Consider the difference between taking the stairs and riding the elevator to get to your high-rise office:
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?
Press the button. Arrive.
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?
To not do so is like taking the stairs in a world filled with high-rises and elevators. Why would you?
Jean Francois Mourier is CEO of REVPAR GURU.