In the 1960s, Global Distribution Systems (GDS) revolutionized the hotel industry. In the 90s and 2000s, Online Travel Agencies (OTAs) forced hotels to adapt once again. Now, Artificial Intelligence (AI) is set to transform the way hotels manage revenue and stay competitive.
NB: This is an article from LodgIQ, one of our Expert Partners
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Your legacy Revenue Management System (RMS) may have served you well in the past, but the old systems aren’t sophisticated enough to keep your hotel competitive. AI brings together machine learning to analyze the vast amount of data to help you with real-time decision-making.
Hotels that hold onto outdated technology are limiting their potential.
RMSs Are Good, But Limiting
A system designed twenty years ago (or more!) was created to perform human tasks faster. But in 2024, human speed isn’t enough. Today, the amount of data at your fingertips increases your hotel’s potential—but only if you can use it.
RMS Can’t Provide Real-Time Information
You need up-to-the-minute information about your guests, market conditions, and current trends to accurately forecast future occupancy and profitability. Legacy RMSs are hindered because they are only set up to consume the same type of data a human revenue manager was able to consume. They never considered adding in all the additional impactful data points that influence consumers.
Thanks to the avalanche of possible data available at any second, there’s no way for humans to process it all fast enough to use it for useful insights.
Siloed Data
Legacy RMS products hold you back because they tend to silo data which makes it tough to implement omnichannel strategies. You have past occupancy trends in one area, customer preferences in another, and group contracts in yet another. It’s time-consuming and inefficient to pull data from Excel, the PMS, and any other sources and wrangle it. You could spend a day crunching this data to identify the opportunity dates and strategies that would work for them Or, you could use a modern RMS to crunch the data to create insightful daily forecasts, segment analysis, market segmentation, and more in seconds.
Lack Of External Market
Additionally, legacy RMS programs often don’t consider the external market outside the hotel’s direct competitors’ sell rates.You lack visibility into the success of your competition’s past and current marketing campaigns. You can stalk their reviews and booking pages to see their prices, but that doesn’t give you insight into their future pricing approach. Or how their current strategies are actualizing.
A modern RMS can deliver these insights on the macro and micro levels, so you gain visibility into what your hotel’s competitors are doing and how consumers are responding to them.
Lack of Personalization
An outdated RMS doesn’t offer you the insights you need for guest personalization. McKinsey report found that 70% of today’s customers expect personalization. The State of Personalization Maturity in Travel and Dining from Incisiv and Adobe marks a brand’s personalization maturity through data and technology infrastructure and a unified performance view, among other factors. How would you rate your current system?
Personalization makes your guests feel special and offers your hotel relevant upselling and cross-selling opportunities to help them enjoy their stay at your property. A Get Your Guide report shares that 90% of travelers want to experience local authenticity when on vacation. An AI-driven Commercial Strategy Platform can deliver the insights you need to make relevant recommendations to your guests.
Yes, your legacy system has years of data. Yes, your team knows how to use it and what to expect. However, yesterday’s innovation is now the equivalent of trying to race the Indy 500 with Henry Ford’s Model T. It’s not going to keep up.
Fortunately, you don’t have to upend everything you have in place to modernize. If a hybrid approach works best, you can implement a modern hotel tech stack in increments using our modular components.
Built for the Modern Hotel Landscape: AI-Driven Commercial Platform
Whether your role falls under revenue management, sales, or marketing, you need the actionable insights modern technology can deliver to grow your hotel’s profitability. Marketing needs an efficient way to connect stay dates with need dates. Sales is given the proactive data points to find gaps in demand where they will be able to offer more competitive pricing to their contacts and groups.
They can have an immediate optimal pricing response with robust displacement analysis so they can return to their inquiring group faster. Time is money in sales, and this system gives them immediate answers so they have a better chance at closing the deal. Revenue managers need insight to the optimal business mix for maximum revenue- both top and bottom line.
A modern RMS is really a commercial strategy platform bringing together everything sales, marketing, and revenue managers need to collaborate into one easy-to-use space.
Process At Scale
A commercial strategy platform performs processes at scale and at speeds unattainable by humans. In seconds, it monitors your competitors, analyzes your hotel’s performance, and understands market trends as they apply to your current situation. Your team can toggle back and forth to gather the insights they need to make smart decisions in minutes.
Eliminate Silos
You can easily develop and implement omnichannel marketing and cross-team collaboration because you have all the information at your fingertips. Integrate your channel manager data, analysis, and market segmentation for one easy-to-use dashboard that delivers the insights you need to make profitable decisions.
Gives Real-Time Data
A commercial strategy platform crunches millions of data points in seconds, giving you more accurate insights and predictive possibilities. This lets you quickly make informed, real-time decisions about potential occupancy, room rates, and even neighborhood-level market competition.
One New York hotel increased its revenue by $56.7K over three nights using a commercial platform. Find out more in this case study.
LodgIQ’s Hierarchical Approach
The strength of our commercial strategy platform is a proprietary AI-driven algorithm based on a customer’s willingness to pay.
This model takes a hierarchical approach, starting from the macro level (state and city data) and drilling down to the micro-level (street and individual hotel data). It considers buying tendencies, habits, and market dynamics, understanding that pricing cannot always be a fixed percentage of competitors’ rates.
Our model focuses on maximizing revenue by finding the sweet spot between ADR and occupancy. It aims to determine the highest rate that attracts the maximum volume of guests without turning away necessary business. Willingness to pay doesn’t guarantee the highest rate in the area but rather the optimal balance to achieve maximum revenue.
And you don’t have to wait until your contract expires with other hospitality software. LodgIQ integrates with many existing systems and has separate components you can use for specific marketing, group, or other insights.
The future of hotel revenue management lies in AI-driven commercial strategy platforms. AI goes beyond optimizing tasks that humans can do; it performs processes at a scale and speed that is unfeasible for humans. AI can analyze vast amounts of data, identify patterns, and make real-time decisions that maximize revenue.
When sales, marketing, and revenue managers share data and coordinate strategies, your hotel sees the results in higher profits and happy guests. Find out how our commercial platform can increase your hotel’s profitability.
