Executives from IDeaS Revenue Solutions spoke to LODGING at HITEC 2022 Orlando where they touched on how and why hoteliers might do well to focus more on ADR and costs to achieve their RevPAR and profitability goals. At that time, Stephen Hambleton, director, product management, and product success; Mike Chuma, vice president, marketing, enablement, and engagement; and Ravi Mehrotra, president, co-founder, and chief scientist, took the opportunity to describe how adding technology like their newly launched Channel Forecast Dashboard to their G3 Revenue Management System (RMS) can help hoteliers make more profitable decisions about the business they acquire by enabling the system to monitor and forecast net KPIs performance and costs. They also mentioned the cloud-based, mobile-first revenue management system they created specifically for Wyndham to help its franchisees optimize their revenue strategies and grow market share. IDeaS helps its clients respond to the pandemic recovery, ensuring solutions support hotels during inflation, returning challenges, and labor and channel costs.
What is the concept behind the new Channel Forecast Dashboard?
Hambleton: The pandemic has motivated a different focus, a move from revenue metrics to cost-centric metrics, where decisions can be made based on a strategy that places a greater emphasis on cost control in achieving profitability. Rather than focus on RevPAR, our solutions now take into account what it costs to acquire reservations and service rooms at a time when leisure demand is booming, and, therefore, OTA channels are seeing large growth and labor is scarcer and more expensive, with the recognition that longer-length-of-stay reservations cost less to serve. Driving for ADR, longer LOS demand, and business from lower-cost channels might mean filling fewer rooms with less cost to make more profit overall. Unlike rule-based approaches with recommendations that require significant time and attention from the owner or revenue manager, our solutions automate decisions, making it easier to both make and apply them.
Chuma: The overarching concept is that with more logical systems, owners can make better decisions, faster. Because our products are intuitive and streamlined with fewer tabs and more proactive choices, they can make decisions and implement strategies more quickly, so they can focus on operating their hotels. And, ultimately, become better hoteliers.
What, if any, impact do inflation/higher room rates have on demand?
Mehrotra: People will selectively pay for the things that are important to them. Guests are not just buying a room, and certain guests are willing to pay a lot more for certain things than other things. So, hoteliers should place more emphasis on pricing those attributes, rather than focusing strictly on room rates. From a technology standpoint, it’s mostly a matter of figuring out what attributes guests want, what they’re willing to pay, and making distribution system changes to accommodate them.
How might hoteliers better incorporate such revenue-generating attributes?
Hambleton: I think the hotel reservation journey, in general, is pretty fragmented, much more so than other industries where technology enables familiar purchasing strategies that both highlight value and offer the opportunity to upsell—e.g., by prompting customers to add “recommended” products to their cart, or, in the case of airlines, select a more desirable seat. We need to get better at gathering data about guests and using it to show them the value of what they’re buying. A simple example is that we could start to learn about the attributes guests may buy, by offering rooms on a high floor or a better view of the same type I booked for a small incremental fee in a digital check-in process.
Chuma: The idea of using data for an interconnected hotel reservation journey has been talked about for a very long period of time, but the mentality has shifted over the last two years. Hoteliers are beginning to understand the interconnectedness of the systems. Revenue-generating practices such as upselling are not so much revenue management as profit practices. For example, as you climb up the scale from midscale to upscale, to upper upscale and luxury, there is ample opportunity to create a more connected journey, so you can optimize the profit of the entire journey, rather than just the rooms revenue.
How does forecasting technology deal with economic uncertainty such as inflation and recession?
Mehrotra: The simple answer is that while reality changes, the laws of physics and mathematical optimization do not. So, if you really have a solution that’s based on science rather than a gut feeling or arbitrary incomplete rules, you can be confident that, as the reality changes, you can adapt your model to the new reality. It is what I call “memory-less forecasting”. It looks at and predicts the future by looking at how things are evolving.
Chuma: Our own focus is on helping hoteliers succeed in any situation. What this period has taught us, as an industry, is that we can deal with pretty much anything that you throw at us. It’s given the hoteliers a toolbox that they can use to fix their problems.
Hambleton: I think in simple terms, it also highlighted the importance of using automated technology. Having the right revenue management controls in place becomes really critical when times are tough, such as in a recession, when human resources are the first thing to be scaled back. Equally, as demand becomes ever more uncertain, we have to have solutions that can adapt quickly, solutions that continue to produce decisions we can depend upon.
How and why did you create a system specifically for Wyndham?
Hambleton: We were already working to develop adaptable technology in line with large enterprises’ strategies. In Wyndham’s case, they needed a flexible and scalable system to anticipate demand that would be geared toward primarily two specific time-strapped user bases that weren’t served well enough by their existing technology; the individual franchisee caught up in other demands of running a hotel, and the centralized revenue manager of numerous properties who needs to know where to spend their time and how to make decisions effectively.