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News for the Hospitality Executive |
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By Jean
Francois
Mourier
July 8, 2011 Consider the difference between taking the
stairs and riding
the elevator to get to your high-rise office: Stairs: You climb, stair by stair; leg muscles
straining every
step of the way. Time is slipping by: you have so many things to
get
done; yet you must climb all of these stairs to get to your
destination.
Beads of sweat form, you shift the load in your arms: with every floor,
the
briefcase you’re carrying seems to multiply tenfold in weight. You finally get to your office—now what
is it you were
thinking about? What is it that needs to be done? Elevator: It’s effortless. It’s shifting from manual to automatic. Now let’s take a leap in logic and apply this same “manual to automatic” concept to hotel revenue management. In today’s environment—with multiple channels and infinite revenue optimization decisions—don’t you think it’s imperative for hotel revenue managers (RMs) to make revenue management effortless by shifting from manual to automatic? Many industries made the transition long ago and have never looked back: Banking - We go back no
further than the 1970s here. Look at the breadth of automation in
consumer transactions since then: automation has moved from human
tellers
with drive-thru pneumatic tubes, to ATMs that count and sort cash
deposits,
then instantly apply the funds to the customer’s account. Can you
imagine
the viability of a bank that refused to implement even the simple
version of
ATM technology today?
Marketing/CRM - Today,
customer relationship management (CRM) systems are mobile, and
adaptive.
Gone are notebooks filled with postcard surveys and the paper databases
of
names and addresses. In their place are interactive systems, such
as
digital signs that communicate with customers through their mobile
phones. These systems have the ability to remember the customer
and
adaptively respond with different messages for each
“interaction.” Would
it be feasible for marketers to return to the old school, manual
communication
methods?
The questions at the end of these examples may be a little exaggerated, but only to make the following point: it makes no sense today to use the technology of yesterday. Yet, hotel revenue management has remained relatively unchanged for decades. Most revenue managers forego the automation of an effective software solution for the manual process of channel management, inventory control, and forecasting; however, such a system in today’s RM environment is not quick, nor is it effective. Faster, Better, Stronger Consider the automation of channel management: there are so many channels available to the consumer today. OTAs, mobile booking, travel agents, telephone, walk-ins… the list goes on and on. And the speed at which emerging channels appear today is incredible. It is hard enough to effectively manually
manage the
channels currently available—with new ones popping up every year or so,
it
could almost be impossible. Now imagine the cost associated with
managing all
of these channels, both new and old, manually as opposed to automatic.
The
human incremental cost of monitoring, adjusting, and calibrating each
new
channel is enough to justify the switch. An RM relying on manual
technology for channel management is vulnerable, like a building with
an old
alarm bell, whose owner hopes that someone will hear. Not overwhelming enough yet? Let’s take into
account
inventory management. Not only do RMs need to monitor all booking
channels, they also need to instantly update inventory in order to
optimize
revenue. If a hotel is manually updating inventory, chances are
there
will be a delay - and chances are there will be money left on the
table.
To illustrate this, let’s look at a hypothetical scenario: Before the hotel’s RM can
update rates and inventory levels due to a group booking of 20 rooms,
the hotel
staff has booked two customers over the phone while a three-night
booking was
made through an OTA. All bookings overlap on the same dates, and the RM has yet
to make his initial rate and inventory update.
In this example, since rates weren’t able to reflect the initial change in inventory (i.e., the group booking), money is being left on the table. Is it significant? Maybe, maybe not; but spread such incidents over three months or a year and it adds up to a significant loss. The RM must update inventory and transmit the rate affect across all channels, instantly. Like a bank customer waiting in line at the drive-thru bank teller: his time is valuable—how much of it is lost relying on old, manual technology? Of course, keeping revenue optimized also relies on constant rate adjustments based on historical patterns, forecasts, and seasonal highs and lows. Effective software systems start with the appropriate data (based on the RMs recommendations) and adapt to current trends. This automation of booking pace gives RMs the option of simple oversight, or the ability to completely override and control the system based on both forecasted data, and real-time, actual results. Much like today’s CRM systems, software automation in revenue management is adaptive. Automatic booking pace is the difference between standard mail-in CRM response cards and adaptive, interactive mobile marketing communications. So, given the marked improvements that
switching from manual
to automatic gives to revenue managers, why not get from point A to
point B
effortlessly through a software solution?
 Jean
Francois Mourier is CEO & Founder of RevPar Guru, a company that
has
developed an alternative type of revenue management and real-time
pricing
solution (combined with automated online distribution) to help hotels
maximize
occupancy and increase their profits. The company’s Yield Dynamic Price
Engine, an integrated revenue management and pricing solution, adds
unprecedented
power and real-time adaptability to the pricing process, leaving
managers
more time to run their hotels. You may reach him through www.revparguru.com
or by calling +1.786.478.3500. |
| Contact:
REVPAR GURU INC.
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