Why Hotels Envy Airlines When It Comes to Managing Revenue

Hotels are jealous of airlines when it comes to revenue management. A standard major airline has a second-degree black belt in optimizing airfares. Multiple times a day, an airline adjusts rates in reaction to fresh data about supply and demand. It also distributes different rates on different websites, mobile apps, and travel agency systems for various dates of travel and advanced-purchase windows. The typical hotel group, on the other hand, is more like a young student of Taekwondo who is unduly pleased with himself for having side-kicked in half his first wood board. What gives? In brief, hotels face large hurdles to shrug off legacy back-end systems. Revenue management and the related issues of marketing and distribution require a full set of data to be done right. Finger-pointing is one problem. A hotel may be managed by a company that's different from its owner. If the hotel is a franchise, then it has another voice weighing in. Tech investment decisions become fraught when ownership is fractured. So tech investment is neglected. Outside of the global hotel giants, today's rate-setting work is often manual. Think Excel spreadsheets and weekly meetings. A second problem is that many hotel groups use legacy systems for core hotel operations that struggle to handle third-party software integrations. "Often when hoteliers may have ideas for improvement they're told that the data isn't available or not easily accessible," said Farley. "The integration issue has crippled the industry to be able to analyze all the data they have." Training is another issue. "When we talk with hospitality CEOs, we ask, what's the number one thing they need to change to leverage technology in operations?, and they say, 'We need to get our people to think at a higher, more rounded level rather than worrying about managing the technology output.'" said Mike Chuma, vice president of product strategy at IDeaS. At hotel companies too small to have revenue managers, the issue may be a lack of training. Next-generation revenue management tools require staff to spend more time spotting anomalies — like a sudden dip in demand — and responding accordingly and strategically. A fourth factor is complacency. Some full-time revenue managers may feel threatened about how their role might be changed in adopting a more complex system. Under the status quo, their work and the primacy of their role go unquestioned. So change has been slow to come. Fewe