, none of these disruptions changed the nature of data or intelligence that was consumed by revenue managers to make pricing decisions – and it is because of this that revenue management systems continuously got better at predicting the price as they analyzed more historical data, improving in their ability to understand demand patterns and make accurate predictions.
Over the years, the hospitality industry has subscribed to a budgeting and forecasting model that relies almost entirely on historical data and seasonal highs and lows. In this sense, hoteliers constantly had their eyes on the rearview mirror, to anticipate what would lie ahead.
However, this approach will no longer derive accurate results in the post-pandemic landscape. The way consumers are booking and shopping for travel has changed drastically within this increasingly volatile market – making it nearly impossible for hotels to accurately forecast demand 12 months in advance, especially when segments like business travel and group travel are still struggling to return to pre-pandemic levels.
This is important to note, as historically, these segments helped maximize revenue whenever leisure transient demand was weak. But in the post-pandemic landscape, business travel faces a long and largely uncertain road to recovery due to changing business practices. In contrast, group travel demand has remained low in the wake of virtual or hybrid events.
The core process of pricing and consuming intelligence has stayed the same for quite some time – and while Hotels experimented with new products, they never saw a need to change the way they approached pricing – until 2020.
The COVID-19 pandemic gave rise to two new problems for revenue managers – volatility and uncertainty. You might suggest that these are two sides of the same coin – however from a revenue management perspective, they have a different meaning. Volatility is the ability to change unpredictably, and uncertainty relates to the unknown or something that cannot be relied upon.
As demand volatility became a reality for the industry- and continues to be a large part of the way we live today – commercial teams were not sure how can they try to predict this to a certain degree of accuracy – which is what created more uncertainty
For years, revenue managers had relied on historical data to look at the future and AI played a critical role in achieving that – however no AI in the world can work on data that is no longer reliable or if I may dare say data that is outdated.
Outdated data in today’s age means the following:
Outdated by time-period: The data is no longer relevant to be used for analysis due to high degree of volatility caused by macroeconomic factors and requires fresh data to be used
Outdated by nature of data: The data is no longer relevant to be used for analysis as the result would not produce a reliable forecast
Outdated by action: The intelligence that has been provided is no longer applicable as the competitor has already actioned on it – and hence we do not have an advantage of acting on it
We often ignore the fact that price is the value that a buyer is willing to pay for your offering – and start focusing only on data from our competition to arrive at the right price. However, it is also important to consider how does the buyer ascertain the value he is willing to pay for your offering – and what are the channels and information he is consuming during the buying behavior. It would be prudent to understand why a need for ‘new’ intelligence is there and how our existing data is no longer sufficient
With historical demand patterns becoming redundant and new global events impacting travel demand, hoteliers have been struggling over the last 24 months to understand when demand would come back and how should they price for it. This problem gets more exacerbated with the absence of reliable competitor data – as the competition is also shooting in the dark to find the right pricing
What can hoteliers do
Instead of looking at historical data which is unable to build reliable demand patterns hoteliers should pick up data such as look-to-book, airline capacity, OTA searches, social media, news, COVID vaccination numbers and cases. It is difficult for any revenue team to get so much data and then individually understand how each data point can impact demand. To solve this problem RateGain has built the first forward looking demand forecasting solution that uses AI to combine all this data and give an accurate demand forecast for the next 75 days.
Using the demand index for their city – Hoteliers can easily understand
- Where is demand coming from in their city?
- When is demand coming into your city?
- What type of demand is coming in the city?
- Which areas in the city will the demand be high?
- How does this impact prices in the city?
Getting answer to these questions can be substantial for commercial teams to get a larger picture of when demand is expected to rise for their hotel.
Demand patterns no longer follow a trend – and commercial teams need forward looking data to build demand forecasts that can be relied upon. However, the increased volatility creates another challenge for hoteliers – monitoring real-time changes in prices amongst their comp-set and understanding what to react to and what not to react to.
