Julie Sickel, Hotel Editor, BTN
Picture two companies: Company A and Company B. Both
companies are submitting a request for proposal for a negotiated rate at Hotel
X. The companies are of a similar size and they both delivered 500 room nights
to Hotel X last year. By the old standards of doing business, both companies
are equally valuable to Hotel X and will receive a similar negotiated rate. In
2016, however, Company A is going to be charged much more than Company B. The
culprit behind the rate difference: revenue management.
Long considered more art than science, revenue management in
the hotel industry grew vastly more sophisticated in recent years, and now
revenue management companies are figuring out how to deploy business
intelligence. That means that when Company A and Company B come to the
negotiating table, Hotel X can now see that those 500 room nights provided by
Company A were only booked on sold-out nights at the hotel, when other hotels
in the city were also at capacity. Company B is looking much more valuable.
The Rainmaker Group is one revenue management player looking
to mobilize business intelligence for its hotel clients. Last year, it bought
SolidusIQ, a business intelligence platform that culls existing data within a
hotel’s management systems to understand guest and corporate client behavior.
But, why stop there? Rainmaker is utilizing different BI tech to analyze group
business, as well.
“In terms of making the decision, ‘Should I take this group,
and if I do, what should I charge?’” said Rainmaker executive vice president
Dom Beveridge, “that’s an area that we’ve been working on with a number of clients
for a few years now, and given the perfect storm of commercial pressure, we see
it being huge in 2016."
Group BI tools will be able to project what guest business
would be displaced by accepting a group contract and then use win-loss
probability to anticipate how much the hotel could charge that group without
losing the bid.
Last year was already big for hotel revenue management.
Keith Kefgen, managing director and CEO of Aethos Consulting Group, which
conducts executive searches within the hospitality industry, told BTN in
June that, “[Revenue manager] is probably the No. 1 position that we’re doing
searches for in the next 12 to 18 months, more than any other position.”
Patrick Bosworth, co-founder and CEO of Duetto, a household name in hotel
revenue management, said the company grew by more than 400 percent last year,
and it expects to more than double in size again this year.
With tripBAM and Yapta on one side of the fence
delivering insight into hotelier behavior for corporates and revenue management
players on the other side giving hotel feedback on corporate behavior, look for
the intelligence arms race to heat up big time in 2016.