Will Revenue Management be 100% handled by AI?

The “invasive” role of the technology in the hotel & travel industry

Do you remember the first time you utilized your phone to plan a travel, like booking a flight or a hotel stay? Or, even whenever you buy something else by just using your phone? Exactly like that! You don’t remember! We usually have a good memory to retain several legendary “first times” of our life because it is emotionally connected to our brain. Still, it seems too hard to recall something that we started to do just because it was merely necessary, without being considered a real “plus” for our existence. What I’m trying to say is that the usage of a mobile app, from buying something up to planning travels, finding better deals, or (even better) working and making quick revenue-management decisions for our organization thanks to friendly apps between our fingers (maybe while sitting on a plane rather than sitting on the traditional office-wood-made desk) is a process that has literally embedded into our human nature, culture, thinking, vision since the first day it has born… No questions: it’s inevitable already. It has marked the future of our lifestyle as well as our ways of working in revenue management and e-commerce.

The next question would be then: how credible is it that all this bunch of technology (summarized by “AI”) will totally replace the revenue management tasks? And: can really the revenue management be reduced to just a long list of “tasks” …? Discussion is open. I will start here below with my thoughts.

The mission of the global hotel brands

While from a customer’s perspective, the technology is remarkably enhancing the individuals’ travel experience by shortcutting - speeding up - and simplifying decisions, from a hotel operator’s standpoint, the tasks to optimize sales and revenue have been highly tech-upgraded and tech-sophisticated too, opening the opportunity to the e-commerce leaders for being frequently shared within multiple properties and different revenue generators: more filters for data analytics tools, more algorithms for automized pricing decisions based on historical demand behaviors, more accuracy with the predictions, more hotels to manage at the same time.

In addition, all this technological sophistication takes different directions between travel-tech companies and hotel global chains, and here’s the gap that I see: travel-tech companies are more and more focused on having the customer tailoring and customizing packages by themselves quite in advance and by the simple click of different options; while the hotels, although the recent efforts placed to enhance the pre-stay experience by offering upgrades or any other property’s amenity are still delaying with the development of those digital tools serving memorable experiences like “a whole” and “at a glance.” For the hotels, most of the focus is on delivery, quality of service, guests’ loyalty, guest’ satisfaction, and standards compliance… which is not wrong at all. However, I foresee a huge opportunity to compete with travel-tech companies in the field of the “vacation planning” phase, especially for the big global hotel brands. Don’t get me wrong, I won’t ever regret having always built solid partnerships and excellent relations with OTAs for the few hotels I worked for in the past, and let’s be honest: they know very well what they do. So, why we (hotels) don’t learn more from them? Why not enlarge the hotel’s global revenue systems to control additional items beyond accommodation and F&B services? It could sound like a disruptive idea because we have already 100% committed to the fact that hotels should take care of their core business, meaning “accommodation,” “restaurants,” “and pool”... But let’s pretend to be disruptive for some minutes: I dream with global hotel brands building more partnerships with external vendors (i.e., car rentals, airfares, tours, entertainments, attractions, etc. etc.) therefore making their webpages more practical for a generation of travelers (whether BT or Leisure) who really need everything “here and now” in one hand, rather than booking each component separately. And why not? For the well-being of the organization, the revenue management discipline could be involved in the control of these additional items, too.

"The first thing making the difference between automatic system‘s controls and human revenue leaders is the consistency"

Revenue Management is like a ‘complex of human behaviors’ rather than a ‘checklist of tasks’ 

 Let’s try now to wrap up and put all these thoughts together: a. the travel-hotel industry has been lined by more technology; b. this technology has empowered potential guests to act like their own travel agents, especially by the travel-tech companies (also recommending better deals all the time before booking); the hotels took advantage of the technology just focusing on their internal offers by upgrading revenue control systems and reducing head counts… What could prevent us from concluding that a+ b+ c = AI for revenue management?

1. Consistency for the details. 

The first thing that makes the difference between automatic system controls and human revenue leaders is consistency: take a look every day at the news (especially about your local market) and detect the ones that could generate an impact on your business for you to take proper and fair pricing decisions in advance (more in advance than your comp set preferably); use all the benchmark tools on your disposal as much as possible to be on top of what the comp set does every single day for the next 90 days; consider every single day like a total different and independent “world” in terms of market reactions; take (or have your team taking) decisions of price-adjusting and yielding every single day for the next 90 days and for each of the leading retail segments expecting positive impact then, be aware that sometimes this could be also needed more than twice per day for the current week! On the next day, measure the impact of the change made the prior day (pace and pickup reports); focus on the content of each channel (no AI is going to do this for you), working on the accuracy of the descriptions of the products and the visual content; don’t be afraid to diversify your inventory based on features and attribute, that’s enormous opportunity to reach put to more market segments and maximize incomes; have your team to be accurate with the inventory balance more than once per day, systems sometimes pay unexpected bad jokes; repeat the above.

2. Teamwork.

Sales, Marketing, Finance and Operation are three key words that I would consider to complete the profile of a revenue leader: don’t be an enemy of these areas; support each other every day; analyze the quality of the business together with them and always provide rational explanations when it’s not worth; be available for delivering answers when inquiries come up; ask for cooperation from the digital marketing leadership to support your ideas and listen to advice; make your job successful by educating the ops team to detect opportunities to optimize revenues even by organizing annual internal revenue management workshops if you like; stay connected with them all the time and celebrate together the accomplishment.

3. Be present 

The “remote” formula in the travel and hotel industry is another evident proof of how technology has enriched the principle of work-life balance. However (especially if you are a DORM on the property), if you don’t want to be kicked out by a system, I’m afraid that the “be in-site” is critical: connect with partners, have the opportunity to inspire colleagues and your team to do the best, lead by example, join meeting to share your thoughts, ideas and to learn from others, show passion for revenue management to get as much fellows as possible to cooperate with you during emergency times, showcase how the revenue management is helpful if it is extended to other areas of the organization, visit your peers at your comp set and listen to what they do differently.

It’s all about staying physically rather than only mentally connected with other professionals to push all together in the same direction and get great results: believe me, no system will be able to do the same!