Humans Versus Automated Revenue Management Systems
By Jean Francois Mourier, REVPAR GURUIn recent
years, technology has played a bigger and more important role in
everyday life. Today, it's possible to call a customer service number
and resolve a problem without ever speaking to an actual person, or to
pay for your groceries at the supermarket without ever seeing a human
being at the cash register. And just as these things have changed, so
have common business operations, particularly in the hotel industry.
One
of the key elements to a hotel's success is the strength of its revenue
management strategy. While still a fairly new concept, some hoteliers
are embracing the use of
automated revenue systems,
which have the ability to formulate complex algorithms that can
generate an optimal rate with accuracy and speed, even with rates and
information constantly changing because of the Internet. It seems like
the perfect solution, yet still, hoteliers are hesitant to trust this
new technology. Many hoteliers would argue that with a strategic and
precise revenue management system being essential to a hotel's financial
success, computer-generated revenue management simply could not be
entrusted with such an important task. And if it could, what would
happen to the traditional hotel revenue manager whom, remains an
indispensible component of a hotel's staff?
So which
revenue management strategy is right? Are humans or machines more suited
for the intricate, never-ending rate calculations, updates and pricing
analysis of hotel revenue management? It's Your Move - The Chess Game of Revenue Management
Anyone whose played chess - or at least attempted too-knows it's a game
of skill, strategy and intelligence. This also holds true for hotel
revenue management. In order to win, both of these "games" require the
ability to use historical information to make the best moves, predict a
competitor's move before it is made, and use quantitative reasoning and
problem-solving skills to win. With that said, is a computer a more
valuable chess player than a human being? Does the same hold true for an
automated vs. human revenue manager? And, is it possible to use the
computer's skills to improve your own?
When it comes to
computers, virtually the only errors that occur are committed by the
people who operate them. Like a computerized chess player, an automated
revenue system will perform strategies as perfectly as they can be
executed. The speed, multi-functioning capabilities and ability to make
sophisticated calculations are unmatched in both cases-not to mention,
computers are ready and available to perform 24/7. For a
hotel revenue manager,
a sophisticated automated revenue management system can perform
up-to-the-minute price adjustments, calculate supply, demand and
competitor pricing to create an optimal rate flawlessly. A computer can
perform these functions, all day, every day. These abilities are
especially important due to the shrinking booking window of today's
economy, where maintaining RevPAR and sales has proven to be
particularly challenging.
But regardless of their speed and
accuracy, computers ultimately work better with skilled individuals
working alongside their technology. Sometimes, humans can even teach
computers a thing or two. For instance, in the chess world, there was
the case of genius chess player Gary Kasparov, who ultimately beat IBM's
Deep Blue computer in a 1996 tournament, despite the fact, that in May
1997, an updated version of Deep Blue defeated Kasparov 3½ to 2½ in a
highly publicized six-game match.
The Human Element-Still an Important Piece of the Puzzle
So yes, hoteliers and revenue managers should be embracing technology,
coupled with skilled individuals who now have the flexibility to focus
their talents on other important aspects such as analyzing data for
future strategies, and spending more time with hotel staff to generate
stronger marketing and sales initiatives, can ultimately result in a
more successful hotel operation.
In chess, using these
computers can also help individuals gain new information and learn new
skills of the game. The same can be said for a revenue manager who works
alongside a
sophisticated automated system which
can maintain, in real-time, the automated distribution, allocation,
pricing and yielding, while benchmarking against all competing hotels in
a destination.
The best approaches to revenue management in
general are those that emphasize the usage of revenue management systems
to enhance revenue managers' efficacy, rather than making revenue
managers be forced to keep up with today's never-ending information,
calculations and pricing updates.
Both humans and machines have
their strengths; are your property's revenue management strategies
using them to the best advantage?
About REVPAR GURU REVPAR
GURU provides hotels around the world with an alternative revenue
management software solution, designed to deliver maximum bookings and
profits. As REVPAR GURU's custom-designed Yield Dynamic Price Engine is
the only real-time revenue management software available on the
market, it meets the rapidly changing needs of hotels in a very
demanding business environment. REVPAR GURU's solution offers dynamic
rate optimization, real-time pricing, integrated internet and extranet
yield channel management and GDS sales distribution, to increase a
hotel's RevPAR intelligently and effectively, while maintaining rate
integrity and automated rate parity. Since 2004, REVPAR GURU's software
solution has been used by hotels worldwide to increase occupancy and
RevPAR. Headquartered in Miami, Florida, additional information can be
found at
www.revparguru.com or by calling +1.786.478.3500.
Many hoteliers would argue that with a strategic and precise revenue management system being essential to a hotel's financial success, computer-generated revenue management simply could not be entrusted with such an important task. And if it could, what would happen to the traditional hotel revenue manager whom, remains an indispensible component of a hotel's staff?