Hours are spent daily in collating and understanding what is changing in their market and what should they do. This results to significant opportunity loss for hotels as they are unable to react to market changes in time.
What can Hoteliers do
The last decade has seen us transition to a notification model of information consumption instead of analyzing hundreds of rows to find the relevant information. Billions of dollars are being invested in apps that can help drive more focus at work and get the right information to act on it faster. Instant bill payments, instant orders, and daily work summaries have fundamentally changed the way we process information.
The same information delivery needs to be recreated in hospitality – so that hoteliers and commercial teams can quickly make decisions without going through tons of data- and arrive at the decision on what they need to change in their strategy to stay competitive.
RateGain’s MarketDRONE narratives helps in doing the same and based on personalized settings provides a summary of your market in five to ten minutes – giving you ample time to strategize and focus on making the guest experience better every day. Address every change in your market without spending hours behind excel sheets and never miss an opportunity.
Parity makes a comeback as mobile bookings continue to rise
With smartphones contributing in the research of 70-80% of the trips that are booked, a key problem for hoteliers is to ensure that brand.com results are always on top in the 6 inch mobile screen – so that they get preference for booking over third party websites and can improve their margins.
What can Hoteliers do
Monitoring Parity is no longer an option – as third party websites, wholesalers and other demand partners try to sell inventory and generate revenue for themselves. Illegal offers and discounts are on the rise again as travel makes a comeback and investing in a parity solution that not only identifies, but also provides proof of disparity and helps in fixing it automatically is the need of the hour.
Prior to the pandemic, we saw a surge in last-minute travel bookings or what some termed as ‘Impulse travel’ and while this only added to the uncertainty in predicting demand – the last minute traveler was less research oriented and mostly relied on the best price being offered to them.
The COVID-19 pandemic has changed this behavior – and guests now put more importance in understanding how the hotels can provide a safe, healthy, and predictable experience which they can repeat in the future.
What can hoteliers do
In such a scenario, hoteliers should clearly understand which attributes help in better conversions on demand partners, what type of information is critical for the right guest and how much importance are guests giving to the images you have on each demand partner. As guests look to travel after the pandemic, they rely on information across multiple websites to visualize their experience and understand the amenities available at the hotel. AI is coming to the rescue here as well – as it automates quantification of your content quality and tells you which attributes are most critical for you to generate revenue and improve conversions.
Hotel commercial teams exist to maximize revenue – not manually analyze an ever-increasing volume of complex data. Rather than relying on manual processes that are often undercut by human error, BI technology automatically collects, organizes, and analyzes data from various sources and then pushes out consumable, actionable insights to sales teams in a customizable manner. It’s also important to note that BI technology helps to alleviate some of the pressure placed on commercial teams within an increasingly volatile landscape. Incorrect prediction of future demand often leads to some ineffective use of labor resources, which can negatively impact performances and revenue sources across all hotel departments.
Unsurprisingly, the increased volatility of the COVID-19 pandemic propelled a higher adoption rate of BI in 2020, and studies show that by 2023, over 33% of large-sized businesses will practice decision intelligence. Moreover, data analytics makes decision-making 5x faster for businesses.
RateGain has a full grasp of what commercial teams and hotel property managers really need by innovatively compiling data from over 500 sources including OTAs, Airbnb, airlines, car rental companies, and many more. To empower enhanced agility, RateGain’s BI solutions also have customizable built-in alert mechanisms to empower hoteliers and top hospitality brands to make on-the-spot decisions based on real-time data.
There is no denying it – business intelligence is evolving, and traditional solutions no longer suffice. Hoteliers need more data to make sense of the new normal, and they need the right technology to make sense of the data. As hoteliers seek to change their practices to better understand the market, make informed decisions in real-time, and maximize revenue opportunity by effectively targeting transient travel, BI technology emerges as an essential tool to optimize a hotel’s commercial performance.
After all, action without data is – at best – a shot in the dark. Don’t you think it’s time we turn on the lights?