How Can AI Help Hotel Revenue Management In Proliferating?
In the hotel management industry, AI is already bringing stunning transformations. What transformation it can bring in the revenue system.
FREMONT, CA: The advancement of revenue management has been powered by automation. The best of today's technologies, i.e., Machine Learning (ML) and artificial intelligence (AI) can automatically update costs and make pricing decisions. This empowers revenue managers to reflect on tactics and strategies rather than wasting time on scraping data and punching figures into spreadsheets. In the last few years, the most innovative revenue manager using the most advanced technology on the market unrivaled the sophistication and speed of the pricing decisions and the financial results generated by them.
The next generation, AI-powered revenue management, has undoubtedly struck the industry like a hurricane. Some prominent AI-powered solutions tend to replace legacy solutions that use a hands-on, rule-based technique to make pricing decisions and produce an abundance of 100 million decisions every day across numerous properties. Such impressive results are rising by millions of dollars a year, with big hotel chains recognizing their revenue numbers. Smaller properties also make significant gains, often promoting sales life by more than 15%.
Enthrallingly, AI-enabled solutions sometimes produce pricing decisions that revenue managers may find to be overly aggressive, irrational, or simply wrong. This is where the strength of big data and ML is differs from the data processing and computational capacities of humans. Many experienced revenue managers have detailed that they have sold rates that were prompted by AI-fueled systems that they would not have published before.
AI-powered revenue management is all about smart pricing. The aim is to use market estimates, cost sensitivities, and competition rates—with all other inputs included, including demand drivers like special event activities, seasonality, and day of week variations to optimize room occupancy at best possible price. Smart pricing means considering other components, including room type, length of stay, and the extent to which the reduced price promotion will potentially dilute earnings and profits over the long term. The amalgamative complexities included in smart pricing are nothing to sneeze at.
Intelligent pricing is a channel-agnostic approach. Instead of thinking about OTA bookings in relation to direct bookings, for example, smart pricing looks at every distribution channel's relative value and assesses how much each channel can drive guest room demand and help to achieve the overarching goal. The goal is to increase the hotel inventory's profitability. Intelligent pricing assesses demand from all outlets, including OTAs. In an ideal scenario, algorithms then involuntarily incorporate the necessary tactics and strategy to filter companies through the most profitable networks.
Total revenue management, commonly referred to as its broader approach to revenue optimization, reflects guests ' potential at the price of recreational facilities, spas, restaurants, and many other auxiliary rates. For lodgings with casino operations, even the theoretical loss factor into the visitor room and group sales pricing decisions.
In addition to other advantages, business intelligence is obtained from the reporting abilities, for instance, helping improve sales performance, offering valuable insights to occupancy patterns, generating competitive intelligence, channel productivity, etc. The marketing department can use the projections as a reference for deciding when to encourage investments to fuel demand. This allows the management department to know when to raise staff based on the occupancy expected.
In short, the advantages go much beyond "revenue management" and eventually go beyond all parts of the company.