2020 revenue insightAmid an influx of new data points, increased complexity and innovative technology, IDeaS Product Manager Ryan MacLagan blogs about the 7 reasons he would have convinced his regional VP their hotels needed an automated revenue solution

At 22 years old, I was finishing up my last year of college when I was named general manager of my first limited service hotel. In those days, a typical hotel day may have consisted of checking in a guest, refilling their coffee and jumping into the hotel van to give guests a ride to the airport. Long story short: With the constant hustle and bustle of daily property operations, there wasn’t much time left for revenue management.

Because much of my time was spent focused on providing the best possible service to our guests with a limited amount of staff, I didn’t have a lot of time to deploy or even identify the most optimal revenue management strategy. In fact, like most of my peers in those days, I didn’t have the insight I have today on the importance of automated revenue management technology, and how it could have greatly benefited me in an environment providing little time to implement strategies.

Looking back, it’s both funny and painful to remember how I used to think being the first one to sell out meant we were crushing the competition. Little did I know then that I was leaving money on the table every single day. We even used to do this revenue management-related practice on the good old dry-erase calendar consisting of three main colors:

Green: Sell all day at the rack rate loaded in the system
Yellow: Add $5.00 to the rack rate loaded in the system
Red: Add $10.00 to the rack rate loaded into the system

Thinking back at that activity makes me cringe, especially considering the colors were based solely on how many rooms were sold for certain days, and how I thought the selling pace was materializing vs. how it actually was – not to mention how infrequently those “selling strategies” would get updated.

I would usually only focus on the current month, and quite frankly, I was lucky if I was able to re-visit those strategies once a week.
What’s most fascinating about all of this reflection is that the hotels I managed all achieved double digit RevPAR growth despite this manual approach to revenue management. Can you imagine what would have been possible if I knew then what I know now?

If I was able to go on an excellent adventure back in time as 22-year-old General Manager Ryan MacLagan, here are seven reasons I would have convinced my regional vice president that our hotel needed an automated revenue management system:

1-It offers exception-based monitoring
This comes first and foremost when I consider the limited amount of time I had to devote to revenue management. With the system doing the heavy lifting after each optimization for me by highlighting exceptional conditions, I would have benefited greatly from taking swift action rather than spending countless hours poring over reports to find them myself.

2-It drives better revenue
As previously mentioned, we used to pat ourselves on the back for being the first to sell out – and in some cases, we would end up being 3 or 4 rooms short of a sell-out since we also didn’t overbook much in those days. Having an RMS understand our booking curves, as well as our wash patterns, on a daily basis would have helped us yield the right price and overbooking decision at the right time to drive better, quality revenue.

3-It’s simple to learn
With a variety of online and onsite coaching options and on-demand learning resources, it would have been very easy for myself and my staff members to learn the system and continue to reference available support materials and client services to get the absolute best use of the RMS.

4-It helps us be even more competitive in the market
Back in those days, our rate shopping technique consisted of a daily call around of local hotels we considered to be our competitive set. However, depending on who answered the phone, this information could be (and was) very unreliable. If we had competitive rate shops visible, folded that information into our demand forecasting, and yielded on the basis of this data, we would have removed much of our guesswork and dominated the market place even more.

5-It provides better transparency throughout our organization
We spent a lot of time emailing multiple spreadsheets back and forth to each other, and most of the time we never really had an idea as to what our current status actually was. With the many dashboards and reports available within an RMS, it gives different people associated with hotel performance better visibility into the hotel’s most recent KPIs.

6-It pays for itself
This wouldn’t be a hard sell based on the financial return an RMS system provides; I could provide leadership with an ROI model that would pay for itself in just a matter of months. But perhaps even more important than the tangible returns are the intangible opportunities, as it would have enabled me to be more strategic in a traditionally tactical environment.

7-It makes us more money
Our RevPAR increases each year were already good (despite our bad habits) – especially when we were going along well. I know from the measured performance of all our client base that we should expect to always perform towards the top of our competitive set in the RevPAR year after year.

Quite simply, if I would’ve known then what I know now, I would have been more productive, the hotel would’ve performed better…and I would’ve gotten a much fatter bonus.

By IDeaS Revenue Solutions
For 25 years, IDeaS have been helping the world’s hospitality businesses maximize their revenue performance. A pioneer and global technology leader, IDeaS offers industry-leading revenue management solutions for business of all types and sizes in the global hospitality and travel industries. IDeaS transform the right data into clear and actionable insight, so that our clients can price, forecast and report with speed and confidence, improving business performance. Throughout IDeaS’ history, our mission has been the same. We want to make revenue management so user-friendly, insightful and profitable that you wouldn’t dream of doing it any other way.