Until recently, revenue managers had to determine hotel rates on their own using as much information as they could handle, balancing historical performance against current market conditions and guest demand.
As technology advanced, hoteliers started turning to data science to take all of these factors under consideration and create forecasts and pricing recommendations.
In terms of rate management, hoteliers are using data science to create algorithms in forecasting to determine future business and set rates accordingly, said Tom Blomquist, director of revenue management at Scandic Hotels. The information includes historical data, such as what people are paying when they’re buying different products. Data science sees how that can be used to determine new pricing products or improving pricing in the future.
”In short, that’s how we look at the data, both forward and backward,” he said.
Scandic implemented its first rate-optimization program in approximately 40 hotels back in 2006, he said. In 2010, the company decided to add optimization systems to all of its properties. It also has a data warehouse that began in 2005 and was revamped in 2009 and 2010. These systems and the warehouse give the company a more holistic view of guest behaviors, he said.
The revenue-management team works with the optimization system, Blomquist said. They use the data from the warehouse to do a deep dive into the analyses and use that for setting long-term strategic goals. The overall company has structures and systems in place, but each country that is home to Scandic properties has its own organization and cluster of revenue managers to set their own price points, he said.
Often when people hear hoteliers talk about data science, they think companies are using it to increase hotel rates, but Blomquist said that isn’t the full truth. The goal is to try to fill the hotels, which means understanding the customer segments to make sure the hotels have the right pricing at each point in time.
Accor launched its approach to data science about six to seven years ago to better understand and improve its rate management, said Agnès Roquefort, SVP of transformation strategy and data at Accor. Her team has two main competencies: one focused on business intelligence, KPI monitoring and performance improvement; and the other with data scientists, engineers and analysts using AI and advanced analytics for guest knowledge and acquisition.
