Before we begin, let’s get one thing clear: revenue management systems (RMS) are amazing. If you’re not using one, you’re missing out.
NB: This is an article from Topline Revenue, one of our Expert Partners
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The automation, the precision, the ability to adjust your pricing in real time – it’s all incredible stuff. But here’s the question – how much automation is too much?
That’s the question we’re tackling today. Can automation be a total game-changer? Absolutely! But is it a one-size-fits-all, hands-off solution? Definitely not. There’s a fine line between optimizing your revenue management with technology and handing over too much control to an algorithm that doesn’t understand your your hotel’s unique quirks, local market, or guests.
Let’s dive into why automating revenue management is a good idea – and where you might be going too far.
The Pros of Automating Revenue Management
Automation isn’t inherently bad – in fact, it’s essential in today’s fast-paced hospitality world. Here’s why:
1. It Saves You Time
If you’re still manually updating your prices every day, how’s that working out for you? Time-consuming, right? With automation, you can let the system adjust your rates based on demand, competitor pricing, and market trends without you lifting a finger. That gives you more time to focus on other things—like, you know, running your hotel.
2. It Makes Pricing Smarter
Let’s face it: humans are bad at making unbiased decisions. We let our emotions get involved, we overthink things, or we just plain forget. Automation doesn’t have that problem. It can track the data 24/7 and make pricing decisions based on real-time information. This means your pricing strategy becomes more dynamic, accurate, and responsive to market conditions.
3. It Helps You Stay Competitive
Your competitors are likely using automated systems to adjust their pricing on the fly. If you’re not doing the same, you’re at a huge disadvantage. Automation ensures that your hotel stays competitive by adjusting your rates to match demand, even if that means raising prices when others are still stuck in last month’s rates.
But Here’s the Catch…
Now, as much as we love automation (and we do), there’s a real danger in letting it run your entire revenue management strategy. If you think you can just set it and forget it, you’re in for a rude awakening. Here’s where it can go off the rails:
1. It Can’t Account for Your Hotel’s Personality
Every hotel has a personality, whether it’s quirky, high-end, or family-friendly. But automation doesn’t know that. It doesn’t know that your boutique hotel thrives on last-minute bookings, or that your luxury property has a certain price sensitivity you need to keep an eye on. Algorithms can be great at making broad decisions based on data – but they can’t pick up on the subtleties of your property’s identity and how it relates to your customers.
Automation can handle the numbers, but it’s still up to you to bring the human element into your pricing strategy. Your hotel’s brand and character can’t be replaced by algorithms, no matter how good they are at analyzing market trends.
2. It Can’t Predict the Unpredictable
Let’s face it – hospitality is unpredictable. There are things that data just can’t predict, like the impact of a major storm, a local event, or even a viral TikTok trend. While automation can help with forecastable patterns and market trends, it’s not great at accounting for random, chaotic events that can impact demand. That’s where you, the revenue manager, need to step in and make those manual adjustments.
