For hoteliers around the world, the ‘new normal’ feels more like the ‘new confusion’; from ongoing border openings – and closings, and openings… – and the disparity between the ways that countries are responding to the virus, the travel industry, as a whole, is chaotic and filled with a great deal of uncertainty.

NB: This is an article by Erik Muñoz, Chief Commercial Officer at Lybra

To make a bad situation worse, travel demand has decreased dramatically, so hotels are competing for a much smaller pool of potential guests, and against hotels that would never have been in their pre-COVID comp set.

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The COVID-19 pandemic has changed revenue management forever.

Traditional RM technology was based upon algorithms that focus primarily on historical demand patterns – such as booking lead times, booking pickup by segments and seasonal stay patterns by day, week or month – as a basis for determining the best possible room rate, at any given time; as such, revenue management systems (RMS) reliant on historical data have now become obsolete because our current market conditions are completely unheard of in our lifetimes.

So, combine the inefficacy of traditional RMS with the chaos that the entire world is now experiencing, and revenue managers are facing a huge crisis: the inability to understand and accurately forecast the future of their business – and the future of travel demand – in order to make appropriate business decisions and develop effective revenue management strategy.

So, how can hotels price their rooms accurately, without information on upcoming demand data within their destination, in a market where historical data is no longer applicable?

The answer is simple: Unfortunately, you can’t.

Now that historical data is a thing of the past, the only data that will be useful for pricing calculations in today’s volatile travel market is competitor and market demand; unfortunately, for hotels who are still using a traditional RMS, only sophisticated, demand-centric revenue management systems, with the ability to collect and analyse real-time market demand indicators, will be able to help hotels accurately price their rooms during the COVID-19 pandemic – and beyond.

Before we explore the importance of these more important types of demand and their impact on revenue management, let’s answer one very important question… What is accurate pricing?

Accurate pricing is a function of demand in a balanced travel economy; when demand increases, making supply limited, room rates rise – and the opposite is also true. Factors such as increased flights into a hotel destination, events and hotel competitor prices can affect demand and/or the perception of value from the guest; in short, the online reputation of each hotel reinforces the anticipated stay experience for your potential guest, and as long as your prices are competitive and in-line with potential guests’ perceived value, your property is pricing its rooms accurately.

Real-Time Market Demand Indicators

Data is key to hoteliers’ success because it is the only way that hotels can obtain a better understanding of what is to come, both in the short- and long-term. Real-time market demand indicators offer information about the projected number of travellers who will be coming to a destination and ensure that hotels are earning as much revenue as possible from each new booking.

There are many different kinds of demand data – all of which are integral for revenue managers in establishing an accurate revenue management strategy and daily room rates during a pandemic – including:

Competitor Rates

Using the demand data, a property’s room rates must be evaluated on an ongoing basis – up to 365 days in advance – for every room type, and for all of the different options available for each type (i.e. room-only, room + breakfast, non-refundable rooms, refundable rooms, etc.) – and then compared to competitors’ rates.

HOT TIP: Of course, online bookings can be made 24/7, so it’s important to review and/or revise your prices more than once per day – as much as possible, in real-time (which again, is only possible through a demand-centric RMS).

Macro-View of Demand

There are many factors that contribute to the demand pressure for your city, including travel agent hotel booking searches, frequency of hotel price changes, hotel cluster search analytics and trends in flight search data – and all of these factors combined, give you a macro-view of a property’s demand, which is important because it enables more accurate overall revenue management strategy, upon which daily pricing would be based.

Flight Search Data

Flight search data – including departure city and airport, destinations, travel dates, one- or two-way flights, etc. – is a strong indicator for travel intent and, therefore, for hotel booking intent; having access to flight search patterns is particularly useful for revenue managers when establishing accurate, competitive room rates, especially in today’s highly volatile travel market.

With the integration of flight search data, hotels can also establish the total percentage of demand for their destination, coming from each departure country – and all of the cities/airports within each country – to determine where the most traveler demand is coming from. Knowing which travelers are interested in traveling to the property’s destination – and when – also gives revenue managers the ability to manage their inventory more effectively, by adding more inventory to the booking channels that are most popular.

Online Reputation Score

In revenue management data analysis, the process by which actual guests make a selection on which hotel and room to book is often overlooked. When considering booking a room at a hotel, most guests will compare the relative value across a shortlist of hotels, which is, effectively, a combination of pricing and reputation scores; even with the best quality data, real-time analysis and pricing updates, and integrations between the property’s PMS/Channel Manager, your property may not actually secure bookings if potential customers’ perception of the value of your property is lower than your hotel’s actual position in the marketplace.

Of course, while you have direct control over your pricing, you don’t have direct control over your online reputation score, as your guests determine how well your hotel matched, exceeded or failed to meet their expectations, often resulting in an online review and a rating score being posted. That’s why it’s especially important for hotels to prioritize guests’ on-site experience, even when your property may be operating at lower staff and or operational capacity; hotels should be exerting as much control as possible over the elements of their stay that can be controlled by service delivery standards, including cleanliness, comfort, location, facilities, staff, free WiFi and value for money.

In order to ensure that the relative value of your property is in-line with what guests are looking for, your property’s RMS must include reputation data analytics directly within the solution, or else your revenue manager is missing an entire dataset that has a huge impact on how/why guests book with the property’s that they do. And if you see that you aren’t getting bookings, it’s the perfect opportunity for you to review your service delivery standards – and that they are being met for each and every guest.

Having the right data is an operational imperative in today’s COVID-impacted hospitality industry, as it is absolutely necessary to establish effective revenue management strategies and pricing; however, there are two additional, highly integral elements to a profitable revenue management strategy, especially in destinations with particularly low demand (which, let’s be honest, is the majority of the world right now, unfortunately).

Strategic Development

Even when using the most sophisticated machine learning-based, demand-centric RMS, savvy revenue managers (the human element) are an integral part of a property’s financial success; the strategic aspect of revenue management is just as important as the data collection and pricing recommendations – and strategy isn’t something that can’t be executed by an algorithm, even one in an advanced AI-based RMS.

Strategy is based on emotions, intuition and the ability to understand business outcomes, from a high-level, in order to have a long-term pricing plan, suited to the property’s pre-determined business goals. Strategy also involves interdepartmental communications and planning, to integrate promotions offered by the sales team, with the revenue management department, with the channel and inventory management team, and other operational departments which fulfil the high service standards, necessary for maintaining guest satisfaction and adhering to the customer service mandate of the property. 


Your property’s core systems must be integrated and automated in order to ensure optimal efficiency and speed to market. Your time is valuable, so you shouldn’t have to manually enter pricing updates; instead, the most effective revenue managers prioritize strategic development and implementation. Once you have decided upon your strategic direction, based on the insights gathered from your RMS, those decisions should be automatically sent to your hotel PMS and in some cases, also sent to your hotel CRS or Channel Manager (depending how your online distribution is structured). In the end, only by balancing both artificial intelligence and human revenue management strategy can help make a hotel survive – and thrive – in the current and post-COVID world. So, what are you waiting for: bring your property into the future, today!

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